Russell narrows headquarters search to two sites in Tacoma and Seattle

Tacoma-based Russell Investments has narrowed its search for a new headquarters to one site in downtown Tacoma and one building in downtown Seattle: the tower known until recently as the WaMu Center, according to a source familiar with the decision-making process.

If Seattle is Russell's pick, its parent company, insurance giant Northwestern Mutual, would buy the 42-story WaMu Center — now known as Chase Center — and Russell would be the anchor tenant, the source said.

Russell is expected to announce its choice in the next few weeks, but the final decision hasn't yet been made.

"This has taken so many twists and turns," the source said. "There's no one [involved] that would take a bet on this right now...

"This is not a done deal."

The Tacoma finalist is a proposed building that German billionaire Erivan Haub would construct for the global financial firm. It was the subject of a presentation to Russell officials Monday.

Russell and Northwestern Mutual representatives declined to comment, as did a spokeswoman for JPMorgan Chase, which acquired the WaMu Center as part of its takeover of failed Washington Mutual a year ago.

Russell, which manages more than $151 billion in assets and maintains the closely watched Russell 2000 small-cap stock index, was founded in Tacoma in 1936 and remains the city's largest private downtown employer. But its ties to Tacoma have weakened since it was acquired by Milwaukee-based Northwestern Mutual 10 years ago.

Tacoma officials have fought fiercely to keep Russell, offering tax breaks and other incentives worth more than $148 million. Most Seattle political and business leaders have been more circumspect in their courtship of the firm, sensitive to criticism they might be poaching.

But a Russell move to the WaMu Center would bring 900 jobs to downtown and help fill a prominent skyscraper that has emptied since Washington Mutual's collapse.

The 900,000-square-foot building at Second Avenue and Union Street, completed in 2006, was the bank's headquarters. About 4,000 employees worked there before the Federal Deposit Insurance Corp. seized WaMu last September and sold it to Chase.

That touched off several rounds of layoffs. Today the tower houses fewer than 500 workers, Chase spokeswoman Darcy Donahoe-Wilmot said.

Chase put the building up for sale in July, but Northwestern Mutual already had what amounted to an option to buy it, the source familiar with Russell's process said.

Russell, which reportedly is in the market for about 300,000 square feet, also had two other downtown Seattle buildings on its short list, the source said: West Eighth, a recently completed tower in the Denny Triangle that has no tenants, and 1201 Third Avenue, formerly known as the Washington Mutual Tower.

But the WaMu Center prevailed because it offers a great location and an opportunity to buy an iconic new building for "pennies on the dollar" — less than half what it would cost to build the tower today, the source said.

Ultimately, the source said, Russell must weigh the possible advantages of a Seattle headquarters in recruiting and retaining employees against its long history in Tacoma and the possibility some employees might leave rather than relocate.

While Seattle has not offered Russell incentives to rival Tacoma's, Mayor Greg Nickels and eight City Council members did offer earlier this summer to support a tax break for the company by creating a new business-and-occupation (B&O) tax classification.

The council members said in a July 11 letter to Russell that they expected to consider the change later this summer. But no legislation has been introduced as yet, Deputy Mayor Tim Ceis and council spokeswoman Debra Carnes said Wednesday.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com