The University of Iowa currently owns just over half of a shopping mall in downtown Iowa City and the Iowa Board of Regents has approved a plan to buy the Old Capitol Town Center for $20.5 million.
“This is less about either the short or long term need for the first floor commercial space in the building,” said David Keift, the University of Iowa’s senior director of business and real estate, “but more about the university acquiring control of a significant footprint in the heart of our campus.”
The mall was built in 1980 as part of an Urban Renewal District that also created the pedestrian mall in downtown Iowa City. “The mall, which covers nearly two city blocks in the heart of the University of Iowa campus, is nearly 375,000 square feet of space,” Keift said during a briefing for the Board of Regents’ Property and Facilities Committee on Wednesday.
In the late 1990s, the mall’s major tenants started relocating a new mall in Coralville and, in 2003, Keift said a group of local investors
rescued the mall from bankruptcy. The University of Iowa struck a deal to purchase 45% of the property in 2006. “The building became a monumental importance to the university during the 2008 flood as it was quickly reconfigured to host our School of Music for numerous years,” Keift said, “and our Memorial Union operations and bookstore.” Keift said.
Under the deal, the university will use reserve funds to make an initial payment of $206,000, then take out a commercial loan to pay the rest. Keift said the university will use rental income from current tenants in the building to cover those loan payments.
“The university views the purchase price, which was based on a recent appraisal, as a favorable value to the intitution. It comes out to be about $123 per square foot for all the leased space and common areas in the building,” Keift said. “You couldn’t come close to duplicating that cost per square foot to rebuild this size of a building.”
Keift admits the university doesn’t need the space right now, but he says the reason to buy now is to ensure 45% of the building isn’t acquired by other investors who may not be interested in upkeep of the property. “It’s imperative that this building and this center remain an important and vibrant part of the university and community,” Keift said.