The News and Observer Publishing Co. has sold the Franklin Street headquarters for its Chapel Hill News and Durham News operations to an owner who plans to turn the former press room into a liquor distillery.

Scott Maitland, owner of Chapel Hill's Top of the Hill restaurant and brewery, paid $2.15 million for the 0.8-acre site, which includes about 10,000 square feet of office space and 10,000 square feet of warehouse space.

Maitland will lease the office space, including 5,000 square feet to The N&O for its western Triangle news and advertising staff. The remaining space will be set aside to brew vodka and gin under Maitland's Top Spirits company.

"Believe it or not, printing a newspaper and running a distillery are considered the same class of activity, and so the building is zoned correctly," he said. "It's got everything we need. All the power. All the water. The loading dock."

Maitland already makes microbrew beer at Top of the Hill. He must apply for federal and state approval to operate a legal distillery.

Felicia Gressette, The N&O's vice president of marketing and community publishing, said the buildings had become more space than the company needs. About 15 newsroom and advertising people now work at 505 W. Franklin St. putting out the biweekly publications the Chapel Hill News and the Durham News.

"We're very happy that we're staying on Franklin Street," she said.

Facing a recession and a brutal advertising environment, The N&O has reduced staff over the past two years. The warehouse space was used to print the Chapel Hill News until The N&O consolidated printing operations in Raleigh.

The News and Observer Publishing Co. bought the Franklin Street property for $554,000 in 1993 when it purchased Chapel Hill News. Last year, it had a tax value of $2.9 million.