While demand for higher education continues to grow globally, the way in which it is being delivered is changing. Most of the growth is in the form of online, user connected, peer-learning platforms that provide highly interactive sessions, creating a rich, personalised experience for every learner.
This demand is resulting in the launch of new online or virtual universities, as well as digital learning platforms from traditional providers. The role of the university campus is also evolving, from a somewhat remote and specialised “ivory tower” to a more integral part of the urban fabric within which they operate.
Universities and other centres of higher education are now seeking to create innovative communities incorporating student housing, leisure, retail and entertainment components as well as just a learning environment. These trends have implications for how the higher education sector develops, finances, and manages its real estate.
This column focuses on how innovative new approaches to the management of higher education real estate assets, provides the potential to grow revenues and student numbers, without the need to grow their real estate footprint. These approaches start with the need for more accurate data.
By benchmarking processes, technology and organisational structures against the practices of other higher education institutions or even the private sector, universities are learning how to better integrate real estate with campus needs, reduce costs and optimise use of their facilities. This may involve measures to improve the integrity of real estate data to better inform decisions, leading to increased tenant revenues or cost savings from process efficiencies.
Benchmarks can be quantitative (measuring characteristics of the real estate portfolio or aspects of workflows), or more qualitative (assessing practices and processes). Comprehensive assessments are helping universities think about their space differently.
For example, creating shared spaces and open offices for part-time faculty, while centralising shared services like finance, HR, IT and corporate real estate.
These assessment are also the starting point for the creation of metrics for measuring ongoing performance against your most important real estate goals. Tracking critical metrics and making continuous improvements are crucial for transforming the way you manage space.
Leading universities are deploying integrated workplace management systems developed for other real estate asset classes to track and manage their space use more efficiently. These platforms often can be integrated with other facilities or real estate systems to create a university-wide data warehouse and generate related key performance indicators quickly and easily.
System and data integration allows for faster and better-informed decision making, more efficient use of space and comprehensive capital planning. In addition to quickly producing comprehensive reports, integrated systems give leadership access to real-time occupancy data with dashboards and intuitive, role-based views.
US data suggest that between 30-60 per cent of space on the average college campus is currently underutilised. Improvements in utilisation can be achieved thorough centralising scheduling and management of your space and using data to understand usage patterns.
Educational institutions are using space and occupancy planning services to analyse campus utilisation and pursuing significant cost savings and revenue-generation opportunities. Using a utilisation study, real estate teams can demonstrate how a department can extract more use out of its facilities and avoid new construction costs.
For example, you may learn that classrooms often sit empty in the evening. By extending learning hours, you can offer more classes, prevent overcrowding and avoid the expense of building new classrooms.
Similarly, you may learn that research teams are not fully using their allocated facilities. Some institutions are repurposing underutilised lab space as classrooms, in lieu of building new space. Conversely, lab space can be shared among the various schools within the university system.
Most real estate decisions within universities and colleges in the UAE are currently decentralised by faculty, asset type or function. This limits the institution’s ability to make optimal decisions that enhance the mission and involves all stakeholders in the process.
While the traditional university business model focuses on teaching and research, the university of the future will incorporate space as a third dimension, presenting many new opportunities for the university’s leadership and their real estate teams to collaborate.
As the potential benefits of more efficient use of their premises come to the fore, universities and colleges are likely to explore how business process outsourcing (BPO) has assisted other sectors of the economy. Outsourcing rates are very low on many university campuses, with little reliance on professional service companies.
Universities are currently at a turning point. The rise of the shared economy and the digital transformation of the real estate sector are providing increased opportunities for universities to benefit from the outsourcing of real estate functions to specialist facility management companies.
Higher education is being seen as an attractive alternative sector by many traditional real estate investors, with new financial structures such as PPPs (public-private partnerships) also providing opportunities for new players to enter the market. Operational improvements and efficiency gains allowing innovative institutions to grow their revenue base and student number without a corresponding growth in their real estate portfolio, will contribute to a continued growth in the capital allocated to this sector.
While the model may be evolving, it remains alluring.
- Evrim Ay is Director at JLL — MENA.