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TACOMA, WA-Those accustomed to extra low lease rates in Tacoma are having to move more often these days.

Since the city spent $100 million on a fiber-optic network that connects every city block and alley with the equivalent of a T3 line, 100 startup technology companies have set up shop in, as the government-sponsored advertisements put it, “America’s No. 1 Wired City.” The demand is raising the cost of the supply, however, and Old City Hall is a prime example.

Last spring, Jerry Korum of Puyallup sold the historic Old City Hall at 625 S. Commerce St. for $2.6 million to Horizon Partners of Oakland, which owns several buildings in town. At the time, rents were averaging about $9 per sf. With $500,000 in upgrades coming, rents in the century-old structure will now average about $15 per sf.

Although still a far cry from Seattle rates, which are a major part of Tacoma’s attraction for startups, the increases have had an impact. Rather than pay the increased rates, three tenants have reportedly vacated Old City Hall rather than renew. New arrivals have covered some of that space, but at least 9,000 sf reportedly remains available in the 57,000-sf building.

In addition to Old City Hall, Horizon owns DaVita (formerly TRC) Tower, the adjoining Tacoma Technology Center, Horizon Pacific Center (three buildings at South 21st Street and Pacific Avenue), Carlton Center (1548 S. Commerce St.), the U.S. Bank Building (1102 S. Commerce St.), and Cascade Machinery (2119 Pacific Ave.).

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