Business Community

Xitco brothers quietly stake claim in downtown Gig Harbor

Posted on September 11th, 2023 By:

A pair of brothers from a prominent Tacoma business family has bought up properties with big development potential in downtown Gig Harbor.

Their purchases include a historic waterfront building between the Tides Tavern and the new 7 Seas taproom near the Old Ferry Landing. Another incorporates more than three-quarters of an acre in the commercial heart of the city, on Harborview Drive between Soundview Drive and Pioneer Way.

The brothers, John Xitco, 54, and Luke Xitco, 51, are also partners in a Tacoma company, X Group Restaurants. X Group owns several popular eating and drinking establishments. That connection has launched speculation on whether they’re aiming for similar ventures in Gig Harbor.

Preliminary plans

Downtown leaders and property owners say they are just getting to know the Xitcos, who arrived on the scene quietly. But some downtown watchers note that with more active and entrepreneurial management of these parcels — along with other nearby landowners such as Brad and Michelle Bailey seeking higher and better uses for their properties — downtown Gig Harbor could see development accelerate in coming years.

(The Xitcos have avoided making waves, but they did increase tenants’ rents in downtown Gig Harbor. Some businesses are moving out because of it. The brothers say previous rents were well below market value. See related story.)

The Xitcos recently sent an exploratory letter to the city of Gig Harbor, asking about permits and approvals needed to build a taproom at 3028 Harborview, part of their retail holdings. The proposed venture, dubbed Harborview Village Neighborhood Taproom (or, in their hand-drawn floor plan, the E-9 Brewing Co. Beer – Bait – Tackle) would be in a small building that is hidden from view behind the businesses lining Harborview. (Shane Johns, head brewer at their Tacoma-based E9 Brewing Co., is a partner with the Xitcos in the taproom proposal).

On the other side of the street and down a few blocks, at 2907 Harborview, the Xitcos own a waterfront parcel that includes the Washington Co-Op agricultural building constructed in the 1920s, with a boat dock and a deck overlooking the harbor. The Xitcos bought the property in 2018.

They are working with the city to obtain permits for improvements there, including adding Americans with Disabilities Act (ADA)-compliant parking and a dumpster enclosure. They are also upgrading the dock and enlarging moorage by almost 40 percent to accommodate larger boats.

The Xitcos’ property at 2907 Harborview aka the Boat Barn, which has both a waterfront deck and moorage. The new 7 Seas Brewing taproom is next door and on the other side, the Tides Tavern is a few properties down. Photo by Ted Kenney

Real estate entrepreneurs

John Xitco downplayed the possibility that he and his brother seek to own, operate or develop restaurants on either of these Gig Harbor properties.

“Principally, our business is a real estate business,” he said. He added they are more interested in buying and leasing properties than in running enterprises on them.

The brothers do know their eateries and taprooms, though. Through X Group Restaurants, they own E9 Firehouse & Gastropub (often called Engine House 9) on North Pine Street in Tacoma; Asado, an Argentine-styled grill around the corner from E9 on Sixth Avenue; and E9 Brewing Co. & Taproom in downtown Tacoma. The Pine Room, the Xitcos’ event space and catering operation on Sixth Avenue, was home to their popular restaurant and nightclub Masa Comida Mexicana for eight years, ending in 2015.

But drinking and eating establishments are a hard business, laden with costly regulatory red tape, John Xitco said. The brothers at this point in their careers are more interested in buying, holding and managing real estate for the long-term, he said.

Exploring options

Even the taproom that is the subject of the exploratory letter is far from certain to move forward, he said. If it does, the business may be built and run by an operator other than the brothers.

Washington allows a limited number of taprooms per brewery, Xitco said. The brothers could open a taproom in connection with E9 Brewing there. Or they could instead be landlords for another brewer who wants to pour beer in downtown Gig Harbor.

The little house at 3028 Harborview became available when a pet food store decided to shut its doors, Xitco said. The Xitcos bought the property in October 2022.

“We thought it would be a good idea to take a look” at what the city would require for a taproom. But the space may stay a retail shop, he said.

Down the street at 2907 Harborview, Xitco said they’re making improvements that the city of Gig Harbor requires in connection with the owners’ renewal of a state Department of Natural Resources tidelands lease. They have no plans to develop the site or open a restaurant there, he said.

This is 3028 Harborview, part of the Xitcos’ holdings in downtown Gig Harbor. It was previously home to Green Cottage Pets. Last week, the owners sent the city a pre-application letter to explore the requirements for placing a taproom there. Photo by Ted Kenney

The Xitcos’ background

Though the Xitcos’ restaurants may have brought them visibility in recent years, their roots in Pierce County real estate dealings go deeper. Their grandfather was Michael J. Tucci, founder of Tucci & Sons, an earthmoving and paving company that evolved into a major player in development and construction. Their father, John Xitco, married Tucci’s daughter, Mary Lou. He ran Tucci & Sons in partnership with his brother-in-law, Mike Tucci. Growing up, both Luke and John worked there full-time during summers.

In 1981, their father put together a deal to buy Tacoma fuel distributor Lubking Petroleum. Their uncle Mike Tucci and their father’s best friend Frank Pupo Sr. were partners. The new owners renamed the company Associated Petroleum Products (APP) and surprised the industry by putting their sons, Luke Xitco and Frank Pupo Jr. in charge (Luke’s brother John also had an ownership interest).

By all accounts, Luke and Pupo Jr. excelled at the task. Sales grew from less than $40 million when they started to $600 million in 2015, when APP was acquired by World Fuel Services.

In announcing the acquisition, World Fuel Services said it paid $230 million for both APP and another, unrelated company. John Xitco would not disclose how much money the APP sale put into the Xitco brothers’ pockets.

Luke Xitco

Since 2015 they’ve channeled significant funds into real estate. Their acquisitions embody the real estate axiom about “location, location, location.”

In 2018, they paid $12.5 million for an office building at 1313 Broadway across from Hotel Murano in downtown Tacoma. The next year, along with a minority partner, they spent almost $2.7 million for a two-story structure with prime retail space at North 26th and Proctor streets, the center of Tacoma’s upscale Proctor District.

Gig Harbor roots

They also looked toward Gig Harbor. The brothers grew up here, near the Tacoma Narrows Airport in the family home overlooking the Narrows. Luke still lives on the Gig Harbor Peninsula. (Both Luke and John Xitco attended Bellarmine Prep High School).

In 2018, when 2907 Harborview Drive caught their attention as a potential acquisition, the Haub family owned the property. It had recently been part of the Ben B. Cheney Foundation’s unsuccessful effort to develop 25 to 30 housing units in downtown Gig Harbor. The Xitcos bought it for $1.5 million.

Their rationale for buying that property, John Xitco said, is that there is a limited amount of waterfront, and if you can own a small piece of it in Gig Harbor, it’s a good thing.

In 2022, four connected parcels on Harborview Drive became available with the passing of Victoria Bonneville, who with her mother, Mary Bonneville, owned the property and operated Bonneville Weavers on the site from the 1970s through the 1990s. The property includes storefronts at 3102 and 3104 Harborview. Behind these, it incorporates a parking lot as well as open land with three small houses (one of which, 3028 Harborview, is the site of the Xitcos’ proposed taproom). The Xitco brothers bought that real estate for $1.32 million in October 2022.

Canterwood Commercial Center

The Xitcos have yet another proposed development in Gig Harbor — this one far north of downtown, with the brothers’ involvement in it going back decades. The Xitcos are partners with Tucci & Sons in Swede Hill LLC, which seeks to build Canterwood Commercial Center, across Canterwood Boulevard from St. Anthony Hospital. The center would have an 18,000-square-foot office building, a 9,000 square foot parking garage, and three smaller retail buildings totaling about 10,000 square feet, with drive-through windows – think fast food, Starbucks and a pharmacy.

John Xitco said the property is the remnant of 50 acres bought by Tucci & Sons long ago. The brothers have been part owners since they liquidated their family’s stake in that firm in the 1990s.

Construction of Canterwood Boulevard eventually cut a swath through the land, and Swede Hill LLC sold more to CHI Franciscan to build St. Anthony Hospital. What’s left is a 7.6-acre parcel sloping down to Highway 16 with wetlands, a tributary of McCormick Creek running through it, and hillsides as steep as 70 degrees in some places.

Starting in 2006, Swede Hill LLC’s efforts to gain the city’s approval for the project moved in fits and starts. The Pierce County Hearing Examiner OK’d the site plan, design review and conditional use permits for the drive-throughs on Sept. 9, 2021.

The approval came with the requirement for substantial environmental mitigation, including creation of new wetlands to compensate for the ones that will be disturbed; daylighting the stream and restoring it to more a more natural condition; buffers; and preserving an open area in the middle of the property through which the stream will run.

No guarantees

The approval expires three years after it was granted, unless Swede Hill LLC files for building or civil permits. So far, this hasn’t happened.

Will Canterwood Commercial Center move forward before the approval expires next year? John Xitco gave no guarantee. They won’t go it alone, he said, because their ownership team has minimal experience developing retail centers. “It’s kind of out of our wheelhouse,” he said.

If the project does take advantage of the current hearing examiner’s approval, it will happen either through co-developing Canterwood Commercial Center with a more experienced partner, or selling the investment opportunity to be pursued by someone else, he said.