The News: In Pinch, Newspaper Turns to Real Estate for Help
- Mar 17, 2009
A falloff in advertising and competition from online information sources have written themselves into tough economic times for many newspapers. But one newspaper, The Miami Herald, recently dug up some economic relief in a major lease deal at its headquarters, located on Biscayne Bay.Brown Mackie College announced on March 11 that it will lease 50,000 square feet at One Herald Plaza, from the paper’s parent, The McClatchy Co. The 10-year deal is valued between $18 million and $20 million, based on current Downtown office rental rates.The lease will have a powerfully positive effect on the paper’s bottom line, said Alan Kleber, co-manager of Cushman & Wakefield of Florida’s tenant advisory practice. If the operating expense for that space were, for example, $12 a square foot, it would cost McClatchy $600,000 per year. But a lease for $30 a square foot means that the 50,000 square feet would instead generate $1.5 million per year.Corporations might formerly have said that leasing part of their headquarters was off-limits, but executives are now considering multiple revenue streams, Kleber said. “Nothing is sacred,” he said, noting that The New York Times recently sold part of its headquarters for $225 million and leased it back. In the meantime, Hearst Corp.’s Seattle Post-Intelligencer published its last issue today, and Denver’s Rocky Mountain News , owned by The E.W. Scripps Co., did the same Feb. 27.In one of Kleber’s recent deals, a landlord had originally asked for a $44- to $46-per-square-foot rental rate but settled for $32 and included generous tenant-improvement allowances. Many tenants are also landing free-rent provisions, as much as one year on a 10-year lease. “One or two years ago, I would have been laughed at if I asked for that,” Kleber said. “It’s like night and day.He reported that the Miami office market is increasingly volatile, influenced more by the most recent lease than by long-term metrics. Shaping sentiment on the landlord side are three new Downtown buildings, totaling 1.7 million square feet and set to open in 2010. None of them have signed an anchor tenant.