Weyerhaeuser, one of the Pacific Northwest’s cornerstone companies for more than 110 years, plans to relocate its headquarters and 800 employees from Federal Way to Seattle.

The move will occur in 2016 when construction of a new building at 200 Occidental Ave. S. is complete.

President and CEO Doyle Simons did not attend the Tuesday news conference at which Mayor Ed Murray announced the relocation.

But in a statement Simons said “our 430-acre campus in Federal Way is costly and too large for our needs.” Also, he said, “moving our headquarters to Seattle will give us access to a larger talent pool to meet future recruiting needs, not just in this region but from across the country.”

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The forest-products giant has sharply downsized over the past decade. Just this summer it completed the spinoff of its homebuilding unit, known locally as Quadrant, by folding it into Southern California-based Tri Pointe Homes.

But even now it is the state’s seventh most valuable public company, with an $18.1 billion market capitalization that ranks it just above Nordstrom. It posted sales of $3.7 billion and net earnings of $485 million in this year’s first half.

It’s the second time Weyerhaeuser has pulled up stakes and moved its headquarters: Founded in Tacoma in 1900, it moved to Federal Way in 1971.

Weyerhaeuser intends to sell its Federal Way property, which contains approximately 750,000 square feet of office, research and industrial space.

The 800 employees in its current headquarters building will relocate to the new Seattle facility, while 120 research-and-development employees at its nearby technology building will stay in Federal Way. Weyerhaeuser will lease the technology building after selling it, company spokesman Anthony Chavez said.

Federal Way officials had been concerned that the company might be looking to relocate. Just last week Mayor Jim Ferrell wrote to Weyerhaeuser CEO Simons asking for a meeting to discuss the matter.

“While unfortunate, this certainly is not a surprise,” he said. “We clearly understand that their core business model has changed.”

The mayor’s chief of staff, Brian Wilson, said that while the company has a “showcase facility,” visible from Interstate 5 and built to underscore the company’s forest-products heritage, the building is aging and sits on “an extremely valuable piece of property.”

A source close to the company said that in recent weeks, “The rumors have been rampant down there that they were looking to get out of the headquarters building and maybe out of Federal Way.”

At Tuesday’s news conference, Murray said the move is a “game-changer” for Pioneer Square, the southwest corner of downtown Seattle that is the historic heart of the city and has recently seen an increase in development.

“Businesses want to be where there are creative people, where there are vibrant streets, where there are active parks, where there are walkable, bicycle-transit oriented neighborhoods,” he said. “That is Seattle and that is Pioneer Square.”

He also read a statement from the Weyerhaeuser CEO, in which Simons called the relocation “an important step for our company … The south downtown area is a great transit hub for employees and we’re excited to become part of a growing, vibrant, historic city.”

Simons was named CEO in June 2013 and in November bought a $1.85 million condo on Queen Anne, according to county records.

Greg Smith, whose company Urban Visions is building the seven-story building on parking lots next to Occidental Park in Pioneer Square, said Weyerhaeuser will occupy all the office space in the 200,000-square-foot building.

The planned building’s ground floor, opening to the park, will have 15,000 square feet of retail space, he said.

“We’ve been working on designing a building in Pioneer Square for many years that would become a centerpiece of the neighborhood,” Smith said. “I can’t think of a better tenant for us to land than them with their more than 100-year history in the state.”

Building permits for the project have not yet been approved, but Murray said the city is working on getting those approved in a timely manner.

Leslie Smith, of the Alliance for Pioneer Square, the nonprofit organization devoted to improving the historic district, said she is excited for the life the new building and businesses will bring to the community.

“Pioneer Square has waited a long time for the transformative development of 200 Occidental,” she said.

Much as Tacoma officials were stunned when the company pulled up its roots there, some elected officials in Federal Way expressed disappointment Tuesday.

Weyerhaeuser “emotionally moved out a long time ago,” said King County Councilmember Pete von Reichbauer, who represents Federal Way. “In recent years they have been absent at the table — that should have been a strong indicator that the current executive officers have little or no connection to our region.

“That’s unfortunate because we in South King County benefitted from a strong, rich commitment from the Weyerhaeuser Corporation, Weyerhaeuser Foundation and Weyerhaeuser Family … they all had a very strong commitment to the region,” von Reichbauer said.

But Mayor Ferrell sounded an optimistic note, calling the pending move“an excellent opportunity to provide some public or private organization with a beautiful facility well located on the I-5 corridor.”

Seattle Times reporters Lynn Thompson and Brier Dudley and deputy business editor Rami Grunbaum contributed to this report.Coral Garnick: 206-464-2422 or cgarnick@seattletimes.com. On Twitter @coralgarnick