Making the Grade
A CCIM shares tips on campus-related development in small markets.
Campus-related developments are on the rise and not just in well-known university towns. Cedar Falls, Iowa, home to the University of Northern Iowa, is also the site of Pinnacle Prairie, a more than 750-acre mixed-use project. When completed, this development will include 2,000 new single-family, high- density homes, a 75-acre office park, a research and development campus, and 750,000 square feet of retail. Commercial Investment Real Estate magazine spoke with Brady A. Gruhn, CCIM, director of sales and leasing with Lockard Realty Co., to discuss his involvement with this project.
CIRE: Have you always been interested in campus-related development?
Gruhn: Living in a campus-based community, I found that the university affects a large number of local economic factors such as employment opportunities. With both John Deere and the university presence, Cedar Valley [Iowa] has a very diverse employment base.
CIRE: How did you get involved in the Pinnacle Prairie development? How did you decide that Cedar Falls was the right market?
Gruhn: Lockard Development was hired by Merrill Oster, a global entrepreneur, to help design, develop, construct, and handle the sales and leasing of the development. We began this project in 2004 and anticipate its completion in 2015.
This market was selected because Cedar Valley and the university have both gone though a renaissance in recent years. For the last 10 years, John Deere has achieved record profits and projects continue to prosper because of the emergence of bio-fuels. Other large corporations have invested in the area by building up to 1.2 million-sf distribution facilities. The university has achieved exponential increases in its reputation due to strong academic and athletic programs. Because of this, the community is on the rise and greatly in need of more housing, office, and retail opportunities.
CIRE: What were some of the challenges and risks involved with this development?
Gruhn: Being such a large-scale project in a modestly populated community definitely has its hurdles. There is a perception among some retailers and their brokers that this is not low- hanging fruit. However, we have overcome this notion by showing the impact to not only the community but to the region that the community serves. By accurately depicting the large trade area that the Cedar Valley serves, and the potential for growth, I have been able to seize on an untapped market.
CIRE: What skills or strategies did you incorporate into the process?
Gruhn: I have drawn on all of my communication and negotiation skills to work with proposed tenants, city officials, and cooperating brokers. Since the size and scope of the project make it a marathon, not just a sprint, each negotiation has to be conducted from a macro perspective as much as a micro.
I was also able to draw on my CCIM education daily. Whether I am working on site selection or profitability, my classes in market, user-decision, financial, and investment analysis have allowed me to assist in helping my customers my clients in making the best decisions.
CIRE: What are your future plans? Are you working on any other campus-related projects?
Gruhn: I am actively researching other university towns. At present, I am in the discussion phase of a more than 65-acre retail project in Ames, Iowa, where Iowa State University is located. I also am handling the brokerage work on a new 200,000-sf retail/restaurant development in Iowa City/Coralville, which is home to the University of Iowa.