Posted on Thu, Jan. 26, 2012

The Miami Herald Media Company announced plans Thursday to move its headquarters to a Doral building that once housed the U.S. Southern Command. The company will build a new printing plant on property it is buying next door.

The Herald — publisher of newspapers, websites, multimedia content and magazines in English and Spanish — signed a 15-year lease on the two-story office building, which will house its business and news operations. Construction is expected to begin on the printing plant in April; the move is slated to be completed by May 25, 2013.

David Landsberg, The Herald’s president and publisher, told employees that they should view this move as a sign of confidence in The Herald’s future.

“McClatchy fully believes in us and they obviously understand the opportunity that exists in this marketplace,” Landsberg said, referring to The Herald’s parent company. “Let’s thank McClatchy for the investment and faith they have shown in us.”

The new location at 3511 NW 91st Ave. encompasses 15 acres in the Westpoint Business Park in Doral, four miles west of Miami International Airport. The purchase of the land is expected to close within the next several months. Blanca Commercial Real Estate President and CEO TereBlanca represented The Herald on the deal.

Long search

The Herald has been searching for a new home since its corporate parent, the McClatchy Co., sold the 13.9-acre downtown Miami Herald property on May 27, 2011, for $236 million to the Genting Group, which hopes to build a $3.8 billion destination resort with a casino. The Herald has the right to remain at its current location rent-free until May 2013.

The 108-year-old media company has called the location on Biscayne Bay home since 1963, and many business leaders wanted the company to remain in Miami’s central business district.

But Landsberg said finding sufficient office space in that area wasn’t possible given the company’s budget and the need for extensive — and preferably free — parking. The company also considered separating its offices from its printing operations, but was unable to locate existing warehouse space in Miami-Dade or Broward counties large enough for The Herald’s printing presses.

“It would not be smart to saddle this company with occupancy costs that did not make sense,” said Landsberg, who estimates costs would have been about double in the downtown area over what the company will spend. “We needed a great place to be, but we also needed it to be a cost-effective place to be.”

Office space in the airport area, which includes Doral, averages $24.79 per square foot, while similar space in the Downtown Miami area costs about 30 percent more, averaging $36.33, according to research by Jones Lang LaSalle, an office brokerage firm not involved with the deal. Parking in downtown adds additional costs that can be as high as $6 more per square foot.

“When you’re looking for 150,000 square feet and that many employees, it’s really cost-prohibitive,” said Jonathan Kingsley, senior vice president with Jones Lang LaSalle. “I think it comes down to costs and logistics.”

The move comes at a time when the newspaper industry has struggled with changing media consumption habits and declining revenues. Landsberg said The Herald’s total reach has increased thanks to multimedia distribution.

The Miami Herald has 732 employees, including 20 who work in a Pembroke Pines office and will not be affected by the move.

The Southcom site allows for office and production facilities in the same location, direct access to two major highways, nearby restaurants and shopping, and a building designed to withstand the toughest of potential hurricane conditions, Landsberg said. The deal to purchase the adjoining land also includes three generators that can run some of The Herald’s presses in an emergency.

The city of Doral has long been considered a corporate business hub with more than 9,000 businesses and several Fortune 500 companies. Carnival Cruise Lines, Ryder and Perry Ellis International are among those with headquarters in the city. With a commercial population that grows to more than 150,000 employees daily and a residential population that more than doubled from 20,000 in 2000 to more than 45,000 in 2010, Doral is one of South Florida’s fastest growing cities.

Pat Talamantes, McClatchy’s vice president and chief financial officer, said terms of the land purchase and the cost of building the new plant will be disclosed by McClatchy next week in a filing with the Securities and Exchange Commission.

The company holds $6 million from the Genting purchase in escrow to offset the moving costs, Talamantes said. The company used $165 million from the sale to fund pension obligations; the remainder was used to pay outstanding debt associated with McClatchy’s 2006 acquisition of Knight-Ridder, The Herald’s former parent.

“Because of the work you’re about to embark on, you’ve enabled us to make our company stronger,” Talamantes told Herald employees.

The Doral site is one of several The Herald has considered since selling its property eight months ago. The company initially favored the site of the former Bertram Yacht headquarters, just east of Miami International Airport on Northwest 37th Avenue and 21st Street. That deal, which would have involved build-to-suit construction of a joint office and production facility, ran into problems over financial terms.

Ultimately, The Herald decided the best move to meet its financial and time constraints was to lease existing office space and build the plant itself, Landsberg said.

“The advantage to buying the land and building the plant is that it gives us 100 percent certainty that this will happen from a financial perspective,” Landsberg said. “Given our timeframe, we could not allow something to happen that could delay our having a place to go. We wanted to be completely in control of our future.”

The new offices will be in a 158,000-square-foot building that is owned by GPA-1, LP of Memphis. The building housed the U.S. Southern Command until it moved into new adjacent headquarters in 2010. The landlord will provide The Herald with an allowance to cover the costs of gutting the interior.

Three of The Herald’s existing presses will be retrofitted and relocated to the new production building, east of the office building, Landsberg said. The three-story, 119,000-square-foot production facility will be built using pre-fabricated panels. Site work is expected to begin in late March; the company plans to begin installing the presses in December 2012.

“It’s really tight to do what we want to do, but it’s really doable,” said Craig Woischwill, senior vice president of circulation and operations for The Miami Herald.

The new plant is expected to allow The Herald to improve its printing quality and approximately double the amount of color pages. In addition to The Miami Herald and El Nuevo Herald, MHMC prints and distributes The Wall Street Journal, New York Daily News, New York Post and El País, among others.

Modern newsroom

The new offices will allow The Herald to create a newsroom for the digital age, Miami Herald Executive Editor Aminda Marques Gonzalez said.

“We’ll be able to build a modern newsroom around a central hub that truly integrates our multimedia operations, including our print, website, radio, video, mobile news and tablet platforms,” Marques Gonzalez said. “We’ve been visiting and studying other newsrooms to incorporate the best ideas around the country into our new space.”

Manny Garcia, El Nuevo Herald’s executive editor and general manager, said “The move signifies an important investment in our community, South Florida and the region.

“There is no place more exciting to be a journalist than here, and this decision is the clearest sign that we are here to stay.”