The University of Tennessee at Knoxville is looking to expand by potentially leasing the Cherokee Mills building. The proposal includes a master lease worth over $41.4 million for a period of ten years. This arrangement would allow the university to reserve the facility for approximately $194.1 million over 30 years, with an option to buy the property later.
Cherokee Mills has a large office space, covering over 192,000 square feet on nearly 9.4 acres. It’s conveniently located less than two miles from the main campus and is easily accessible by a short drive or a 20-minute walk.
Currently, UT already occupies part of the building, housing facilities like the Boyd Center for Business and Economic Research and the Denbo Center for Humanities and the Arts. If the lease is approved, UT plans to use more of the space for educational purposes, operational tasks, and possibly administrative offices and a childcare center.
The Board of Trustees will consider the master lease during the winter meeting on February 28. They need additional approvals from the Tennessee State School Bond Authority and the State Building Commission before moving forward.
Interest has also risen in Cherokee Mills from other businesses, but existing tenants can stay until their leases expire. The property recently changed hands, selling for $20.7 million, and if the university’s lease goes through, it will be under new management.
To break down the rental costs, UT’s estimates indicate a base rent of $8.25 per square foot, increasing yearly. An extra charge for utilities and maintenance brings the total to a possible $9.75 per square foot, also subject to annual increases. If UT occupies 75% of the space, they could have an option to buy the property early.
It’s worth noting that the building, originally built as a textile mill in 1917, has a history of various uses, including a potato chip factory and a department store, before becoming an office space in 2007.
There’s also some needed maintenance. The roof requires about $621,000 in work during the first ten years, with a full replacement costing around $3.3 million. The current owners plan to handle immediate repairs, while ongoing costs would be included in UT’s rent starting after five years.
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