Under an expanded lease, the online education firm will put its brand on 225 South Sixth Street as it consolidates its workforce.
Minneapolis' tallest building is getting a new name.
The office tower that currently is called 225 South Sixth Street and known for the distinctive halo on its roof will be renamed the Capella Tower under an expanded and extended lease by its largest tenant, Capella Education Co.
The fast-growing online education company, founded in 1991, has been a tenant in the building since 2004 and occupies 203,000 square feet. Under the new lease announced Thursday, it will almost double its space, bringing more than 1,150 Twin Cities-based employees under the same roof.
The agreement makes Capella by far the largest tenant in the office property, which is made up of a 56-story tower and an adjoining 20-story building for a total of 1.4 million square feet.
Capella said the move, which will transfer employees from offices in the Campbell Mithun Tower, will begin this summer and be completed by early next year when the building's name change becomes official.
"We are excited about our expansion in downtown Minneapolis and believe that our consolidated downtown location will be a key factor in allowing Capella to continue to attract outstanding, highly committed employees and faculty," Capella Chairman and CEO Steve Shank said.
Company officials said that they began looking for larger quarters last year to consolidate the majority of their employees. About 50 workers in the Twin Cities will continue to work from home.
Lois Martin, chief financial officer, said the company considered existing and newly built properties in Minneapolis, St. Paul and several suburbs. One reason for choosing to remain in downtown Minneapolis was the availability of mass transit, she said.
Shank said a recent employee survey found that more than 50 percent of Capella's workforce uses mass transit to get to work.
Capella is the parent company of Capella University, which offers 19 graduate and undergraduate degree programs with more than 950 courses. More than 22,000 students were enrolled as of Dec. 31, with most pursuing advanced degrees. Capella is one of the few Internet colleges that have no classrooms and all instruction exclusively online. Classes are taught by teachers working either from Capella's Minneapolis headquarters or out of their homes in other parts of the country.
Revenue last year rose about 26 percent, to $226.2 million, while income increased about 70 percent, to $22.8 million. Last month, the company said it expected sales and enrollment in the first quarter to increase more than 20 percent. The new lease provides opportunities for the company to increase its space, if needed.
"Capella University has grown to be an innovative leader in higher education, and all of Minneapolis should be proud that they will continue to call our city home," Mayor R.T. Rybak said.
Originally called First Bank Place, 225 South Sixth was completed in 1992. A construction manager added a couple of extra feet to the height of the halo so that the tower would be taller than the IDS Center. The property changed hands in 2006 in one of the Twin Cities' largest office building transactions. ASB Capital Management, a Washington-based investment firm, bought it for about $245 million from Hines Interests of Houston.
Capella's expansion will help increase the building's occupancy to about 85 percent, according to Bob Pfefferle, a project manager for Hines, which continues to manage the property. Some of the space Capella will occupy will be vacated this summer by Ameriprise, he said.
Other tenants include IBM, Morgan Stanley, Merrill Lynch and the law firm of Winthrop & Weinstine. Last year, Virchow Krause & Co., a consulting and accounting firm that has had offices in Bloomington since the 1980s, agreed to lease four floors, and recently increased that to five floors, Pfefferle said. The relocation of about 250 employees is scheduled for this year.
Susan Feyder • 612-673-1723