During the month of Tishrei 5721, Harav Shmuel Chefer, the dean of Beis Rivka of Kfar Chabad, had a lengthy Yechidus with the Rebbe. During the Yechidus, the Rebbe began to discuss the location of the girls’ school and seminary. The Rebbe raised his voice and said, “I cannot sleep at night due to the close proximity of the girls’ and boys’ schools!” 

This view was echoed in a letter written to President Shazar (Igros Kodesh vol. 24, p. 126) where the Rebbe writes that only due to technical difficulties was the Kfar originally set up as one village. But now that it has been made possible, the educational institutions should be situated in separate locations, the boys in Kfar Chabad, and the girls in Kfar Chabad 2.”

(Taken from Teachings of the Rebbe on Chinuch)