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University of Iowa seeks to buy entire Old Capitol Town Center for $20.6M
Purchase will include first floor — home to restaurants, CVS
Oct. 29, 2024 11:06 am, Updated: Oct. 29, 2024 5:22 pm
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IOWA CITY — Nearly two decades after buying a portion of the Old Capitol Town Center — which opened in 1981 as a downtown mall, anchored by Younkers and JCPenney — the University of Iowa now plans to buy the entire 375,000-square-foot building.
For $20.6 million, the university aims to acquire the remaining 45 percent it doesn’t already own of the Town Center — which spans nearly two city blocks immediately south of the UI Pentacrest. The institution already owns a 55-percent stake — primarily the second floor — which it calls the “University Capitol Centre.”
Current uses of that UI space include administrative offices — like the Office of Vice President for Research and Information Technology Services — and student services, including the Office of Student Financial Aid, International Programs and Student Disability Services.
“As we continue to return spaces in the heart of our campus to classroom and learning use and as we continue to adjust space needs in the wake of the COVID-19 pandemic as some employees continue to utilize remote and hybrid work options, full ownership of UCC makes strategic sense for the university,” Senior Vice President for Finance and Operations Rod Lehnertz said in a statement about the purchase proposal going before the Board of Regents for approval next week.
This sale, if approved, would consummate a piece of the UI 10-year-facilities master plan presented to regents in January 2022 that included an option agreement to buy the remaining 45 percent — primarily the first floor, which houses restaurants like Chipotle and Buffalo Wild Wings, a coffee shop and a CVS.
The option agreement required the university to give the mall’s ownership group an “intent to exercise its purchase option” by Oct. 1 — and then close the deal no later than Oct. 1, 2025.
“The notice provision was timely provided, and the parties have now entered into a formal ‘Exercise of Option and Purchase Agreement’ that sets the financial terms of the acquisition and further extends the closing and occupancy dates until October 1, 2027,” according to a proposal going before the regents.
Details from the purchase agreement include:
- The $20.6 million price tag, based on a recent appraisal;
- A payment plan requiring UI to deliver 10 percent of the price upon regent approval — with the rest not due until Oct. 1, 2027, “at which time the remaining 90 percent of the payment would be paid and the university would take ownership of the space”;
- A caveat allowing the seller to accelerate the closing by giving the university at least six months notice of its intent to do so;
- And a clause indicating all commercial leases would be assigned to the university when the ownership transfer occurs in 2027, with all rents prorated to the date of the sale.
“The university would be required to approve any new commercial leases or change in terms of existing leases in the mall if the lease extends beyond October 1, 2027,” according to board documents.
“A change in ownership does not allow a lease to be terminated,” UI spokesman Chris Brewer told The Gazette.
In addition to the 55 percent of the Town Center the university already owns, it leases some of the portions it doesn’t.
And while the university didn’t provide specifics in the board documents, UI officials reported the “long-term plan is to retain a retail presence in the building, which also helps offset the operational costs of maintaining the facility.”
“The university’s current plans for the mall are to continue with a strong retail and restaurant presence on the first floor,” Brewer said. “Specific plans will become more developed over the coming years.”
Calling the 45-percent acquisition “an important strategic purchase,” UI officials said the center has become a “UI student and staff transaction hub.”
“As the university secures ownership of the balance of the building, it would continue to develop spaces to serve student and operational needs that benefit from immediate adjacency to the UI campus core.”
The university first bought more than 100,000 square feet in the Town Center in 2006, when it planned to relocate its Department of Public Safety there. At that time, the university reported a purchase price of $8.5 million, with an estimated cost of outfitting the space at $9.5 million.
In 2008, the university leased additional space after flooding inundated the campus — requiring administrators to find temporary space for the UI bookstore and parts of its school of music.
Vanessa Miller covers higher education for The Gazette.
Comments: (319) 339-3158; vanessa.miller@thegazette.com
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