The News & Observer has reached a deal to sell its downtown headquarters for $20.2 million to a local group that plans to redevelop the 3-acre site beginning next year.
The agreement, signed Monday, caps months of negotiations between the newspaper and the development group, which calls itself Above The Fold. The group includes the developers Mark Andrews, Michael Sandman and Joe Whitehouse as well as Russ Jones and Henry Ward of Loden Properties. Raleigh architectural firm Clearscapes will lead the design of the project.
The first phase will involve renovating the building at the corner of Martin and Salisbury streets that now houses The N&O’s printing presses. The N&O has signed a long-term lease to occupy about 50,000 square feet in the renovated building, which will also include street-level retail.
Plans for the rest of the site have not been finalized but will entail demolishing the remaining buildings, which date back to the 1950s. Jones said future phases would likely include a hotel and possibly apartments. The group expects to draft renderings for the entire site in the coming months.
“This site is going to require quite a bit of great design and great community development,” he said.
The project will take years to complete and is the largest proposed downtown since The Edison, the office and residential development being built three blocks east of The N&O. The Edison, which occupies an entire block, is expected to result in more than $150 million in new investment downtown.
The N&O has been at its current site since 1907. Publisher Orage Quarles III said in selling the building he had two goals: To make sure the newspaper had new space that would fit its needs, and to remain downtown if at all possible.
“That’s the beauty of this. It allows us to do both of those things,” he said.
The N&O’s decision to sell comes as downtown is experiencing a surge in redevelopment activity. Just two blocks from The N&O’s site, a bidding war for a 1.2-acre, city-owned site boosted the final sales price to $6.3 million, or more than double the amount of the initial bid for the property.
The size and central location of the The N&O’s site made it particularly attractive to developers, a number of whom made offers when the newspaper began soliciting bids late last year. Above The Fold’s proposal was unique in that it involved salvaging a portion of the existing buildings. The approach allows The N&O staff to remain in its current offices while the renovation of the building at Martin and Salisbury streets is completed.
“We were the only group that really thought to save something,” Jones said.
At more than $6.7 million per acre, the sale is among the priciest land deals in downtown’s history.
Shedding real estate
Interest in The N&O property spiked last year after consultants unveiled a draft of a future downtown plan that showed the newspaper’s surface parking lot across from Nash Square being redeveloped into a hotel. Jones agreed that the 3-acre site is a “phenomenal hotel site,” adding that his group’s vision is to have a mix of uses that will engage pedestrians and better connect the property with Nash Square.
He said the group has had initial discussions with the YMCA about possibly locating an activity center on the site.
“If there’s a way to incorporate a Y onto the site, that’s something we want to fight to find out,” he said.
Above The Fold plans to incorporate both public spaces and public art into the development. That’s something that has been a specialty of other projects Clearscapes has been involved in. Steve Schuster, the firm’s founder, said the goal is to retain the heritage of the place that has housed a newspaper for more than 100 years.
In preparation for the sale, which is expected to close in early 2016, The N&O has purchased new presses that are being installed at the company’s Garner inserting facility. The new presses are expected to be operating by April.
The sale does not include The N&O’s Martin Building on Hargett Street. It was recently renovated and is now leased to McClatchy Interactive, which provides online services for all of McClatchy’s newspapers, including The N&O and the Charlotte Observer.
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.
The N&O is just the latest newspaper to sell its real estate holdings. Newspapers have been shedding real estate as their staffs have shrunk and the properties have become attractive ways to raise capital.
The Charlotte Observer’s headquarters is now under contract and last month Sacramento, Calif.-based McClatchy announced that it has begun a review of its real estate assets to identify other properties that it may sell in its 28 markets across the U.S.
McClatchy plans to use the proceeds from The N&O sale for debt reduction and other corporate purposes.
The developers who are a part of Above The Fold have been involved in numerous local projects. Andrews, Sandman and Whitehouse are the development team behind The Cypress, a retirement community in North Raleigh, as well as The Paramount condominium development in Glenwood South and the Aloft Hotel that recently opened on Hillsborough Street.
“This is a legacy project. It’s fun to have long-time Raleigh developers involved in putting this together,” Jones said. “This is a project we can’t screw up. We love it. This is the best location in Raleigh.”
News researcher Teresa Leonard contributed.
Stilts and louvers
When The N&O’s current headquarters opened in 1956, the newspaper described it in a news article as “this attractive, yet substantial erection of steel, concrete, brick and plaster – something of a three-story building on stilts.”
Today the building is perhaps best know for the odd-looking shutters that extend around the west and south sides. The N&O was undeniably proud of them, proclaiming the headquarters to be one of the few buildings in the country and perhaps the only one in the state to feature them: “Now, just glance up to the second and third floors outside the new building and you’ll see our pride and joy – outside venetian blinds. The architects call them vertical louvers.”