Desert Sun is gearing up for sale again, this time for $ 12.9 million
Just months after being sold to a Los Angeles-based real estate group, The Desert Sun’s headquarters at 750 N. Gene Autry Trail is back on the market.
The owner, Industrial Realty Group LLC, is offering the entire building for $ 12.9 million, more than $ 5 million more than the price asked by the newspaper’s parent company, Gannett Co., last October. The new owner is also exploring options to keep the property and lease all or part of the building to new tenants, according to the company’s listing agent, Polo Doria of Lee and Associates Commercial Real Estate.
“I throw a net wide and wide in all of the western states for a group that fits well,” Doria said. “It is a very unique building in our market, part office, part warehouse.”
Built in 1989, the two-story building spans 9 acres and contains over 86,000 square feet of rental space across from the Palm Springs International Airport. The Desert Sun is currently the only tenant in the building and occupies part of the offices on the second floor.
The Banning Museum of Pinball had previously expressed interest in renting the building, but the time and money required to transition to the new space proved too important for the nonprofit organization.
Doria said it is targeting potential business tenants looking for new regional headquarters, think tanks, educational institutions or even specialty retailers like IKEA. He noted that the new owner was “quite capable” of expanding or renovating the building to meet the needs of the right buyer or tenants.
Industrial Realty Group, or IRG, specializes in the purchase and reallocation of industrial facilities and other specialty properties such as military bases for wider commercial use. He purchased The Desert Sun building as part of a portfolio of several Gannett properties, according to Bruce Haas, a partial owner of IRG serving as a consultant on the Desert Sun construction project.
Haas said the $ 7.5 million price for the property initially quoted by Gannett does not necessarily reflect the value IRG would have recognized for the purchase on its balance sheets.
“Let’s say the total purchase price (of the wallet) was ‘X’,” Hass said. “They split that up and came up with an internal allocation. This internal allocation might be different” from the value Gannett assigned to The Desert Sun property.
That, Haas suggested, may partly explain the discrepancy between the reported May selling price of $ 7.5 million and IRG’s asking price of $ 12.9 million four months later.
Haas said he wasn’t sure exactly how many properties were included in the purchase of the portfolio, but said the total price was likely “around $ 100 million.” He referred further questions about the wallet purchase to IRG.
Tom Messmer, vice president of special projects at IRG, said that, to his understanding, the other portfolio properties purchased from Gannett were also former newspaper buildings in “a similar position” to the Desert Sun building. He said one of the papers was located in Florida and the Desert Sun building was the only West Coast property in the portfolio, but that he did not know the details of the rest of the portfolio.
Other IRG representatives did not respond to requests to provide more details about the purchase. A representative for Gannett did not immediately respond to a request for comment.
Another factor in the price hike, according to Hass, is work already done by IRG to remove printing presses and other specialized equipment from the Desert Sun building.
Messmer, who led the work on the moves, said his company had spent the last few months cleaning specific equipment for building logs.
“All the mailroom equipment is gone,” Messmer said. “The press is about two-thirds away.”
Messmer said that once the printing equipment is removed, no additional work will be done on the building until a suitable tenant or buyer is identified.
“There is no way to guess what tenants want,” he said.
Messmer declined to say if a new buyer could demand The Desert Sun move. He noted that “most of the plans I made were for a multi-tenant building.”
“The building divides very well to be multiple offices,” he said. “I hope all future tenants will want to adaptively reuse what’s in there.”
James B. Cutchin covers business in the Coachella Valley. Contact him at [email protected]