Washington Post Considering Selling Building to Relocate
Washington Post Co. (WPO) may sell its downtown headquarters to relocate to a property that will make its operations more efficient, following similar moves by newspaper companies throughout the U.S.
“Once we removed the presses from this building over 10 years ago, we were no longer tied to this particular location,” Publisher Katharine Weymouth said in a memo to employees today. “Our goal is to give us a more modern, bright, open and efficient building.”
As newspaper owners struggle with plunging circulation and advertising spending at a six-decade low, many are selling their downtown buildings to take advantage of a real estate recovery. The Washington Post is likely to find strong buyer demand for its headquarters, said Dan Fasulo, managing director at property-research firm Real Capital Analytics Inc.
“The D.C. office market was the leader in the recovery over the past few years,” Fasulo said in a telephone interview. “Any time you are a stone’s throw away from the White House, you’ll draw great interest from developers.”
Other companies have sought to profit from their property holdings. New York Times Co. in 2009 sold the space it occupies in its Manhattan headquarters for $225 million to pay debt and leased it back. The newspaper moved to the building in July 2007 after selling its former headquarters to Tishman Speyer Properties LP for $175 million in 2004.
A.H. Belo Corp. (AHC), based in Dallas, is trying to sell the main offices of its Providence Journal in Rhode Island and adjacent lots, and USA Today owner Gannett Co. (GCI) has put the Des Moines Register’s Iowa building on the market and is evaluating options for its Virginia headquarters.
Washington Post Co. is working to contain its costs as its namesake newspaper struggles to keep readers and advertisers. Its average weekday circulation dropped to 471,200 in the first nine months of last year, down 9.2 percent from a year earlier, while its print advertising revenue fell 14 percent to $160.7 million.
The company relies primarily on Kaplan, its for-profit education unit, which accounts for almost 60 percent of annual sales. Its publishing business brings in 15.5 percent of sales.
Washington Post Co. hired Studley Inc. and JM Zell Partners Ltd. as its real estate advisers, Weymouth said. They will seek buyers and identify sites for relocation, she said. The building is at 1150 15th Street NW in Washington.
Advertising expenditures for print and online media in the U.S. have fallen every quarter since the start of 2007, according to the Newspaper Association of America. Advertising revenue totaled an estimated $19 billion in 2012, the lowest when adjusted for inflation since at least 1950, according to data compiled by Mark Perry, an economics and finance professor at the University of Michigan-Flint who tracks newspaper advertising. Daily circulation volume dropped 12 percent between 2007 and 2011.
Commercial-property values, meanwhile, are on the rise, particularly in the urban areas where newspapers tend to be based. U.S. prices climbed 7 percent last year and are, on average, within “a few percentage points” of their 2007 highs, according to a January report from Green Street Advisors Inc., a Newport Beach, California-based property-research firm.
In Washington, the average price for office space was $478 a square foot last year, down 3 percent from 2011, according to New York-based Real Capital. That compares with a 4 percent increase to $232 a square foot nationwide.
The price for the Washington Post’s headquarters is “just a matter of how much the investment community wants to spend, given that most government agencies are contracting and office prices in the D.C. market have cooled over the past six months,” said Fasulo of Real Capital.
Washington Post Co. rose less than 1 percent to $388.44 at the close in New York. The shares are little changed over the past year, compared with a 14 percent increase in the Standard & Poor’s 500 Index.