Baker Construction & Development Inc., of Spokane, says it has started construction of a second-story addition to the historic Schade Towers office building that will house the district offices of the Indian Health Service.

The $1 million project will add 5,000 square feet of office space atop a previously constructed first-floor addition on the east side of the building, located at 528 E. Spokane Falls Blvd., in the University District east of downtown, says Kirk Ledbetter, a project manager for Baker Construction. The main portion of the building is five stories tall, and in all, the structure has about 70,000 square feet of floor space.

Two real estate investment groups—Black Pro Invest Schade Towers LLC., which is managed by Dave Black, Grant Person, and Mark Pinch, and another concern headed by Baker Construction president Barry Baker—own Schade Towers, having bought the building as a joint venture in 2005.

The U.S. General Services Administration, which manages real estate for federal agencies, has agreed to lease 3,700 square feet of the new space for the Indian Health Service, Pinch says.

Indian Health Service is a division of the U.S. Department of Health and Human Services. It provides medical and health services to members of federally recognized American Indian tribes and Alaska natives.

Lebetter says the Schade addition will accommodate Indian Health Service's current Spokane-based staff of about 16 employees. The service's Spokane office currently is located at 1919 E. Francis.

The Spokane office of Alaska-based USKH Inc. designed the project, which Ledbetter says will be completed this summer.

Ledbetter says the addition had been in the planning stages for about two years, but only moved into the construction phase when the owners secured the Indian Health Service's lease. Jeff McGougan, of Spokane-based NAI Black, handled the lease.

The main portion of the building was erected in 1903 and housed the Schade Brewery. The structure was converted to commercial space in the late 1990s.

Schade Towers is listed on the National Register of Historic Places. The National Park Service, which administers the register, approved the design for the addition, Pinch says.

Shade Towers is 92 percent occupied, Pinch says. Tenants there include Spokane Teachers Credit Union and Asuris Northwest Health, among others.