Developer Sevak Khatchadourian, owner of the Pacific Southwest Building in Downtown Fresno, has revitalized the region's tallest structure — considered the core of Downtown Fresno. Photo by Edward Smith

“It was the center of downtown and everything was built around it.”

That’s how Craig Scharton, former Downtown Fresno czar, describes the Pacific Southwest Building. He should know a little about the 16-story structure. He owned it back in the 1990s.

Planners used the building to orient both directions of the old Highway 41 — now known as Blackstone Avenue, guiding Fresno’s outward sprawl.

Ten years ago, the most prominent building in Downtown Fresno’s skyline had only 5% occupancy. Attempts to transform the Pacific Southwest Building into residential from office had stalled, victim of the Great Recession. The tallest building between San Francisco and Los Angeles went through a series of owners and has changed from bank to office to residential lofts, now with a rooftop bar and a French café at the bottom.

Today, the building sits at 95% occupancy, with developer Sevak Khatchadourian preparing to bring the final floor online, ready for luxury loft tenants.

 

Ups and downs

The Pacific Southwest Building has gone down a path mirroring that of Downtown Fresno, following the region’s ups and downs. But now the developer has a building that provides for its tenants a space to “live, work and play.”

In 1925, bankers finished construction of the Pacific Southwest Building at the corner of Fulton and Mariposa streets. The site had changed hands several times between different savings and loan corporations. City planners used the northeast corner as the guide for the old Highway 41 alignment. It was also used to line up Elm Avenue, which was Highway 41 south at the time, said Scharton, who once owned the building along with four other investors.

“It used to be when you drove home from the coast on 41, before the new 41 was built, the first thing you saw was the Security Bank in the distance,” Scharton said.

To Scharton, the Pacific Southwest Building is one of the most iconic structures in Fresno.

The PSW is not laid out like other buildings. The floor plate on which it stands is smaller than most. The T.W. Patterson Building, built around the same time and a black away, has 12,000 square feet per floor compared to the PSW’s 5,500 square feet per floor, Scharton said. An air shaft runs up the middle, so units are limited to the perimeter.

 

Selling points

While this means the total leasable square footage is smaller, the result is every suite has an incredible view, Scharton said.

On a clear day, one can see north Fresno and all the way to the mountains.

That was the selling point for Scharton when a group of investors went in on the building in the early 1990s.

Within a two-year period, nearly every building in Downtown Fresno had gone into foreclosure, Scharton said.

“Downtown lost something like 90% of its value within a two-year period,” Scharton said. The Gottschalks store in Downtown Fresno closed in 1988. The Gottschalks corporate office soon after moved to north Fresno.

Scharton feels it was the loss of the corporate office that put the final nail in the coffin of Downtown Fresno, as a large portion of people spending money at bars and restaurants went away.

But the nearby Fresno County Superior Court was still open, and Scharton felt that was a key selling point. He reached out to young lawyers and within a year, he had eight floors occupied from barely a floor occupied when he bought it from GE Capital.

Scharton sold his share in 1997 when he moved away, and his partners retained ownership.

 

New life

The owners saw the potential for residential, Scharton said. They borrowed against the building, putting $1 million back into the property. Another $10 million went toward investments in coastal properties. When the Great Recession collapsed the value of the properties, the Pacific Southwest Building was left on the hook.

Once again, the building was in foreclosure.

When that happened, Scharton reached out to the bank, wanting to get a local broker to work the deal in hopes of keeping ownership local. The bank chose Dick Ellsworth, former left-handed pitcher for the Chicago Cubs-turned commercial real estate broker. Ellsworth died on Monday.

Khatchadourian’s bank had informed him about the Pacific Southwest Building back in 2011. He and his brother went out to look at the property and Khatchadourian saw its potential.

“I just fell in love with the architecture of the building and the beauty of the craftsmanship,” Khatchadourian said.

But while the outside may have been stunning, the interior needed work.

“Restoring an old building is not the same as building new,” Khatchadourian said. “Every wall you open, there might be a surprise, so you have to be creative about what you do with this.”

Being on historical registers severely restricts what can be done with a building’s façade. Some of the cornices date back to the 1920s. He reached out to dealers to recreate those pieces and had to get them tested to get matching colors.

The right plan

On the inside, some of the office conversions had taken place, but most of the floors weren’t laid out for someone to live in. It wasn’t until 2015 that the first phase of the building opened for residential tenants.

Even after Khatchadourian purchased the building, he was not in a hurry to bring it online. For a couple years, he didn’t do anything. He needed to find his demographic — who his tenants would be, what they wanted and what they needed.

What he discovered: He needed a place where people could “live, work and play” in the same environment.

He looked at the WeWork model — shared office space for professionals where they could be away from home, but still in a professional space. The 13,000-square foot Workspace opened in 2016.

Khatchadourian changed the bottom vault into a theater space. In 2020, French-inspired bakery La Boulangerie expanded and opened its café at the corner of the building. In 2021, craft cocktail lounge Quail State debuted with much fanfare, occupying the balcony and interior space.

Khatchadourian is using the same formula that worked for the Pacific Southwest Building for the caddy-corner Helm Building. Ethiopian restaurant Fasika is scheduled to move in as well as a cigar lounge and wine bar. The retail spaces on the bottom are nearly completed and work will soon begin on residential above.

Khatchadourian said bringing the building to where it is now took 10 years of his life and a lot of gray hairs. He said there is room for other developers to come in and perform.

“The housing market is there,” Khatchadourian said. “If we have a lot of housing, commercial will follow.”