Owners of Observer’s uptown site weigh options
02/28/2014 8:00 PM
03/01/2014 4:53 PM
Almost two weeks after the Observer transferred printing operations from its uptown headquarters, an adviser for the pension fund that owns the site is considering options for the property, including a potential sale.
Jim Bishop, managing partner of WhiteStar Advisors in Boca Raton, Fla., said his firm oversees the South Tryon Street property as the investment manager for the Sacramento, Calif.-based McClatchy Co.’s pension fund.
The Observer property and those of six other McClatchy newspapers were transferred to the pension fund in 2011 to cover a $50 million obligation. WhiteStar was retained to transfer the properties from the company to the pension fund.
Now that the Observer has moved printing operations to the University area, Bishop said, WhiteStar is taking a look at the situation over the next few months to determine whether it still makes sense for the pension fund to keep the uptown property.
“We are continually evaluating all of the properties within the pension fund, both with regard to their position within the fund and the company’s overall needs,” he said.
He added that he started getting inquiries about the site from parties interested in buying it “probably the week after we transferred the property to the pension fund. But I haven’t received anything close to a viable offer at this point. Nor have we solicited any offers.”
He described the inquiries as preliminary, but didn’t specify the parties making them.
Publisher Ann Caulkins said she would like to keep the Observer’s 400 employees in or near uptown, and wants to build a new high-tech newsroom better suited to the digital era.
“I want us to have the new technology, the media center environment,” she said in an interview in her office at Tryon and Stonewall streets. “This is the environment of yesteryear.”
But the final call belongs to the pension fund. McClatchy rents the building for $4 million a year under a 10-year lease.
Built in 1971, the building comprises more than 360,000 square feet and was assigned a tax value of nearly $21 million during the 2011 Mecklenburg property revaluation. The tax value of all the properties, including parking lots and a warehouse across Church Street, totals $45.3 million.
The Observer occupies 9.3 acres spread across the parcels. The newspaper has been published at the Tryon Street site in two different facilities since 1927.
The paper in January paid $5 million to buy the Dow Jones publishing company’s printing facility in the University area. The new presses have upgraded the Observer’s color printing capabilities.
The possibility of a sale comes as development activity in uptown is on the rise after cratering during the recession. Just Friday, Novare Group, Batson-Cook Development Company and Grubb Properties announced they are ready to begin construction on SkyHouse Uptown, a 24-story, 336-unit luxury apartment building at 10th and Church streets.
Caulkins said she has learned of inquiries from several “viable suitors” about the Observer property, and has passed those along to McClatchy officials. Real estate brokers, she added, have said they see the newspaper’s properties uptown as “very attractive.”
However, finding a developer with the financial muscle to buy the Observer’s property could be tough, said Tom O’Brien, a senior vice president in the Charlotte office of Cresa, a national real estate firm specializing in representing corporate tenants.
He noted that the city of Charlotte has been struggling to sell some of its holdings in uptown in recent years, including a nearly 4-acre tract on Stonewall Street near Interstate 277, just a few blocks south of the Observer.
“Lots of people have been in discussions with the city over those properties,” he said. “But the valuation the buyers have been putting on those properties has not been in sync with the value the city has put on it.”
He added that unless a developer already has a corporate anchor tenant lined up, they will seek “discount” pricing on such properties in hopes of keeping expenses – and risk – as low as possible.
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