Why McMenamins is sticking with Tacoma, despite losses at popular Elks Temple

The century-old Elks Temple in downtown Tacoma cost $30 million to turn into a hotel/restaurant/bar/concert venue. It opened right before the pandemic. Since then, it's been a consistent money-loser for the company that restored it.

However, the McMenamins company made its name by taking the long view. Company co-founder Mike McMenamin has no intention of changing that now.

In downtowns like Tacoma and Seattle, a lot of buildings are losing money. Many of them are getting sold at bargain basement prices, like Pacific Place in Seattle. Some will get torn down and replaced with something new.

Mike McMenamin — one of the founders of McMenamins, which restored the property — tunes out that kind of news. He prefers to take the long view.

Mike is sort of a legend in the Pacific Northwest. He and his brother Brian — a couple of Grateful Dead fans — grew one Portland pub into an empire of 64 properties, which include small hotels, breweries, wineries, distilleries, restaurants, bars, concert venues, movie theaters, swimming pools, spas, and even a golf course.

McMenamins' projects are known for their creative reuse of historic buildings. Examples include a former car showroom in Seattle (The Six Arms), a middle school in Bothell (The Anderson School), and the stately Elks Temple in Tacoma.

Mike says his process is to fall in love with a building and its history first.

"The math we kind of work out a little bit later," he explains.

But sometimes the math comes back to bite him.

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he Elks Temple was one of the most ambitious architectural preservation projects ever done in downtown Tacoma.

The old building is all white on the outside, with ornamental columns and fancy balconies. It looks almost like a museum.

But when McMenamins bought it, the inside was a mess.

"There was paint peeling and you know, rusty this and rusty that," Mike McMenamin recalls, "and the floor was all gone."

Plus, it was heavily vandalized.

"Oh, sure. There was a 30-year run of freedom in this building, so there was graffiti all over the place, McMenamin says. "It was great."

The company spent $30 million to renovate and fill that crumbling shell of a building with five restaurants and bars, 45 hotel rooms and a big concert hall.

Exploring it has become a treasure hunt for visitors, who seek out the stories of history displayed in its art, or the secret bars, or the Alice-in-Wonderland spot where several hallways come together and a combination of real and false doors are labelled "this way," "that way," and "the other way."

The Elks Temple opened right before the pandemic.

"We got killed by that. That just absolutely murdered us," McMenamin says. "We lost a tremendous amount of money during Covid."

And while things have gotten better since then, it's been challenging for the company to find and retain workers. And there are fewer office workers in downtown Tacoma going out for business lunches.

The result is that the Elks Temple hasn’t been making any money. In fact, it’s been losing money every month.

How much is it bleeding? Mike McMenamin wouldn't say, exactly. And with his easy-going vibe, he certainly doesn't seem to be panicking.

"Business is good," he says, "just, not where it needs to be."

But he says big losses aren't unprecedented in his company.

"Well, I think it goes back to our history," he began.

RELATED: Hear more on the latest episode of Booming, "Can Buildings Learn?"

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hirty-some years ago, McMenamins bought an old estate known as a poor farm, several miles outside of Portland, Oregon.

It was in rough shape — its residential buildings crumbling, its barns and silos falling apart.

The company turned it into a winery/brewery and hotel. For a long time, he says it lost $100,000 a month.

"There was a good contingent in our company that were saying, 'Why are we doing this? This is insane,'" McMenamin recalls. "Well, it was, probably. But in the end, it started making money and it started pulling along other projects."

Now, that project, known as The Edgefield, has expanded to include a distillery, movie theater, spa, and golf course. It's become one of the company’s crown jewels.

That experience illustrates why Mike McMenamin is not quitting on Tacoma. He measures success in decades, especially with the next generation of his family now helping run the business.

And there are positive signs in the neighborhood around the Elks Temple — a new stop on Tacoma's local light rail line nearby, and the ongoing restoration of Tacoma's historic city hall across the street.

Are there naysayers in the company now who say, "You know what, we should probably cut our losses" in Tacoma?

"Yeah, of course," McMenamin says. "We have those discussions."

He says those tough conversations hold him accountable and sharpen his techniques and oversight.

A company spokesperson, Jessica Lee, later emphasized McMenamins made the decision to stay in Tacoma long ago, and has no intention of changing that now.

In an email, she said the company's position is, "We’re happy to see business coming back and smiling customers walking through our doors every day. We love Tacoma and we’re not leaving. We’ve built a great concert venue and have welcomed thousands to our hotel and restaurant. Tacoma is a great city, and we remain committed to building community here."

Mike McMenamin says there’s an inherent value in old buildings, even when, in cases like the Elks Temple, they cost three times more to restore than it would have cost to just put in a new building.

He says investing in old buildings can pay off in the long run. Not just for him, but for downtowns like Tacoma and Seattle, because people are drawn to them.

"It's a huge magnet. You know, you can feel it when you walk in an old building. You know, the history, especially this place has just layers and layers and layers of history, and so many people are connected to it in one way or another that it has that community sort of bond that is a powerful driver," McMenamin says. "It's hard to do that in a new building."

He says that the value of old buildings only increases when the neighborhoods around them are changing so quickly. If he’s right, that value could soon pick up steam in downtowns like Tacoma and Seattle as discounted properties sell to new owners with new visions for their sites.

Amidst such change, he says historic buildings become an emotional anchor, something residents can point to and say, “that’s the heart of my neighborhood.”

Hear more from Mike McMenamin, and learn what the downtown branch of the Seattle Public Library can teach us about adaptability on the latest episode of Booming, titled "Can Buildings Learn?"