Russell Investments will move its 900-employee headquarters to downtown Seattle's Chase Center, known until recently as the WaMu Center.

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Russell Investments is moving to Seattle.

The global financial firm, founded in Tacoma in 1936 and based there ever since, announced this morning that it will relocate its headquarters in 2010 to downtown Seattle’s Chase Center, known until recently as the WaMu Center.

Insurance giant Northwestern Mutual, Russell’s parent company, is buying the 42-story tower, JP Morgan Chase spokeswoman Darcy Donohoe-Wilmot said.

In its announcement, Russell said that “the move will provide the company with access to a large talent pool and will place Russell in the center of a major Pacific Rim city, alongside other like-minded global firms and business pioneers.”

Russell President and CEO Andrew Doman also cited “the unique conditions of the commercial real estate market in Seattle.” A source familiar with Russell’s decision said recently that Russell and Northwestern Mutual were attracted to the Chase Center in part because of the opportunity to buy the three-year-old, 42-story skyscraper for “pennies on the dollar.”

Chase acquired the tower at Second Avenue and Union Street last year as part of its takeover of failed Washington Mutual. The building’s name will be changed to the Russell Investments Center when Russell moves in.

Russell’s announcement capped a three-year search that narrowed earlier this year to Seattle and Tacoma. The other finalist was a site in downtown Tacoma where German billionaire Erivan Haub proposed to construct a new building that Russell would lease.

Russell has about 900 headquarters employees.

For Seattle, Russell’s decision softens part of the blow downtown suffered when Washington Mutual, its largest employer, collapsed a year ago. More than 4,000 WaMu employees once worked in the tower. Now fewer than 500 do.

Chase will continue to lease three floors in the building, Donohoe-Wilmot said, and its bank branch will remain.

For Tacoma, Russell’s loss is a major blow. The company is downtown Tacoma’s largest private employer, and civic leaders offered tax breaks and other incentives worth more than $148 million in a bid to keep the firm.

“We recognize that this news will be disappointing to some,” Doman said in a statement. “We weighed all considerations carefully, and in the final analysis our decision was based on what would best serve Russell over the long-term.”

Seattle Mayor Greg Nickels acknowledged the impact on Tacoma in a prepared statement. “Ultimately, the most important fact is that workers can stay in the Puget Sound area and that a prominent company will continue to call the Northwest home,” he said.

Russell had planned to make a decision last year, but extended its search after the financial collapse and real-estate downturn presented new opportunities.

“We couldn’t be more thrilled to welcome Russell Investments to Downtown Seattle,” Downtown Seattle Association President Kate Joncas said in a prepared statement..

“Russell Investments is a great company, with a great reputation, so there’s no question they were highly sought after, and they had a difficult choice to make.”

Russell manages more than $151 billion in assets and maintains the closely watched Russell 2000 small-cap stock index. Its ties to Tacoma have weakened since it was acquired by Milwaukee-based Northwestern Mutual 10 years ago.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com