Former Bally property could become new townhouse development


Federal Way City Council could vote as early as Oct. 4 to allow developers to turn the derelict Bally Total Fitness building into a new market-rate townhouse development.

The property at 32818 1st Ave. S., known for years as Bally Total Fitness (or simply Bally’s), closed in 2011. It has been vacant and deteriorating for at least seven years, and for sale for most of that time. (Google Street View images show graffiti smearing the exterior since August 2012, although it was recently cleaned up.)

The townhouse project is appealing to members of the city council: it could, within a few years, revitalize a dilapidated property that a town planning report described as a “visual blight on the community”. This would boost housing for middle-income residents. And the co-ownership arrangement means it could pave the way for home ownership once built, council members say.

But local residents shared their concerns during public comment periods about driveway access, parking on South 328th Street, traffic safety, congestion and crime. Some neighbors circulated a petition against the project, according to city notes from a public comment period in August. Other commentators have praised the project for building more middle-income housing rather than low-income housing.

The former Bally Total Fitness property at 32818 1st Ave. S., Federal Way. Image courtesy of Google Maps

Next steps

The project requires the property to be rezoned from “office park” to “multi-family residence”. Council will need to modify the City’s master plan and zoning map and adopt the development agreement for the project before it can officially begin.

City council members first opened a public hearing into the matter on August 9, then concluded that hearing on September 20, when they also completed a first reading of the property’s rezoning agreement. The deal is now in second reading at the October 4 board meeting, and if they like what they see, they could close the deal with the developers that evening.

The homes would include units of 2 to 4 bedrooms each with 2-car garages and private entrances, according to developer Intracorp.

Condominiums combine private ownership of a home with the development of an apartment complex. Buyers often find “condos” more affordable than stand-alone properties, and families with upward mobility frequently use townhouses as a “stepping stone” between renting and owning their dream home.

Developers, on the other hand, can choose to rent some units and sell others. The deal will require Intracorp to set up each condominium so it can be sold to a landlord, though it can choose to rent townhouses instead.

“The residential development market is unpredictable right now,” Intracorp development director Lis Soldano said at the latest board meeting. “We are adding flexibility to this project to adapt to these market conditions. …We are still committed … to building a market-priced, condominium-quality townhouse community that we believe Federal Way will be proud of.

Although they generally agreed that Intracorp’s proposal was a good fit for the property, council members expressed some caution that the project might fail after the city had already rezoned the property.

The property is currently worth around $3 million, Associate Planner Natalie Kamieniecki said at the Sept. 20 meeting. Although a rough estimate, the property could be worth $50 million or more after the townhouses are built, Kamieniecki said, adding that it would cost around $70 million to build the project. .

The Bally’s building was constructed in the mid-1970s, according to city staff. Bally’s originally purchased the property in 1988 for $2.3 million and sold it to Fitness International LLC in 2011 for $3.5 million. The fitness center later became an LA Fitness, but closed in December 2011. The current owner, First Avenue South Apartments, purchased the 6-acre property in 2015 for $1.5 million, state records show. King County Assessor’s Office.

An initial analysis by the Public Works Department found that the development would generate less than 1% of the existing traffic on 1st Avenue S. Currently, 328th Street South handles approximately 150 vehicles per hour. The new development would add 63 vehicles per hour, according to the most recent estimate, an increase of about 30%, according to city staff at the last meeting.

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