By LYNN PORTER
Seattle Daily Journal of Commerce
Posted: January 28, 2021
Local developer Sound West Group had just finished the parking podium and the first level of framing on one of two buildings in its long-planned Marina Square mixed-use project on the downtown Bremerton waterfront when COVID-19 hit last year.
In April, 2020, a year into construction, the Bremerton-based developer suspended the project at 280 Washington Ave, and pivoted in response to the severe impact of the pandemic on the hospitality industry, including most urban-located hotels, it said.
Sound West Group retained the plan for 125 market-rate apartments in the six-story north building, but redesigned the south building, which was to have had a 120-room Cambria hotel. Now that six-story tower will have 155 units, a mix of studios and one bedroom apartments, along with furnished extended stay units which will serve the growing demand from private contractors for the nearby Puget Sound Naval Shipyard, said SWG’s CEO Wes Larson.
The company announced yesterday that construction has resumed on the project, which is slated for completion in 2022. Construction and land cost total $130 million.
Sound West Group develops multifamily, single-family and commercial real estate in the Western Puget Sound region. The 66-unit Ellie Passivhaus apartments at 320 Queen Anne Ave. N. in Seattle is among its recent projects.
Marina Square is its biggest project to date. Larson said it is fortunate that work on the hotel tower had not yet begun when the pandemic hit. Otherwise the company would have had a partially built hotel with the expensive option of redesigning midstream. That would have had a substantial impact on Sound West Group, he said.
Even so, the pivot cost it $1 million it would not have otherwise spent, he said.
“It was all-consuming for us,” Larson said, noting it took eight months and involved negotiating a loan intended for multifamily and hotel into one for just multifamily. To get any construction financing in this environment was very difficult, he said.
“Covid dropped on us like a ton of bricks,” the CEO said. “I think it’s the classic black swan event. We didn’t know that it had hit us until after the fact.”
Apartment rents at Marina Square will begin around $1,350. The project will have a grab and go store, and some space can be adapted for a restaurant should a user come along before the development is complete, Larson said.
There will be 363 stalls in the parking podium for Marina Square residents and commercial tenants, and for tenants of the adjacent Port of Bremerton Marina.
Sound West Group acquired the 2.2-acre construction site near the ferry terminal in 2018 from the Port of Bremerton for $4.5 million. Marina Square is in a federally tax-favored Opportunity Zone, which Larson said defers taxes on capital gains invested into the project, somewhat like a 1031 Exchange, and eliminates capital gains earned once you are invested in the project. Larson said that helped Marina Square attract $40 million of equity.
Encore Architects designed the development and the interiors for the north tower. Compass Construction is building the project.
The team includes Vida Design, interiors for the south tower; Fischer Bouma Partnership, landscape architect; MAP Ltd., civil engineer; Bykonen Carter Quinn, structural engineer; and Haggard Electric, Comfort Systems, One Way Plumbing and Smith Fire, MEPF engineer team.
Larson is a fourth-generation Bremerton resident. He said it is an “honor and privilege” to develop Marina Square — the biggest project on the waterfront in Bremerton’s history and one that is very important to the city.
“It’s really the crown jewel for our company,” he said.