The News & Observer is evaluating real estate proposals from multiple developers interested in its downtown headquarters and could make a decision early next year about whether to sell.
Orage Quarles III, The N&O’s publisher, said the newspaper has hired a broker to help it vet potential buyers for the company’s roughly 3.5-acre site.
“They’ve been interesting, and we’re taking them all seriously,” Quarles said of the proposals the company has received so far. “At some point early next year we’ll sit down and see if something can happen.”
“We do know this is the premier location downtown,” he added.
The property being marketed to developers does not include The N&O’s Martin Building, which was recently renovated and is now leased to McClatchy Interactive, which provides online services for all of McClatchy’s newspapers.
The N&O spent $2.6 million to renovate the Martin Building, which once housed the newspaper’s circulation department.
The N&O now employs about 300 people downtown, or about half the number of employees it did before the financial crisis in 2008. Like all newspapers, The N&O has been struggling to offset a decline in print advertising with revenue from its digital initiatives.
A number of newspapers across the country have sold their real estate holdings in recent years, including the Miami Herald, a McClatchy paper that sold its 14-acre waterfront site for $236 million in 2011. The Charlotte Observer is also seeking to relocate its headquarters and sell its current site after acquiring a new printing facility.
Quarles said if the property is sold, his preference would be that The N&O’s offices remain downtown. The company would need about 40,000 square feet to accommodate its current workforce.
Quarles said The N&O’s existing building is costly to maintain and no longer aligns with the company’s increased focus on its website and other digital efforts.
“It’s just an old and inefficient space,” he said.
The N&O’s downtown headquarters also includes its printing presses. The company would need to purchase new presses, which would likely be located at the company’s Garner facilities.
Quarles said interest in the company’s property spiked in September after consultants unveiled a draft of a future downtown plan that showed The N&O’s surface parking lot across from Nash Square being redeveloped into a hotel. After being contacted by three different developers in one week, he got a broker involved to formally solicit and evaluate proposals.
Downtown has seen a surge in redevelopment activity in recent years, although much of the new construction has been apartments. The size and central location of the The N&O’s site makes it particularly intriguing to developers.
“I would call that a transformational site,” said Gregg Sandreuter, a Cary developer who is behind the Edison apartment and office project now under construction just a few blocks east of The N&O. “Some pretty amazing things could happen there over time if it’s done properly.”
Developers would likely seek to have a mix of offices, residential, retail and possibly a hotel on the site. Redeveloping such a large tract would take years and likely require the investment of more than $100 million.
“You’d be investing in the future of downtown, and the belief that downtown has a bright future,” Sandreuter said.
By selling now, The N&O would be seeking to capitalize on both the low-interest rate environment and investors’ strong interest in the Raleigh market.
“They’re kind of high on Raleigh and Charlotte right now; both of those cities have a lot of attention on them,” said Andy Andrews, CEO of Raleigh-based Dominion Realty Partners, which is building the Charter Square office building at the south end of Fayetteville Street.
Andrews said investors will be watching to see how the new apartment and office projects being built downtown perform. They’ll also be speculating about what the economy will look like in three to four years. He said the earliest that a project on The N&O site would likely start coming out of the ground would be 2017 or 2018.
“It’s hard to predict the future in terms of what’s going to happen to interest rates and things like that,” he said.