nickw252 |
Oct 31, 2012 1:28 AM |
Grand Canyon University pays $6.4M for 15 acres in Phoenix for expansion
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Grand Canyon University will use the $150 million originally earmarked for a Massachusetts expansion in its own backyard.
This comes a day after its parent, Phoenix-based Grand Canyon Education Inc., turned down a 217-acre campus in Northfield, Mass., from Oklahoma-based Hobby Lobby Stores Inc.
GCU President Brian Mueller told me today that he was committed to spending $150 million to build dorms and classrooms on that East Coast campus that eventually would grow to 5,000 students. But Northfield officials made it clear that GCU would be required to invest another $30 million to develop basic infrastructure, such as sewage and road expansions, he said.
“The cost started to mount on our side of it,” Mueller said. “There was just not going to be any capacity for the town to help. It’s not that they didn’t want to, the money is just not there.”
There also was an element in town that was afraid of growth, he said. The town’s entire population is 3,026 within 34 square miles within one of the poorest counties in the state.
But the overriding factor was the extra costs, Mueller said.
“It got to a point as a publicly traded company there was just too much risk for us to invest that kind of money and not be able to get any help,” he said. “It was just too much risk there.”
That $150 million was going to come out of the company’s internal cash flow, he said.
“We’re going to continue to invest that money in our current campus,” he said. “There is so much we can still do here in Arizona and in the Southwest, that we would get a better return for a lot less risk.”
Plans call for building two dorms and another classroom building on its Phoenix campus at 33rd Avenue and Camelback Road. The dorms are expected to be ready in fall 2013 and the classroom building a year later, Mueller said.
Meanwhile, GCU just paid $6.4 million to Crown Realty & Development for 15 acres that includes a 131,000-square-foot building that previously housed a SwapMart at 27th Avenue and Camelback Road. That property will be used to house GCU’s call center. Currently, GCU’s call center operations are at Interstate 17 and Peoria Ave. Eventually, those employees will be moved out as leases expire, and moved into the former SwapMart building.
“We will take that building and retrofit it to a call center and then possibly have to build another building on that same property to handle the number of people that would move over there,” Mueller said.
Of GCU’s 3,000 employees, about 2,000 work in its call center operations, split between the I-17 and Peoria Ave. site and another in Tempe. Mueller said he will continue to operate the Tempe call center, but move the north Phoenix employees to the new building at 27th Avenue and Camelback.
The employees that will be moved to that facility will include those who serve GCU’s online students, including enrollment counselors, academic counselors, technical support and back-office functions.
“It’s not right on campus, but it’s close to campus,” Mueller said.
Todd Noel of Colliers International’s Phoenix office represented GCU in the sale. Will Strong, senior associate of Cushman & Wakefield Inc., represented Crown Realty & Development.
Strong said the industrial market continues to tighten in terms of buildings available for sale.
“The Metropolitan Phoenix industrial market fundamentals are starting to improve with 2.8 million square feet absorbed year-to-date, lack of supply and increasing values,” Strong said. “This ultimately became an opportunity for Crown to sell a well-located property at a good price.”
Rick Carpinelli, senior vice president of acquisition and development for Crown Realty & Development, said he has enjoyed working with GCU on this transaction.
“We are pleased that we could work with GCU on the purchase so they can further their expansion,” he said. “GCU is a great institution for our community and state. We look forward to seeing their expansion into our former property.”
Mueller said it’s better in the long run that GCU won’t expand to Massachusetts after all.
“There’s so much work for us to do here in Arizona and the Southwest,” he said.
Angela Gonzales covers health, biotech and education.
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