Blue Spirits bankruptcy reshapes plans at Cashmere Mill District

CASHMERE — The bankruptcy of Blue Spirits Distilling is expected to leave an entire building vacant at the Cashmere Mill District by the end of the year, prompting the Chelan Douglas Regional Port Authority to put planned improvements to a neighboring building on hold.

Port Finance Director Monica Lough discussed the changing picture at the district during an Aug. 25 review of the agency's budget and year-to-date finances.

Blue Spirits leased all of Building A at the Port-owned business park and previously occupied additional space in Building B. The company moved out of its Building B space March 31.

Lough said the Port received expected rent for Building A through June 30 but has received nothing since then.

The Port expects to receive several months of rent from the trustee handling the bankruptcy, although those payments had not yet arrived as of Aug. 25.

More significantly for the district's future, Lough said the trustee has indicated that all of Building A will be vacant by the end of the year.

“They've given an October 31st deadline,” Lough said. “I'm not sure how realistic that is, but we will have a lot of space available there.”

That anticipated vacancy has changed the Port's plans for Building B.

The Port had budgeted for capital improvements to the building, but Lough said the project has been placed on hold as the Port prepares for substantially more space to become available in Building A.

The vacancy is also forcing adjustments to the Port's 2026 operating revenue projections.

The Port's adopted 2026 budget anticipated approximately $175,000 in rent from Blue Spirits for Building A. Building B, which was occupied by both Hurst International and Blue Spirits when the budget was prepared, was projected to generate approximately $140,000.

Lough said the supplemental budget currently includes no Building A rent for the second half of the year, although that figure remains uncertain as the Port waits to see what it receives through the bankruptcy process.

“Right now we currently have nothing budgeted for the second half of the year,” Lough said. “That's still a yet to be determined item.”

Building B revenue will also be reduced to account for Blue Spirits ending its lease there March 31, leaving Hurst International as the building's remaining tenant.

The changes mark a reversal from earlier expectations for the two Port-owned buildings.

As recently as May, Lough reported Cashmere Mill District revenue was tracking near projections, while noting that Blue Spirits had already vacated its additional space in Building B. At that time, Blue Spirits continued to lease all of Building A.

The Port has continued pursuing redevelopment elsewhere in the former mill property. In June, officials told the Cashmere City Council they were working with 3N Development on a potential O'Reilly Auto Parts project on one parcel while planning to retain and redevelop other portions of the site itself.

For now, however, the impending availability of Building A gives the Port substantially more existing space to work with before proceeding with additional improvements next door.

Andrew Simpson: 509-433-7626 or andrew@ward.media