COVID-19 has permanently moved Olympia to remote work, restaurant tells city

COVID-19 fundamentally changed how we work. It sent most of us home during the pandemic, only to discover that after it, many people prefer to work remotely. And that has been hard on the restaurant business, says one family.

The Knudsons have owned the Italian restaurant Casa Mia for more than 40 years at Eighth Avenue and Plum Street in downtown Olympia.

They previously had a plan to redevelop their property, but that vision was slowed by the pandemic then made it more urgent as state workers did not return to the office.

“They’re not coming back,” says Bob Knudson.

His son, Evan Knudson, put a finer point on things in a letter to the city. The family also operates a restaurant on Martin Way, just west of College Street.

“Fortunately for the Martin Way location, business has not only gotten back to pre-pandemic levels but has recently started to exceed the numbers from 2019,” he writes. “Contrast this with our Plum Street location, where sales are down approximately 35% since 2019 and we’re doubtful that we’ll ever be able to recover to anywhere near the levels we once had.”

Like his father, Evan says working remotely isn’t helping.

“By far the biggest negative factor that business owners and property developers on Plum Street are faced with is the movement away from in-person offices,” he writes. “Employees were forced to work remotely and as the pandemic subsided, they collectively decided that they didn’t want to return to the office.”

As a result, the Knudsons, working with Olympia-based Thomas Architecture Studios, a firm known for its mixed-use designs throughout downtown, has proposed a text amendment to Olympia city code that would allow drive-through businesses in mixed-use multifamily developments with ground floor commercial space.

It’s only proposed for a section of Plum Street, between Union Avenue and Fifth Avenue.

The idea of a drive-thru in an apartment building might sound puzzling, but Bob Knudson says the combination is already at work at a Starbucks on Mill Plain Boulevard in Vancouver, Washington.

“Drive-through uses are more valuable than storefront retail, so by allowing them as part of larger multi-family developments, it would encourage developers to invest in Plum Street,” Evan writes. “More residential development would lead to better future business viability.”

Will state workers ever come back?

Bob Knudson believes the collection of buildings opposite his restaurant known as Town Square are largely vacant. A check of the state Department of Enterprise Services, the state agency that manages state property, shows there are a number of state office leases still in effect at Town Square, although it wasn’t clear if workers were there or at home.

Kidder Mathews commercial real estate broker Evan Parker said it’s clear the state has consolidated and vacated space since the pandemic.

He has a 48,000-square-foot listing on Quince Street, near Plum Street and Union Avenue, that was once occupied by state workers. Using a conservative estimate of around three parking spaces per 1,000 square feet, he thinks the building was once home to about 140 workers. Now it’s not.

“I think they have a valid concern,” said Parker about the Knudsons.

The state Office of Financial Management shared this data: Of roughly 27,000 state workers who have what OFM called a “duty station” in Thurston County, more than 15,000 of them telework at least one day per week.

The data, too, shed light on further consolidation: The state set a goal of reducing leased office space by at least 20% for leases expiring in fiscal years 2024 and 2025.

“Our next goal is to reduce leased office space by at least 30% for leases expiring in fiscal years 2026 and 2027,” the OFM information reads.

The Knudsons aren’t the only downtown restaurant owners to notice this change. It prompted the owners of Three Magnets Brewing Co. to end food service in early 2023.

“While evening and weekend business has been slowly bouncing back, weekday lunch and happy hour are virtually non-existent without state workers commuting into the area five days a week,” the owners announced in a social media post, “and that was a very important part of our revenue stream our entire business plan was built around.”

How is the Casa Mia proposal proceeding?

The text amendment was approved by the Olympia Planning Commission 5-2 and by the city’s land use and environment committee 2-1, according to city information and an update from Bob Knudson. It is now set to come before Olympia City Council in March.

The Olympia Planning Commission has sent a letter to council summarizing the debate.

“There were two dissenting commissioners who felt, even with the amendments, that the recommended language did not address their concerns regarding health and safety of the proposal,” the letter says.

“One commissioner maintained safety impacts to people walking and biking outweighed the benefits of the code amendments. The second dissenting commissioner was concerned for the health of residents living above a drive-through with the added vehicle traffic and engine idling.

“While design of entries, exits, and ventilation could help mitigate some of the concerns raised, it was the opinion of the dissenting commissioners that these efforts would not be sufficient, and that the negative externalities of the drive-throughs would outweigh the benefits of additional housing for the Plum St. area and the city of Olympia.”

The planning commission also tweaked the geography of the proposal, wanting it to apply on Plum Street between Union Avenue and Eighth Avenue, although it apparently went back to the original area following the land use committee vote, according to Bob Knudson.

So, if the council approves the text amendment next month, what do the Knudsons do?

They could move forward with redevelopment of their property on Eighth Avenue, with or without a Casa Mia. But he added, “The restaurant is not going anywhere, anytime soon.”