Media giant Gannett Co., parent of The Arizona Republic and azcentral.com, is selling its 10-story office building and parking garage in the heart of downtown Phoenix.
ViaWest Group, a Phoenix-based real estate company, is the buyer, according to an announcement Wednesday by Greg Burton, Republic executive editor.
Gannett did not disclose the sale price. Public documents on the sale were not yet available.
Republic and azcentral.com offices will remain in the building at 200 E. Van Buren St., located at the same corner where The Republic has been based for generations.
The building, as well as the parking garage a block north, is under contract, according to Burton's announcement. The sale is expected to close in late September, and Gannett will begin a lease arrangement at the property, Burton said.
The McLean, Virginia-based company owns more than 120 U.S. media organizations, including USA Today.
The Republic and two other companies share the 250,000-square-foot building, which was completed in 1995. KPNX-TV (Channel 12) and digital marketing company G/O Digital, both owned by Tegna Inc., will continue to occupy space in the building in accordance with their leases, according to the announcement.
“The Arizona Republic has been a cornerstone of the Arizona news landscape for decades and we remain dedicated to Arizona, our partners and communities. This building is a wonderful part of our history, but this is an opportunity to modernize our day-to-day environment and consolidate operations to spaces more adaptable to digital growth and innovation,” the statement to staff said.
Many corporations sell office properties or other real estate, then lease back the same buildings or move into rented space elsewhere.
Such deals generate cash that a company can invest in its core business. Some entities might not need as much space as they did in past years because of new technology, flexible work scheduling, telecommuting and downsizing.
Gannett’s roughly 15,300 U.S. employees occupy 12.8 million square feet of space around the nation, of which 3.5 million square feet, or more than one quarter, is leased, according to company statements.
“Many of our local media organizations have outside news bureaus, sales offices and distribution centers that are leased from third parties,” Gannett said in its most recent annual 10-K financial report.
The leased space includes Gannett’s corporate offices in Tysons Corner, Va., which were purchased by a London-based real estate group in 2015.
In recent years, Gannett has sold newsroom buildings and relocated staff to new facilities in Indianapolis, Nashville, Memphis and other cities.
Other newspaper companies have done the same, in cities including Boston, Cleveland, Houston, Miami and Philadelphia.
During the past few years, ViaWest has purchased and developed more than $350 million in commercial real estate across metro Phoenix.
In March, the group paid $34.25 million for the Blackhawk Corporate Center in northwest Phoenix’s Interstate 17 corridor, where ViaWest owns two other sizable office projects.
In May 2017, ViaWest teamed with a Chicago capital partner to pay about $30 million for The Monroe Building at 111 W. Monroe St. in downtown Phoenix.
The deal for that 255,000-square-foot office building, which was developed in the 1960s, broke down to about $117 per square foot.
“Arizona State University has made a large impact on downtown Phoenix’s office market,” said Pete Bolton, a longtime Arizona commercial real estate expert. “The school, along with light rail, are drawing more companies and talent to the area that will boost office absorption even more.”
Phoenix Newspapers Inc. built the parking garage in 1989 and the Republic building in 1995. That year, employees began moving across the street from the newspaper's earlier headquarters at 120 E. Van Buren St.
Publicly traded Gannett purchased PNI's parent, Central Newspapers Inc., in 2000.
In 2011, KPNX-TV, which was owned by Gannett at the time, moved into the building and its news operations were joined with The Republic and azcentral.com.
Channel 12 offices and studios remained in the building after the companies split in 2015, when Gannett Co. was spun off from Tegna.
The midrise was the first office building developed in downtown Phoenix during the 1990s, when the area was struggling to rebound from a business exodus to the suburbs in the 1980s.
Downtown Phoenix’s office market has rebounded with the area’s growth. The average office vacancy rate for the area is about 14 percent, according to Colliers International.
The overall office vacancy rate for metro Phoenix is almost 16 percent.
The biggest office sale in central Phoenix this year was the $80.7 million deal for the former Viad Tower at 1850 N. Central Ave. That sale broke down to about $166 a square foot.
Chase Tower, the tallest office building downtown, sold earlier this month for about $79 million through a foreclosure deal.