Universal Technical Institute (UTI) announced this week the purchase of its Avondale, Ariz., campus and plans to consolidate the operations of its Phoenix-based Motorcycle Mechanics Institute (MMI) into this facility. UTI also announced the company’s individual UTI and MMI Orlando campus facilities will be consolidated and reconfigured into one site.
“These initiatives are part of our ongoing real estate optimization strategy and consistent with our focus on utilizing our strong balance sheet to support our growth and diversification plans,” says CEO Jerome Grant.
With technical schools among the many businesses evolving their operational strategies due to COVID-19, Grant says these consolidations will provide long-term benefits to the school.
“As we enhance our blended learning model, where students participate in instructor-led lectures and demonstrations online and complete their hands-on training in our labs, we’re also able to consolidate and reformat space to decrease fixed expenses, support new offerings and allow for growth to meet increasing student interest and continuing employer demand for our graduates,” says Grant.”
“By combining our Avondale UTI and Phoenix MMI campuses, Avondale will become our largest campus in terms of size, number of students and breadth of programs,” he adds. “Deploying capital to acquire this strategic site will yield significant economic benefits, and we are excited about the forward momentum we are building toward further growth, diversification and enhancement of our student offerings.”
UTI acquired the Avondale campus, which is comprised of a 283,000 sq.-ft. specialty use building on a 23-acre parcel of land, in an all cash transaction for $44.5 million. UTI has been the sole occupant of the facility since it was built for the company in 2004. Vacating the Phoenix MMI campus site, currently comprised of approximately 173,000 sq.-ft., and consolidating the MMI operations into the Avondale campus, will be complete by the end of fiscal 2022.
Once fully implemented, UTI says it expects to reduce annual occupancy and related operating expenses by approximately $6.5 million from purchasing the Avondale campus, vacating the Phoenix MMI campus site and consolidating the MMI operations into the Avondale campus. The expense reductions will be phased in over the next two years and are expected to be fully realized by the end of fiscal 2022, the company says.
In Orlando, UTI currently has plans to consolidate its motorcycle and marine training programs into one location with its automotive, diesel and manufacturer advanced training programs, reducing the current aggregate 263,000 sq.-ft. by an estimated 75,000 sq.-ft. UTI says it is evaluating lease and purchase options for the necessary space to facilitate the consolidation. The company says it expects to complete the Orlando consolidation and reconfiguration by the end of fiscal 2021. Additional details will be provided once the Orlando transactions are completed, the company adds.