Citing high costs and declining enrollment, HACC to leave facility in Midtown Harrisburg
As real estate expenses soar and enrollment declines, HACC has decided to vacate one of its buildings in Midtown Harrisburg.
HACC said late Friday it plans to move its trade and technology programs over the next four years from its so-called Midtown 2 facility at Third and Reily streets to other buildings on its Harrisburg campus or other HACC campuses in Central Pennsylvania.
The programs, which use about 48,000 square feet of space, have less than a 20 percent classroom utilization or occupancy rate, making it an expensive facility to maintain.
The move is expected to save HACC about $1.9 million per year in rent, maintenance and utility costs.
"After a detailed financial analysis, it was determined that it does not make good business sense to continue to lease or purchase Midtown 2, which is the only leased space at the campus," HACC President John "Ski" Sygielski said in a statement.
The relocation, HACC officials added in a statement, is tied to the end of a 15-year lease that expires June 30, 2022.
HACC signed the lease for Midtown 2 with Harrisburg-based GreenWorks Development in 2007.
Three years later, by fall 2010, HACC saw enrollment at its Harrisburg campus — which includes Midtown 2 — grow to a peak of 10,747 students. Enrollment has since been on the decline.
HACC does not track student enrollment by building. However, it does track credit hours. Officials said usage at Midtown 2 peaked in fiscal year 2011-12 at 12,254 credit hours. For the 2016-17 fiscal year, credit hours at Midtown 2 declined to 8,323.
Credit hours are usually based on the number of classroom hours per week throughout a term or semester. Students receive three credit hours for most classes.
Sygielski said no programs are being cut as part of the relocation. The transition out of Midtown 2 will occur at times that have the least impact on classes, he added. The move is expected to begin in the summer of 2019 and be completed in phases by 2022.
"Furthermore, HACC remains strongly committed to the Midtown area with the college's robust workforce development and continuing education and credit welding programs at Midtown 1 at Fourth and Reily streets," he said.
HACC owns the nearby Midtown 1 facility and its adjacent parking lots. HACC said a portion of the Midtown 2 savings initially will be used to renovate spaces for the relocated programs.
"By moving out of Midtown 2, the college will eliminate leased space and free up cash flow to invest in maintaining the other facilities at the Harrisburg campus," Sygielski said.
Doug Neidich, CEO of GreenWorks Development, said he had been in conversations with HACC and was not surprised by the planned move. He believes the facility will be reused for educational purposes and this gives him four years to attract a new institution. The facility was once the Evangelical Press Building.
"It's a strong location and the building is fit out for educational uses," he said.
The building also could work for other institutional or office uses, said Brad Jones, president and CEO of Harristown Enterprises. HBG Realty LLC, a Harristown affiliate, manages the property for Neidich.
Jones said he could also see some type of mixed-use opportunity at Midtown 2. The neighborhood - which is home to the Broad Street Market, the Susquehanna Art Museum and a collection of shops and restaurants - will soon be home to a new federal courthouse and state archives.
"In some ways, the fact that HACC had made this announcement now is helpful," Jones said. "It's possible that someone could come in and negotiate an early termination and buy out the lease."
HACC serves about 19,000 students at its Gettysburg, Harrisburg, Lancaster, Lebanon and York campuses.