The Seattle Times Co. has sold an eight-story South Lake Union office building to California real-estate investors and will become the building's prime tenant, vacating the nearby building that has been its headquarters for 81 years.

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The Seattle Times Co. has sold an eight-story South Lake Union office building to California real-estate investors and will become the building’s prime tenant, vacating the nearby building that has been its headquarters for 81 years.

The 1000 Denny Building was purchased this week for $36 million by an affiliate of Simms Commercial Development of Beverly Hills, public records indicate. It was one of two properties The Times put up for sale in 2008, saying it needed cash to pay down debt and subsidize its flagship newspaper, which, like most dailies, is struggling financially.

The sale “contributes to our financial stability,” Times Publisher Frank Blethen said in a message to employees Thursday. The Times had been asking $44 million for the property in recent months, according to offering materials.

Blethen said his company, which already occupies part of the Denny Building, would move its newsroom, executive offices and other operations now housed at its headquarters at 1120 John St. to the building. The Times is hoping to complete the move by the end of the year, he said.

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The newspaper will occupy about 55 percent of the Denny Building’s 285,000 square feet. The lease is for 10 years, with options to extend, said Times spokeswoman Jill Mackie.

The remainder of the 82-year-old building, at Denny Way and Boren Avenue North, is leased to other tenants. The sale includes space occupied by the venerable 13 Coins restaurant.

While there are no immediate plans for the Times’ full-block headquarters building, Mackie said the company hopes to one day redevelop the property, perhaps in a joint venture with a development firm.

The timing and type of development, office or residential, hinge on zoning and the market, she said.

One potential complication: the exterior of the oldest part of the building, at Fairview Avenue North and John Street, has been designated a historic landmark, and significant changes would require city approval.

But South Lake Union has become a development mecca in recent years. Vulcan Real Estate is completing a 1.7-million-square-foot headquarters complex for Amazon.com on blocks north and west of The Times’ property.

And last year Touchstone, one of the region’s most active developers, bought most of the block just east of The Times’ headquarters.

Current zoning limits building heights to 85 feet, but the city is considering changes that could allow structures up to 300 feet tall on the headquarters property.

“I think it has terrific potential,” said Jim Bowles, senior managing director in the Seattle office of brokerage CB Richard Ellis. The site has good access to downtown and Interstate 5, he said, as well as good views to the north and west.

“There’s a sense of gravity pulling people and retail and investment to South Lake Union,” Bowles said. “There’s so much going on there.”

In addition to the 1000 Denny Building, The Times also is trying to sell the block just north of its headquarters that is dominated by the mostly vacant Troy Laundry building. A sale is pending, according to the Commercial Brokers Association database.

For a time the company also listed for sale a full block, mostly parking lots, bounded by Denny, Boren, John and Fairview. But The Times took that prime parcel off the market after renegotiating its debt early last year.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com