The Billings Gazette will sell its downtown headquarters, listing the 54-year-old building for $7.865 million Wednesday.
"This decision is being made simply because the building is too large for our current needs," said Dave Worstell, the Gazette's president and publisher.
The entire top floor of the 94,000 square-foot building, which once housed the paper's circulation and accounting departments, is now largely empty. The accounting department was the last to move out two years ago when its services were consolidated out of state by Lee Enterprises, the Gazette's owner since 1959.
The ground floor houses the Gazette's newsroom and advertising department, both of which have significantly condensed over the last decade through retirements and buyouts. During that time the Gazette has worked to adjust to abrupt changes in the traditional newspaper industry and to expand its online operations.
In 2007, the Gazette added a new wing to the building to house a new production system that slipped advertising inserts into the daily paper. As circulation of the physical paper has dropped over the years and the Gazette has moved to an increasingly robust online operation the need for the insert machine has diminished.
The Gazette's printing operation and press, which occupies space on the ground floor and basement, could be part of the building's purchase. Should that happen it would likely cause the elimination of press-related jobs.
"The sale of the building, when it happens, will not affect the news and advertising operations of the Billings Gazette," Worstell said. "At some point, the sale will change our local printing and production operation, and this will have an impact on staff."
With its listing, the Gazette building enters a commercial real estate market in downtown Billings that has seen an active summer but that historically has been a mixed bag. Retail and residential space recently has been more popular than business and office space, said David Goodridge, a commercial real estate broker in Billings.
Right now downtown Billings has an office vacancy rate of just over 24%, according to CoStar Realty Information.
"It's probably going to be a hard sell," Goodridge said of the Gazette building.
Widmyer Corp., based in Coeur d'Alene, Idaho, recently bought three downtown buildings and is currently working on a purchasing a fourth. The company plans to develop the buildings into residential and retail space.
In July, the City of Billings started negotiations to purchase the five-story Stillwater office building, which has had two owners since it was sold by the federal government in 2013. It's sat mostly vacant for almost a decade. Currently, Yellowstone County's administrative offices occupy the third floor.
If it doesn't end up selling to the city, it'll likely sit empty for another five or 10 years, Goodridge said.
"Active buyers of office space? You're seeing the activity," Goodridge said. "It's the county and city."
Most real estate investors right now are looking for a relatively quick return, he said. As a result, speculative property — space that isn't already outfitted for a specific use — doesn't sell as fast as those properties that are built out.
"Speculative stuff is hard to sell right now," he said.
Worstell believes the Gazette building is marketable, adding that the Gazette has been approached many times over the last year by interested buyers. A local broker with Berkshire Hathaway Commercial Services has the listing; Lee Enterprises purchased Berkshire Hathaway's news group, BH Media, in January 2020.
"Because our building is underutilized and offers more space than we currently need, we felt like the time was right to explore a sale," he said.
Even with a potential sale in the offing, leadership at the Gazette hopes to retain the news organization's downtown presence.
"When the time is right to move locations, we will look for a new downtown Billings location that is the correct size for our operations and has convenient access for our customers," Worstell said.
The Billings Gazette has been in operation for 136 years and during that time it's gone through many changes, Worstell said. He expects that won't change as it moves into the future.
"Financially, the Billings Gazette is in good shape. We are very optimistic about our future as the preeminent news provider in the city, region and state, and a partner in helping local businesses connect with customers through our digital and print marketing products," he said. "The Billings Gazette will be serving the communities that depend on us for news and information for many, many years to come."
The support that's come from those communities has been one of the most important elements of the Gazette's success.
"Our readers and advertisers have always been supportive as we have made changes and we appreciate them very much," Worstell said.