At 88 M St. NE, a proposed development behind Union Station, they found everything they were seeking. The building would be four blocks from the station and just more than a mile to the Capitol and the Supreme Court. It was a budding media hub, where NPR and CNN had opened offices. The project would be built by Skanska, the Swedish construction giant, which offered a novel solution for creating a large newsroom. And the cost was cheaper than more stately buildings downtown.
Everything was moving along. Then in early August, Jeffrey M. Zell, owner of a Georgetown real estate and consulting practice, went to meet with Donald E. Graham, chairman and chief executive of The Post’s parent company.
“I had lunch with him, and he just seemed to be a little out of sorts, and he had to leave early and take a call,” said Zell, whose firm had been retained by Graham. “And then I talked to him next Monday morning and I understood.”
Graham shocked the world — and his real estate team — on Aug. 5, 2013, when he announced the sale of The Washington Post to Amazon founder Jeffrey P. Bezos. After the sale, 88 M St. fell out of the picture, and a Post real estate hunt took a dramatic turn.
As soon as he acquired the company, Bezos needed to find a new home for it. He’d bought a then-136-year-old Washington institution with a legacy brand, but with financial troubles. Its future depended on it emerging as a digital media company with a global audience.
The city around it was fast-changing, too. In the past decade, the District added a new Red Line Metro stop (called NoMa-Gallaudet) north of Union Station where federal agencies and media companies had already settled in. A $2 billion waterfront development was underway in Southwest. And Nationals Park anchored a booming new district in Southeast.
For decades, The Post had a foothold in the power vortex of downtown Washington — a short walk from the White House and in the center of the city’s business community as well as its legions of lobbyists and policymakers.
The current buildings went up more than 40 years ago and were big enough to accommodate a printing plant and store reams of paper. By 1999, The Post had stopped printing the paper downtown. (The operation first moved to College Park. It’s now printed at a plant in Springfield.) Dated and inefficient, the buildings were up for sale. Bezos declined to buy them.
“If Bezos had wanted to buy the building for a fair price, we would have sold it to him,” said Ann McDaniel, a former Post Co. executive, “but he decided against it.”
The search wasn’t just about a particular address but also about creating a modern newsroom. The industry has transformed. Stories are published, broadcast and tweeted at breakneck speed, but the old newsroom wasn’t designed for the type of collaboration that’s now required.
“Journalism today is not a solitary venture,” said Martin Baron, The Post’s executive editor. “Reporters and their editors work intimately with videographers, photo editors, interactive graphics specialists, designers and technologists.”
Bezos entered a real estate market still stinging from the Great Recession and hard up for companies looking to lease big chunks of space. While downtown properties retained the highest lease rates, dozens of developers in emerging neighborhoods struggled to fill the buildings they planned; others dropped rates to hold on to existing tenants.
There were lots of options: lease vs. build, modern vs. retro, D.C. or its environs, urban core or hipster flair. The Washington Post serves readers, advertisers and business partners, and it was a trick to find a place that would meet every need.
In the end, Bezos flew to Washington to decide for himself and steered the hunt in a new direction.
By any standard, this was a true Washington real estate adventure. By the time the company moves, in mid-December, nearly all the people who began the hunt will have departed The Post.
Zell, who has been in real estate since 1979, says he’s never seen anything quite like it: “I spent more time on this deal than on any other I’ve done in my life.”
A changing landscape
At first, the idea was to save money. Other newspaper companies battling through a difficult business climate had already cashed in their real estate: The New York Times Co. sold and leased back space in its new Times Square headquarters. The McClatchy Co. sold the Miami Herald’s headquarters property for $236 million in 2011. The headquarters of the Detroit Free Press and Detroit News was put on the market.
Seeking stability in an unsteady economy, investors had begun parking their money in Washington real estate. Even though a lot of companies weren’t expanding, values were on the rise.
McDaniel, who is now a consultant for Graham Holdings, said that as a publicly traded company that owned a financially struggling newspaper, sitting on that value no longer made sense. “Owning the building wasn’t the most effective use of our assets for our shareholders,” she said.
“Don kind of said, at the end of the day, if we could figure out how to end up with a $75 million gain, that he would go ahead and execute the sale of the building,” Zell said. “So we started crunching numbers.”
The Post owned three connected buildings near the corner of 15th and L streets, as well as the land under a fourth. A buyer could build about 900,000 square feet of new space, a rare opportunity.
“If you looked at what’s going in Washington, there weren’t that many development sites left in the downtown or the east end,” said Arthur G. Greenberg, a broker from the firm Savills Studley, which was also hired by The Post. “The three buildings were in need of repair. They were dated. It just appeared that the site was ripe for redevelopment.”
But, if The Post’s leaders wanted to sell their buildings, they would have to figure out where to go. The possibilities of remaining at 15th and L, or moving temporarily and returning, were dismissed because of costs and logistics.
“A move will make good operational and economic sense,” Katharine Weymouth, the publisher, wrote in a staff e-mail in February 2013. The goal, she said, was “to give us a more modern, bright, open and efficient building that better supports and advances our mission into the future.”
Bezos and Weymouth did not respond to requests for comment for this article.
The Post surveyed employees and found that their homes were almost evenly split among Maryland, Virginia and the District, McDaniel said. The team also approached local officials about the possibility of tax breaks or incentives.
One option was to move to Northern Virginia. Gannett, owner of USA Today, was in Tysons, and Politico was in Rosslyn. The Washington Post Co. also owned the for-profit education company Kaplan, which faced scrutiny by Congress; moving to Virginia would provide cheaper real estate and voting representation in Congress.
“Our education, television and health-care businesses are highly regulated and as such we wanted to make sure that those interests were represented in Congress,” McDaniel said. “Don felt it would be important.”
But going to Virginia or Maryland would also require separate space downtown for reporters covering Congress and the White House.
Northern Virginia “was ruled out early in the process due to the duplicative costs associated with having a newsroom in both D.C. and Virginia,” said Usha Chaudhary, former chief financial officer of The Post.
For a company in need of as much as 350,000 square feet, there are only so many options. But as the District tried to shake off the recession, office vacancies were well above average, driven up by government cutbacks and private sector downsizing. This was a good moment to move.
More than a dozen developers proposed a “build-to-suit” — or customized — headquarters for The Post in the city’s emerging areas: Mount Vernon Triangle, NoMa, Southwest and the area around Nationals Park (dubbed Capitol Riverfront). Rents were still below pre-recession levels.
The neighborhoods beyond downtown enticed The Post’s leadership for other reasons. Perhaps no city in the country was changing as quickly as the District, with new restaurants, bike paths, parks and shops opening at a record pace.
To Weymouth and her team overseeing the search, moving to an up-and-coming part of the city felt like the right move for an organization looking to reinvent itself as a new media company. A few months after The Post began its search, NPR opened a splashy new $201 million headquarters in NoMa. CNN and SiriusXM Radio were already there.
“Initially, we were drawn to NoMa because it would have given us a cost-effective solution with maximum flexibility in designing our space in a build-to-suit construction, while also helping a developing neighborhood in the District come alive,” Chaudhary said.
Among the offerings in NoMa was 88 M St. Located about a block from NPR, the project had the capacity for larger floors that would allow The Post newsroom to fit on just two levels, a priority for Baron.
Very few downtown buildings had the girth to accommodate that. In fact, modern design typically calls for buildings that are narrow, which allows for more efficient workspaces with more natural light.
The search was narrowing. Then, boom — the sale to Bezos. Those wondering why Graham hadn’t played more of a direct role in identifying the newspaper’s new headquarters had their answer: He wasn’t going. The real estate contractors selling the building found out hours before Graham told his staff.
Greenberg, who grew up in Wheaton, said that “even if we weren’t involved in the sale, we would have been surprised.”
The Bezos way
In the next three months, Graham closed two sales: The Post to Bezos for $250 million and The Post buildings to Carr Properties for $159 million. Graham quickly moved the offices for his new company, Graham Holdings, to Rosslyn.
Weymouth’s team and representatives from Bezos’s private investment company, Nash Holdings, again began scouting locations for The Post.
In Seattle, Amazon is gobbling up office buildings so quickly that it is on pace to soon occupy 10 million square feet, or one-quarter of the market’s premium downtown space. It fills more than a dozen buildings already. And in a reflection of the competitive landscape for tech talent, Amazon is building a new headquarters in the South Lake Union area of Seattle that has been described as a “futuristic new inner-city home,” one that will feature three 38-story high-rise towers, two midsize towers and three 95-foot interconnected glass biospheres. The campus will be serviced by a dog park, two-way cycle track and
a streetcar line that the company helps fund.
Bezos’s aspirations for the headquarters of The Post, a far smaller company, were more modest. Members of the search team, including a representative from the global architecture firm Gensler, flew to Seattle to tour some of Amazon’s offices. Among the main takeaways were the need to use space efficiently by having fewer offices and dedicating less space per square foot to each employee.
Shortly thereafter, the parameters of The Post search shrank, first below 290,000 square feet and then below 250,000. The Virginia question was also raised again: If real estate was cheaper there, why not consider it? Or what about 1015 Half St. SE, a 10-story building near Nationals Park that had been vacant for more than two years despite bargain-basement rents?
“One discipline Bezos brought in was money,” Zell said. “They were counting every nickel.”
After a second round of winnowing, the team settled on three finalists toward the end of 2013: two downtown buildings with large blocks of space available and 88 M St., their preference. The developer of the project, an American unit of Skanska, the Swedish construction giant, had designed a large two-story newsroom by expanding those floors to a second building. The company promised a quick time frame — a critical factor because Graham had sold the existing buildings.
Bezos flew to town to make the final call. So in January of last year, the man who is the fifth-richest in the world, piled into a shuttle bus with the real estate team for a tour.
They saved 88 M St., their preferred option, for last, but the strategy didn’t pan out. Whereas the other sites were already built, this was a parking lot on a stretch of NoMa that felt particularly lonely that day. It had little visibility or prestige. And it lacked variety as far as restaurants and services. Zell said Bezos didn’t appear to be feeling it.
“He saw it as a lot of empty holes, not urban-istic,” Zell said. “And from his perspective, it was just not where a prominent newspaper should go.”
With the District in such a dramatic period of expansion, other companies are faced with similar decisions about whether to take a chance on promising but unproven neighborhoods. A move to NoMa or the area around Nationals Park might appeal to a fast-growing millennial workforce, but it could hinder access to other employees, customers and business partners.
“Seeing The Post stay in the center of the city isn’t surprising because there is a lot of history there. There’s a legacy,” said Matthew A. Coursen, a broker at the firm JLL who represents companies making real estate decisions. “There is a lot of tradition that isn’t going anywhere overnight. So I didn’t expect something radical.”
Frederick J. Ryan Jr., who replaced Weymouth as The Post’s publisher in October last year, said Bezos wanted a downtown location. “It was important to him for us to stay in the center of the city, in the center of the District,” Ryan said.
Bezos first chose 1099 14th St., a downtown building, but the companies couldn’t come to terms. His final choice was around the block: 1301 K St., a 12-story building completed in 1989 for high-end legal and professional service companies. Its three-story vaulted lobby is finished in marble.
Called One Franklin Square, the Reagan-era project has dual towers overlooking Franklin Park on one of the highest points in downtown. The Post signed a 16-year lease for floors four through nine of the west tower and seven and eight on the east tower, which will allow the newsroom to traverse the two wings.
After looking far and wide, The Post will move three blocks from its old address.
A new model for news
Hines, the Houston-based real estate firm that owns the building, won The Post deal by agreeing to make major construction and design upgrades.
“Right now, media is going through this seismic shift,” said Sumita Arora, senior associate at Gensler, the firm The Post hired for its headquarters design. Arora has designed the Washington bureaus for the Associated Press, the New York Times and the Los Angeles Times. The firm is also designing the new Time Warner headquarters in Lower Manhattan.
“There is such an increased need for collaboration, for companies to have the agility to have teams of people react to news quickly and disseminate it on many different technologies,” Arora said. “The design of the media workplace needs to support the fast creation and dissemination of content.”
Much in demand now: Open, bullpen-like newsrooms where collaboration and teamwork are encouraged. Twenty years ago, a newsroom might dedicate 60 percent of its space to an open bullpen and 40 percent to private offices. Now, Arora says, she is designing for splits closer to 90/10 — such as for The Post — and in some cases, 100/0.
“The print newspaper is only one place we publish,” Baron said. “We also have to imagine how our stories will appear to readers on smartphones, tablets, laptops, desktops and even watches — and we have to think through the varied ways they acquire news and information throughout the day. All this requires a physical setup that promotes the rapid exchange of ideas. And that’s what we’re looking for in the newsroom we’re building.”
The Post employs 250 engineers, in New York, Reston and Washington, but the Washington engineers are mostly not in the newsroom. At 1301 K St., many will be in the mix. Also, the newsroom will have four live-shot sets for television spots. And desktops as well as monitors around the room will display real-time analytics about how stories are performing on multiple platforms.
Although The Post has rapidly added to its staff, the company leased 242,000 square feet — 100,000 less than once envisioned — and it insisted on efficient use of space to make it work. One challenge of retrofitting a 25-year-old building was working around hundreds of structural pillars that wouldn’t exist in newer buildings.
Gensler addressed this by creating 20-foot-by-20-foot pods of workers who, though sitting at benchlike desks, will be at 90-degree angles to adjoining pods so there aren’t titanically long rows of benches.
Hines rearranged the lease of another tenant, the law firm Reed Smith, and knocked down the walls to the east tower on the seventh and eight floors to create two 60,000-square-foot floors that can accommodate all 700 newsroom employees. (Most of The Post’s operations will be in the building’s west tower.)
Hines cut three holes in the ceiling and added a staircase between the seventh and eighth floors to unite the newsroom.
It agreed to build a two-story auditorium on the fourth floor where Washington Post Live, the company’s conference business, can hold events.
And it agreed to strip the old facade off the southern face of the newsroom floors so top editors will have nearly floor-to-ceiling glass, enhancing their views of Franklin Park.
The metal signage outside The Post’s current headquarters will adorn the welcome area on the fourth floor at 1301 K St., and a new sign will go up on the facade of the west tower.
For The Post, the deal was complicated but sweetened when Carr Properties landed a new headquarters lease for Fannie Mae, provided construction could begin by January 2016. The Post was offered a hefty financial incentive — one source put it at eight figures — to move out by mid-December.
Ryan declined to disclose The Post’s rent or the amount of the incentive from Carr. He said he is planning to hold goodbye events on 15th Street to celebrate the building’s history and a grand opening on K Street.
“Everyone said let’s build this out for as long into the future as we can possibly imagine,” Ryan said.
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