The Washington Post
Highest and Best Use Analysis
Disposition Process Management
Negotiation and Offer Analysis
Lease Negotiation Process
Construction Project Management
The Washington Post Company/Graham Holdings retained JM Zell in June 2011 to assist it with strategic real estate consulting services regarding its Northwest headquarters property at 1150 15th Street and the possible acquisition of a new headquarters building.
JM Zell was tasked with evaluating and determining highest and best use for the existing Northwest headquarters property, making a fair market value assessment, evaluating and determining long-term space utilization, operational and ownership interest requirements and formulating alternative real estate strategies.
Concurrently, JM Zell educated senior management about the state of the Washington area real estate market with a focus on possible disposition of the headquarters buildings.
JM Zell analyzed the state of the downtown market, applied highest and best use analyses, and explored various disposition options for maximizing the value of the property. JM Zell conducted a detailed review of the headquarters property to ascertain critical data specific to the potential of the three-building headquarters.
This highest and best use evaluation focused on the buildings’ physical conditions, size, permitted alternative uses, redevelopment potential and curb appeal. JM Zell retained a team of consultants to intensively evaluate the site in areas such as zoning, environmental, title, and master planning architecture.
The Post decided to market for sale its 470,000 sf Washington, DC headquarters to unlock the value of its real estate asset. The property had a 738,700 FAR sf of redevelopment potential in a prime location just four blocks from The White House. It was the largest available development site anywhere within Washington’s Central Business District, East End, and West End areas.
The challenge was to find a buyer with the financial capacity to purchase the land for redevelopment at FAR (developable square footage) market value, all at one time, despite having no pre-commitment from large end users – something that had never been done in this market.
The opportunity attracted active interest from developers and end users. Carr Properties, owner of the adjoining building at 1100 15th Street, NW which was subject to expiration of the underlying ground lease held by Graham Holdings Company, recognized the value in unifying the sites.
JM Zell negotiated a single transaction with Carr Properties including the ground leased portion, which was not part of the original offering. The deal included a short term leaseback for Graham Holdings Company operations. In March 2014, Carr Properties closed on the entire 840,000 FAR sf of combined development rights including the corner ground-leased property for FAR market value, making it the largest land sale in the District. Less than a year later, Carr Properties signed a long term lease with Fannie Mae for nearly the entire buildable area.
In 2013, JM Zell performed an extensive market search in Washington, DC and Northern Virginia. The Washington Post decided that remaining in the District was a high priority. JM Zell led a competitive request for proposal process resulting in approximately 37 qualified responses ranging from existing buildings to build-to-suit projects.
In the midst of the property search process, Graham Holdings sold The Washington Post to Jeff Bezos, founder of Amazon. The company then shifted certain objectives and JM Zell created an updated strategy to fulfill the new owner’s objectives.
The Washington Post narrowed the prospects and conducted extensive negotiations with various owners, including Hines Interests. Ultimately, 1301 K Street was selected as it met The Washington Post’s criteria for both value and efficiency.
The new space reflects The Washington Post’s future, working to integrate both traditional newspaper and digital publishing. With a new space design and greater amount of conference area, the building features an open plan environment with collaborative work spaces, which promotes a more dynamic work environment.
The Washington Post will remain in the neighborhood that it has called home for more than 50 years, a tremendous benefit for neighborhood restaurants, bars, and retail shops. The building’s proximity to Metro aligns with staff transit needs, and offers reasonable access to political reporting locales. Further, the District kept one of its most important iconic institutions.
JM Zell was able to align the sale with the timing of the new headquarters occupancy. In addition to negotiating the lease, we provided project management services for design, construction, and relocation.