A Portland, Oregon-based group of investors has acquired the former Carlyle Hotel property, located at 206 S. Post, in downtown Spokane, for $2.14 million from Seattle-based nonprofit Pioneer Human Services.

The transaction comes four months after the Spokane City Council disclosed talks of a potential relocation of Catholic Charities of Eastern Washington's House of Charity to the former hotel property. The city's potential relocation plans caused backlash from some members of the business community who wanted homelessness services moved out of the downtown core, and those plans quickly dissolved. 

Hilary Young, vice president of advocacy and philanthropy at Pioneer Human Services, says the sale of the property was needed to stem massive financial losses of about $10 million that the nonprofit has incurred over 13 years of ownership of the 134-year-old property.

Pioneer Human Services has provided low-income housing at the old Carlyle that was subsidized by its manufacturing workforce programs in Western Washington, explains Young. The nonprofit can no longer keep offsetting losses incurred by the Carlyle property due to a declining aerospace manufacturing industry that began shrinking with pandemic-related travel restrictions four years ago, she says.

The new owners say they plan to keep their obligation to current residents and honor all regulatory agreements attached to the 71,000-square-foot property.

The new building owners include Rudy Munzel and Alex Munzel, who are father and son; David Squire; and a handful of other trusts. All of the building's new owners have acquired the property through separate real estate investment entities.

Going forward, Pioneer Human Services will continue to maintain a large presence in the Spokane area, Young says.

"The Carlyle, because of its size and presence, has been the hub of our delivery model, so it's sad for us," Young says. "We won't be losing $1 million a year in operating costs alone, though."

The property is comprised of two buildings: a seven-story, 74-unit mixed-use residential structure with 14 one-bedroom units and 60 studio units; and a two-story commercial office and storage building, located west of the former hotel, says Rudy Munzel.

The commercial building is vacant, while the residential mixed-use building currently is occupied, he says.

Several regulatory agreements are in place with different agencies for the residential units, and for the next two years the investors say they'll honor current conditions in place to keep at least 51% of the units for low-income tenants. 

"Our long-term goal, after these agreements burn off, is to gradually move it into market-rate housing," says Munzel, adding that after the low-income housing commitments expire, the former hotel will provide workforce housing.

"We envision this being a safe and nice building that anybody would feel comfortable living in," says Squire. "We want to continue some of the legacy that Pioneer put into it. They did a wonderful job doing the best they could in running the building, and we're going to take the baton, spend some money, and provide housing at a market rate for folks that want to live or work downtown."

Spokane-based Goodale & Barbieri Co. has been hired to manage the property, Munzel says.

A few upgrades are planned to update mechanical equipment and heating and cooling systems.

"A building at that age always needs investment, so we're going to be investing hundreds of thousands of dollars in upgrades for mostly equipment. The units are not in bad shape, and there's been a lot of upgrades in the building," Munzel says. 

The seven-story structure also features its original lobby and a first-floor gathering space. Community spaces also are available on each of the above floors.

One commercial tenant has signed a lease to occupy ground-floor retail space at the Carlyle property, beginning Oct. 1.

-Erica Bullock
Spokane entrepreneurs Marianne Watts, left, and Kaylee Sanchez have leased 1,600 square feet of retail space in the former Carlyle Hotel building.

Kaylee Sanchez and Marianne Watts, co-owners of MK Studios LLC, which does business as The Studio Spokane, will be the first commercial tenants at the former hotel property after signing a five-year lease to open an eyelash supply retail store.

The Spokane-based entrepreneurs currently operate a beauty salon in about 3,000 square feet of salon and studio space at 176 S. Howard, two blocks east of the Carlyle.

Sanchez and Watts say they were looking to expand outside of the downtown Spokane core before the Portland investors approached them about leasing a storefront at the Carlyle.

The two salon owners say they will handle tenant improvements themselves for the 1,600 square feet of leased commercial space at the Carlyle. A lash supply store with a feminine industrial aesthetic will occupy about 900 square feet of space, and offices and classroom space will take up the remaining leased area.

Estimated costs for the tenant improvements aren't available yet, they say, adding that renovations are expected to be completed around the end of the year or in January.

Leasing the remaining commercial space at the Carlyle is a priority for the investors who say they want to bring in more small businesses, such as counselors or therapists, to help revitalize the property. 

"We think it helps a lot with the street front," says Alex Munzel. "Keeping it lively will benefit the tenants, neighborhood, and all other offices in the area. It's a win, win, win if we handle it right."

The investors have partnered to purchase other Spokane-area properties previously. After entering the Spokane market in 2018, their portfolio here has grown to include The Broadmoor apartments, in Browne's Addition; the Breslin Apartments and Vista Apartments, on the South Hill; and three properties in Spokane Valley, Rudy Munzel says.