The proposed sale of a 15th Street office building on land owned by The Washington Post Co. has real estate developers urging the education and media giant to consider something much bolder: Selling its corporate headquarters and redeveloping the entire corner of L and 15th streets NW.
Carr Properties is trying to sell the 12-story, 144,000-square-foot office building that it owns and operates on the corner. The building once housed mostly Washington Post employees but now is largely leased to other tenants, including Oxfam America and the D.C. government.
The land beneath the building, however, is owned by The Post Co. and governed by a ground lease with some 30 years remaining on it. After more than five months since Carr first offered it for sale, the building remains on the market. “We had an interest in selling the building, and we’re still in the market as we speak, and are in the process of receiving and reviewing offers,” said Oliver T. Carr, III, president and chief executive of Carr Properties.
The building, which the city assesses at around $20 million, likely would be more attractive to buyers if not for the lease, according to John Sikaitis, director of research at Jones Lang LaSalle. “There is a certain kind of institutional investor that doesn’t want to deal with that,” he said.
That has prompted inquiries from developers about whether The Post Co. would be willing to include its land or buildings next door into a larger sale that could contribute to a major overhaul of the block. The Post owns three buildings adjacent to Carr’s, at 1150 15th St., 1515 L St. and 1523 L St.
Sikaitis said said that for developers, “if you could potentially work out some type of deal with The Post, the redevelopment opportunity would be enormous.”
“I would say there are probably some more astute developers who are approaching The Post and saying, ‘How about you move your headquarters to NoMa or Southeast in 2017, and we’ll redevelop the existing site,’ ” he said.
The headquarters, three blocks from the White House, contains much of the newspaper’s publishing division. In recent years, the unit, which includes Capital Business, has grappled with declining circulation and advertising revenue, and reported an operating loss of $25.6 million for the first nine months of 2011.
The company has sold off some real estate holdings in recent years, including a nearby parking garage and a printing plant in College Park.
“We look at our real estate situation from time to time, but we have no plans to change our current arrangements,” Post Co. spokeswoman Rima Calderon said in a statement.
Another local media company already is making such a move.
In 2008, National Public Radio opted to sell its headquarters on Massachusetts Avenue NW near Mount Vernon Square to Boston Properties for $119 million. Boston Properties is leasing the space back to NPR temporarily while it builds the broadcaster a new headquarters at 1111 N. Capitol St. NE. In 2009, the New York Times Co. sold a stake in its Manhattan headquarters for $225 million and leased the space back.
Gerald Trainer, a managing director at Transwestern, is marketing the Carr building and said The Post Co. ought to consider following NPR’s lead: “I think The Washington Post has an opportunity to do a transaction very similar to NPR whereby they relocate out of their old, dysfunctional real estate for a new functional office building at a location where the costs are much more competitive for the industry they are in.”
Of such a redevelopment proposition, Carr said, “certainly to the extent that an opportunity like that is available, we would be all over it.”
He said that the combined Post properties, which have little retail, likely would make a successful mixed-use project. “I would imagine a mixed-use redevelopment that would include both some office as well as some residential, perhaps hotel. It could add some vitality,” he said.