How universities are maximising their real estate revenue
Universities are investing small fortunes in campus development and improving facilities. In a highly competitive marketplace, and with students paying the highest tuition fees in history, the expectations for what universities have to offer have gone up markedly in recent years.
Students are done with the stereotypical rough student digs and are instead demanding quality accommodation. They aren’t paying £9,250 a year for a course that doesn’t offer state-of-the-art equipment in their field. And they’re not willing to settle for anything less than the best when it comes to recreational facilities.
It’s easy to see the global trend. A quick Google search for university investment and a whole reem of multi-million-dollar campus redevelopment plans appear.
The University of Manchester invested £700 million in the first round of their campus masterplan. It included the building of the new Manchester Engineering Campus Development, new centres for the School of Law and Manchester Business School, a major refurbishment of the University Library, a bigger and better Students’ Union, and a new Medical School – no small feat.
The £300 million second phase is being carried out now. Once completed in 2022, Manchester students will be able to enjoy a new Biomedical Campus, a new health centre for staff and students, and a newly refurbished Schools of Computer Science, Earth, Atmospheric and Environmental Sciences, Mathematics, and Chemistry.
Just yesterday, Virginia Tech announced it was investing US$1 billion in a brand new “innovation campus” just next door to the planned location of Amazon’s new offices. The new development will sprawl across 1 million sq feet as part of a mixed-use development with other institutions and business, with plans for public open space and ground-floor retail.
We've selected a prime location for the #VTInnovationCampus! 🤩
🚇 Steps away from the future Potomac Yard Metrorail Station
🏗 Part of a 65-acre mixed-use district
🙌 Near the nation’s capital & leading tech companies, including @amazon's HQ2 projecthttps://t.co/OfK3tPum9q
— Virginia Tech (@virginia_tech) June 10, 2019
All of this, of course, doesn’t come cheap. It’s not just the upfront cost of construction, but once it’s built, these developments come with hefty upkeep and maintenance costs.
Given the nature of university term times, they are often left underutilised and empty – students go away for the summer, weekends leave studios and lecture halls vacant. Considering the outgoings, many universities are now seeing an opportunity to recoup some of their costs and see the hidden potential in their latest investments.
Here are a few ways universities are using those facilities to generate revenue all year round:
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Simply put – all things are better when shared.
The majority of universities have a lot of things that many companies want – central locations, high-quality facilities, state-of-the-art equipment.
This demand presents a perfect opportunity for universities to put those facilities to use.
Many institutions have started teaming up with sports teams to host regular events and accommodate training sessions at their health centres and stadiums.
It has been a common practice in the United States with many of their college sports teams competing at such a high level. But is starting to feature in the UK too, with teams like Newport County training on University of South Wales football pitches.
The campus keeps growing – see the latest progress in campus development! pic.twitter.com/ZxQO27k7mm
— Grand Canyon U (@gcu) June 8, 2019
Industry is also keen to utilise facilities that can help them further their business and give them the innovation boost they need to stay competitive. Many small and medium-sized enterprises (SMEs) may not be able to afford the latest equipment in their field, but they are the group that can benefit the most if they have access.
Universities are increasingly teaming up with business to allow access to their world-class labs and research facilities. SMEs can use this opportunity to test new products, develop theories, and work in collaboration on business plans.
The money universities receive for this is substantial, but it also offers academics an opportunity to work with business minds and see how their research can operate in the real world.
Expand their portfolio
With huge investments in new facilities, universities are often left with old buildings that no longer get the use they once did.
As university campuses grow, so too does their real estate portfolio. And as many universities are in highly sought after locations, these older buildings can become a great source of capital.
Repurposing old university buildings to make way for a revenue-generating asset is an attractive option for many universities. While selling the property on to business is another good option.
World-renowned Massachusetts Institute of Technology (MIT) has a dedicated real estate management team tasked with the rotation and redevelopment of assets, as well as a capital projects website, highlighting its investment in refurbishing and expanding its own real estate portfolio.
Taking it a step further, some universities are not just selling old buildings to business, but are sharing the development costs with them.
As universities actively seek out more collaboration with industry, they are also developing facilities in which to bring these two worlds together. Innovation Districts, enterprise centres, and research parks are becoming an increasingly common sight across the world – all of which are shared spaces between academia and industry.
The University of Manchester is currently looking for a joint-venture partner for its planned £1.5 billion innovation district, ID Manchester. California’s Stanford University’s research park is built in collaboration with the wider tech industry so prevalent in the state.
This joining of forces reflects the wider shift to collaborate outside of academia and reach out to industry.