Yahoo Finance Revival on Hosmer Street? Hotel-to-apartment conversions show promise at Tacoma sites
A group of investors have been working to revamp a collection of hotel/motel sites in Tacoma’s South End near Interstate 5 in hopes of creating a positive ripple effect on the wider area.
Sage Investment Group of Kirkland is connected to properties in Fife, Olympia and more recently Centralia.
Its work in Tacoma might be considered among its most ambitious so far, with hundreds of new units either completed or on the way.
Two years ago, blocks of South Hosmer Street sunk to the depths of being labeled a “war zone” amid multiple homicides and a reputation as one of the area’s most dangerous neighborhoods.
Now, former lodging sites that in were in the middle of all that are slowly being turned into housing units.
Sage began buying lodging sites along the street in 2022. Its first units opened last fall, with a Trunk-or-Treat community celebration to kick things off.
Gone is the Econo Lodge, 8820 S. Hosmer St., replaced by Safe Harbor apartments. Also gone is the Travelodge/American Lodge site, 8702 S. Hosmer St., now Cascade Ridge apartments.
Still in the works among their properties: Hotel Thea, 7414 S. Hosmer St., and HomeTowne Studios, 8801 S. Hosmer St.
Sage specializes in such conversion work and has been redeveloping what it describes as “underperforming real estate assets” since 2020.
The group has expanded its work into five states for a total of 25 properties with over 1,800 units in its portfolio, and more properties set to close this year.
According to Sage’s website, the group plans to acquire more than 1,000 additional units and add conversion work in three more states to its roster.
It is backed by 230 investing entities — 28% women and 30% people of color, according to a Sage Investment announcement earlier this month, which also noted Sage has now surpassed $100 million in investments.
The group typically purchases and upgrades the properties, operates them through a separate management entity and eventually sells off after about 3-5 years.
Co-founder Emily Hubbard told The News Tribune last fall that housing authorities are typically their biggest buyers.
For now, the local focus is on shoring up the sites, community engagement and promoting its sites as improved entities.
‘Some good wins’
Whitney Wilkins is director of community relations at Sage and a Tacoma native. She said the emphasis on South Hosmer Street from Sage isn’t unusual.
“We do consider buying multiple properties in areas that we identify as ‘Corridors of Opportunity’– spots where we feel we can make a large impact on the greater community,” Wilkins said.
“Hosmer was largely hotels with a large transient population and no options for stable, long-term housing,” she added.
“We’ve had some good wins in the last year,” Wilkins told The News Tribune in a recent interview. “We’re really excited about our footprint on Hosmer. And the goal is to just keep improving the area.”
“Safe Harbor is over 90 percent leased,” she said, predicting that it would soon be fully occupied.
Hotel Thea, soon to be Thea Apartments, will see its first units potentially available for leasing in the next few weeks, with floors available tentatively by the end of the year.
Cascade Ridge is 45 percent rented with “283 prospects in the queue,” according to Wilkins.
Sage converts sites from motel-hotel rooms generally into what it calls workforce housing studio apartments, with monthly rents at Cascade Ridge ranging from $985-$1,050, according to its website. At Safe Harbor, rents average $995, according to Wilkins.
The rents are marketed as “all inclusive,” which include utilities and a technology package.
“Tenants pay one bill each month and do not have to set up and pay separate utility and technology fees to different service providers each month, as they would in a typical rental unit,” Wilkins noted.
“That’s really what’s great about doing these hotel conversions,” she added. “We’re able to bundle things together because of how these hotels were set up.”
Conversion work at Hometowne Studios, which Sage purchased earlier this year, will begin soon, Wilkins added, with the hopes of opening by next summer.
Wilkins noted potential tenants are screened, and that the screening process is aligned with the HUD-Veterans Affairs Supportive Housing program.
“We can be flexible because we understand that people want to be able to build, and they want to be able to start working toward that,” Wilkins said. “And as long as they’re not in arrears, we’re happy to work with them.”
Crime rates have improved in the area, though, as Wilkins said, “There’s still some work to be done, and so we continue our partnership with (Tacoma Police Department) and they’ve been really good to work with.”
Crime data from the city of Tacoma shows reported crime incident rates going down since 2022 in the 8400-8800 blocks of South Hosmer Street.
So far this year as of June 26, the number of incidents reported have ranged from 45 in the 8400 block to just eight in the 8700 block. While that is just a half year’s worth of calls, even if doubled by the end of the year, those rates would still be lower compared with previous years.
For example, in 2022, there were 104 incidents reported in the 8400 block, and in 2021 there were 107 incidents reported in the 8700 block.
Experience can still reflect a different reality.
During coverage of Tacoma’s crime plan update in April, Seattle TV news KIRO-7 reported that one of its photojournalists was assaulted by another man near the Hosmer area, shortly after witnessing a separate, verbal altercation.
South End Neighborhood Council chair Andrea Haug, in an interview this week, said she was pleased with Sage’s work on Hosmer, despite being initially skeptical.
“I think in the beginning times, for me, at least, I was suspicious, because, of course, Hosmer is a hot subject,” Haug said. Questions that came to her mind, she added, included, “Was truly affordable, helpful housing coming to the area? What were their priorities?”
As time when on, “they’ve been absolutely delightful to work with,” she said.
“Yes, it’s a business, and, yes, they need to make their bottom line and make their incomes. But they want to give back to the community just as much.”
She noted that Sage in early June hosted the council’s first Healthy Hosmer Initiative at Cascade Ridge. The effort is a grassroots program that seeks to bring different services/resources tailored to the local community’s needs on a routine basis.
“Hosmer is overlooked unless people are paying attention to policing,” Haug said.
The program initially faced challenges after hope for potential state funding fell through. Its supporters have pursued community partners, with Haug and others seeking ways to broaden the program through representatives of local agencies and nonprofits.
The initiative’s first event in June included the Tacoma-Pierce County Health Department and Lifting Spirits with Helping Hands, a local nonprofit that refurbishes medical equipment and then distributes to those in need.
“Sage said, ‘Sure, come do this on our property,’” Haug recalled.
Members of the neighborhood council participated along with other entities. Food is Free offered plant starts and shelf-stable goods at the event, Haug noted. Sack lunches also were made available.
Haug said it’s worthwhile to take note of the positive actions that now appear to be taking hold in that area.
“I’m not going to deny anyone’s bad experience over there because that wouldn’t be acknowledging that yes, bad things do happen,” she said. “However, no one ever highlights any of the good things that do happen over there.”
Wilkins said Sage works hard to demonstrate to neighbors their work is meant to improve, not hinder, a neighborhood.
“We like to create secure and safe properties, and we don’t want to add to the crime on the street, and that’s also why we’re so involved,” Wilkins said.
“We just want to be responsible property owners,” Wilkins added.
Work at other sites
Elsewhere, Sage has converted the former Port of Tacoma Inn, 3501 Pacific Highway E., to Pinnacle Apartments.
“Pinnacle is open and still maintaining stabilized occupancy, currently fully leased,” Wilkins said. “The onsite team hosts regular resident events to continue to cultivate community connection.”
Nearby, a second Fife site, the Travelodge at 3518 Pacific Highway E., is in the works.
“Permits for an apartment conversion have been issued for this property,” Taylor Jones, senior planner for Fife, told The News Tribune via email in response to questions.
Wilkins told The News Tribune via email that the project is under construction in partnership with another development group.
In Lewis County, Sage is taking on three sites (OYO, Motel 6 and King Oscar) for hybrid mixed-use conversion that would include apartments and hotel space, after being rejected in October by its City Council amid a drop in lodging-tax collections, among other concerns.
In May, council approved the redevelopment. The Chronicle of Centralia reported that the turnaround came in light of the Legislature’s passage of House bill 1042, which promotes new housing built within existing buildings.
The end result was approval by council of a second amended proposal retaining ground level space for commercial use, among other changes.
In Thurston County, Sage is converting the Olympia Hotel (formerly Red Lion) and its nearly 200 rooms at Capitol Lake.
“We’re very excited about that site because it’s a different kind of structure than what we’ve done,” Wilkins said. “It was a very large hotel, with a huge ballroom and bar, restaurant-kitchen area.”
That site’s plans include leasing the restaurant portion, and call for a new coffee shop and indoor amenity spaces, transforming the ballroom area into meeting rooms and even pickleball courts.
“Almost everybody that you meet down there has been in that ballroom,” Wilkins noted, “from proms, birthday parties, other celebrations.”
“With the size of that property we’re getting very creative with what we can do with it,” she added.
