How universities are maximizing revenue from real estate
Many universities have invested heavily in their real estate — but when lectures are done, the buildings still have plenty of potential to generate extra income
The modern campus is not just the domain of students and lecturers as universities look for new ways to get more from their real estate.
At weekends and especially during holidays, campuses tend to empty out. But the buildings still incur operating costs and require maintenance work to keep them in top condition.
Underutilized space is a valuable asset when marketed and positioned correctly in the market, says Shaun Johnson, business development manager at Integral UK, JLL’s UK facilities and engineering services firm.
“The way campus buildings and facilities are used is slowly changing to generate more revenue all-year round,” he says. “Whether they’re hosting external conferences in lecture halls or opening up sports facilities for local teams to use, universities are collaborating more with businesses and the local community."
Making the most of facilities
Universities across the UK and U.S. often have state-of-the-art facilities which have significant construction and running costs. Indeed, the UK’s higher education sector has started £8.8 billion-worth of capital projects since 2014, according to industry tracker Glenigan.
In the U.S., universities from New York’s Columbia to California’s Stanford have been pursuing a range of options within their real estate in recent years, explains Julia Georgules, senior research director at JLL U.S.
“We’ve seen straightforward divestment of real estate, the repurposing of campus buildings and creating portfolios of real estate — as well as a combination of all three,” she says. “There are more options on the table for those universities who are on sound financial footing.”
Privately-held Massachusetts Institute of Technology 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.
However, less-affluent institutions across the U.S face a shortfall between revenue and upkeep costs at a time of decreased further study and tuition discounts to lure students.
In the consequent search for revenue and book-balancing, there’s been some impressive leveraging of real estate by U.S. universities, says Georgules.
“Some of that has been reactive and driven by need, while more prosperous establishments have innovated and collaborated with the outside world,” she says, pointing to California’s Stanford University. Its Research Park in Silicon Valley forms part of a wider drive to collaborate in the world of tech.
Such partnerships between universities and the innovation economy will become more common in years to come, and will work to the benefit of both parties, she adds.
In the UK, third party use of university real estate is in its early days.
Local, national, and even international organizations are frequently looking for high-quality facilities in easily accessible locations to host events, says Johnson.
The University of West England in Bristol, for example, regularly hosts events at its exhibition and conference center for the UK’s Institute of Workplace and Facilities Management body.
“A university with a top-class conference hall is hugely appealing to businesses or trade bodies looking for a venue,” says Johnson.
“Universities are already set up to accommodate and cater for hundreds, or even thousands of short-term visitors, in a way that few hotels can match.”
Sports facilities — such as football, hockey and rugby pitches, are also in demand, says Johnson. Players from Welsh football team Newport County, for example, train on University of South Wales pitches.
“It’s often a two-way thing,” says Johnson, who points to the way the football club is working with the university to offer sports degrees and courses. “Students in return get the chance to gain real time sports science experience.”
New relationships between campus theatres and the wider community are being established.
Last year, the University of Southampton opened a second theatre in Southampton’s Cultural Quarter, over 50 years after the construction of its first on-campus venue. Also, in Southampton, the university’s data center is used by businesses as well as the establishment’s own staff.
Meanwhile other universities are turning to tourists — the University of London, for example, rents out rooms in its student halls located in prime areas of the city outside of term-time at prices to rival those of cheaper hotels.
Keeping facilities in top form
As universities come up with new ways to generate revenue from their real estate, it’s not just their events teams that are growing. More maintenance workers will also be needed.
“When wear and tear rises, there’s a point where having a full-time maintenance team on site to respond to new needs becomes worthwhile,” he says. “Standard visits and checks which may have sufficed in the past may not be enough.”
Indeed, while a university’s reputation may help to attract interest from conference and events planners, ultimately, it’s the quality of the facilities themselves that will ensure repeat business. And this can make a valuable contribution to a university’s longer-term finances.
“The extent to which UK universities think more openly about their real estate could help to generate revenue and define how financially effective they are in the future,” concludes Johnson.