More apartments for downtown Salem as urban renewal agency approves nearly $750,000 grant

Jonathan Bach
Statesman Journal

More apartments are coming to downtown Salem as Washington developers construct a 148-unit building of mostly studio units at the former McMahan's Furniture site. Koz Development is scheduled to break ground on the Nishioka Building in September, with plans to finish in late 2020 or early 2021.

The construction marks a new chapter for the property devastated by fire in 2006 and adds to a flurry of downtown apartment construction in recent years. The building will join the Court Yard apartments by Salem's Riverfront Park and the South Block Apartments near City Hall.

The more people who remain downtown for longer periods of time, the more vibrant the city's core becomes, said Salem Urban Development Director Kristin Retherford.

Adding housing generates an around-the-clock customer base for downtown businesses, Retherford said, and having nearby residents encourages business owners to stay open later.

Developers of the Nishioka Building at 260 State Street got a lift earlier this month from a $749,999 taxpayer-funded grant approved by Salem's urban renewal agency. Court Yard developers received a similar boost in 2016, securing a $740,000 grant.

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A March letter submitted to the urban renewal agency stated Nishioka Building developers needed grant money because the project is inside a historic district, which led developers to choose building materials reflecting downtown Salem's traditional architecture.

For example, builders will use brick masonry on exterior facades, the letter stated.  Making sure the project remains compatible with the neighborhood added about $500,000 to the project's price tag, the letter stated.

Alex Rhoten, owner of Coldwell Banker Commercial Mountain West Real Estate, said he expects the building will bring a young crowd downtown that may have been priced out before.

Cathy Reines, Koz's president and chief executive, declined in an interview to specify where rentals would land at the Nishioka Building, though she said it would be market-rate. Even Koz's market-rate rents are affordable, she said.

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The grant application letter suggests rents ranging from $850 to $1,200. The letter also noted the project could cost $18.1 million.

At Koz's Tacoma, Wash., apartments, studio rents stood at about $900 a month, Reines said. That cost covers utilities, furnishings and high-speed internet, she said. More spacious units with one or two bedrooms increase in price accordingly, but most units are studios in these buildings.

Koz Development breaks ground in September on the Nishioka Building, which will bring nearly 150 apartments to downtown Salem.

Developers are targeting Willamette University students, state workers, downtown employees and others hoping to settle in the city's core. Koz tenants tend to be on the younger side: the average age was 29 at the company's other developments as of last year, according to a company estimate.

The Nishioka Building will consist of 136 studio apartments, two one-bedroom units and 10 two-bedroom units, according to Koz. The Statesman Journal first reported on the project last year.

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It will have ground-floor retail space. Also included are secured bicycle parking spaces, common areas for doing laundry, and a second-floor courtyard, according to the company.

The building is named after Linda and Gary Nishioka, who owned the land and continue to be part of the project, Reines said.

In June, the Nishiokas sold the property to a company — Koz on State Street LLC — associated with Reines for $650,000, county property records show.

A fire at McMahan's Furniture Store on the corner of Commercial Street SE and State Street.

A massive blaze burned at the former McMahan's property, on the corner of Commercial Street SE and State Street, in August 2006.

Koz picked downtown because of demand drivers such as Salem Hospital, Willamette University, the Capitol Mall and the density of businesses downtown whose employees could become tenants, Reines said.

"That's first and foremost," she said.

Then there are the amenities: restaurants, coffee houses, the nearby Willamette River and Salem's nightlife, she said.

"There's an incredible vibe in that downtown Salem corridor," Reines said.

Jonathan Bach has been a business and City Hall reporter with the Statesman Journal since 2016. To support his work, Subscribe to the Statesman Journal. Contact him by email at jbach@statesmanjournal.com, call (503) 399-6714 or follow him on Twitter @jonathanmbach.