The News & Observer’s plans to sell its downtown offices to a local development group for $20.2 million have fallen through.
Failure to reach a final agreement stemmed from the inability of the Above the Fold development group to finalize a plan that included suitable space for the newspaper in its redevelopment of the 3-acre site on McDowell Street.
Elaine Lintecum, chief financial officer of The N&O’s corporate parent, the Calif.-based McClatchy media company, said that the company already is in discussions with another prospective buyer. She added that she is “confident that we can come to an agreement on selling the existing building and finding good accommodations for our operation in Raleigh.”
The deal with Above The Fold, announced in November 2015, included leasing to The N&O renovated space in the building at the corner of Martin and Salisbury streets that at the time housed the newspaper’s printing press. The development group also planned to erect an office building above that space, as well as building an all-new tower on the site.
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But Joe Whitehouse of Above the Fold said the space allocated for The N&O turned out to be unsuitable for The N&O’s needs.
The former printing press space “became a very tough space for The News & Observer to be housed in once you took all the new infrastructure through the building,” he said. “It was very complicated and became an untenable space.”
“In the end, we just could not accommodate the needs of The N&O with lease terms and everything that worked for all,” Whitehouse said. “It’s a shame.”
The Above the Fold group also includes developers Mark Andrews and Michael Sandman, as well as Russ Jones and Henry Ward of Loden Properties.
Lintecum declined to identify the new potential buyer that McClatchy is talking with but said the discussions include “several alternatives” to accommodate The N&O.
“I certainly would expect that The News & Observer would be downtown,” Lintecum said. “We have certainly taken into account the fact that The N&O has been an important presence in downtown for a very long time, and it’s important that you all remain in downtown.” The N&O has been at its current site for more than 100 years – since 1907.
The deal with Above the Fold called for a final agreement to be reached last month – originally Dec. 1, but the deadline was extended to Dec. 30 to give Above The Fold additional time to come up with a plan to accommodate The N&O.
“They worked very hard at that but (were) just unable to meet that end goal,” said Lintecum, who spoke highly of the development group.
Above the Fold also tried to find space nearby that would work for The N&O, said Whitehouse, who likewise had nothing but good things to say about the newspaper and McClatchy.
Sara Glines, The N&O’s publisher, said she was “a little disappointed” that a final deal hadn’t gone through.
“I’m still very optimistic that we are going to land well,” she said. “I think selling this property is both good for McClatchy and good for Raleigh. This is a wonderful part of the city.”
The N&O moved its printing operation to Garner in anticipation that the deal with Above the Fold would be finalized.
But Glines said any sale of the building would involve such a move anyway.
“Had we not been so deeply engaged with Above The Fold, we probably would have been a little slower,” she said. “But all things being equal, it had to move.”
Above the Fold also has two buildings in the downtown block where The N&O is based under contract – the building that houses the Father and Son store and The Professional Building at the corner of Hargett and McDowell streets.
Whitehouse said the development group is reviewing whether to move forward on those deals in light of the termination of the deal with McClatchy.