Tucson: Providence Service Corp Buys Downtown Building

Providence buys downtown site for about $3M


By Tony Davis

ARIZONA DAILY STAR 7/28/2010

Social service provider Providence Service Corp. paid nearly $3 million Wednesday to buy a stripped­down shell of a four-story building in downtown Tuc­son to add to its existing corporate headquarters.

The company will spend the next four to six months renovating the building at 44 E. Broadway, once a fed­eral court annex and most recently the site of a failed effort to develop condominiums and luxury penthouse residential suites.

Providence bought the building for $2.99 million from Bank of the West, Pima County Recorder’s Office records show. Renovating it will cost millions more, said Providence’s chairman and CEO Fletcher Mc-Cusker, adding “there’s no way to know now what the remodel costs will be.”

Once the renovation is done, the company will oc­cupy the second floor, lease out the third floor for of­fices, and work with Peach Properties to develop six residential lofts with rooftop decks on the fourth floor. The first floor has 25 covered parking spaces.

The purchase is the latest step in Providence’s move of its corporate headquarters from east side Tucson to downtown. The company occupies a leased building at 64 E. Broadway and is working with Peach Properties to renovate a second leased building at 50 E. Broadway, lying between the other two buildings.

Once both buildings are renovated in about six months, about 100 employees in Providence’s corpo­rate staff will be working downtown. About 35 employ­ees, including McCusker, have worked at the 64 E. Broadway building since May. The company has 300 employees working on Tucson’s east and northwest sides. It employs more than 11,000 people nationwide and in Canada.

The bank had picked up the 44 E. Broadway building at auction last November for $3.1 million, after the building went into foreclosure. Previously, a partner­ship had tried to develop it as condos, but after sinking $1.6 million into the project, it put the building on the market in fall 2008 for $6 million.

McCusker said the fact that Providence paid less for the property than the bank paid last year isn’t a sign of a deteriorating downtown real estate market.
“I think we just got a good deal,” he said.

The 44 E. Broadway building is “absolutely” gutted, with no exte­rior or interior walls remaining, McCusker said.

“We’re going to have to start from scratch,” he said. “It’s three concrete pads, basically stacked on top of one another. The condo developers went bankrupt, took off the walls, stripped the building and ran off.”

The purchase by Providence is another sign that momentum is building downtown, along with openings or announcements of about a half-dozen restaurants and bistros, a motorcycle shop and UniSource’s new corporate head­quarters, said a spokeswoman for the nonprofit Tucson Regional Economic Opportunity Inc.

“It’s small, but sometimes I think it just takes these steps in the right direction to build momen­tum,” said TREO vice president Laura Shaw.

Providence provides in-home counseling and other social servic­es, as well as non-emergency med­ical transportation under contracts with state and local governments.

The company didn’t originally plan to move into three downtown buildings, McCusker said.

“We just kind of fell into it. We love the building we are in, and it was going to be a modestly sized corporate headquarters. Then the building to the west became avail­able and then the 44 E. Broadway building was in foreclosure,” he said.

It’s not the company’s nature to own buildings but due to the scale of the renovation work needed, it was clear that it would take a com­pany of its size to do it, said Mc-Cusker, in explaining its decision to buy rather than lease this building.

Purchase of the building also provides 100 total extra parking spaces, more than half contained in a now-vacant parking lot lying across the street to the south, he said.

Overall, the CEO said he is quite upbeat about having moved downtown, saying he finds it par­ticularly positive that redevelop­ment activity there is coming mainly from the private sector.

“There’s just a lot of energy. It’s almost contagious,” he said.

Contact reporter Tony Davis at tdavis@azstarnet.com or 806-7746.