University Business - September 2006 - (Page 68)

I N SOME WAYS, THE TYPICAL LANDLORDTENANT RELATIONSHIP APPLIES. A SUIT able tenant is found. A lease is worked out. Rent gets paid hopefully on time . And the landlord gets an earful when the drain clogs, the roof leaks, or the heating or air-conditioning system busts. But in other ways, the rules are different when the landlord is a college or university. For one, institutional needs prevail over profits. When Cornell University administrators decided the retail space on the ground level of an off-campus dorm would better serve as a student lounge, the long- time retail tenant's lease was not renewed. The university wound up finding a spot for that tenant across the street, reports Director of Real Estate John Majeroni. In addition, a university landlord may be more contractually flexible. Say a student renter is graduating early and needs to break the lease. We don't like to be strict for the sake of being strict. We understand that the students are the reason that all of us are here, says Jessica Saavedra, the real estate administrative coordinator at Washington State University. We have to weigh decisions based on business and image. When a college or university is leasing its real estate residential or commercial learning how other institutions are handling the situation can help. Institutions and their real estate managers are taking the following key approaches in their roles as landlords. FOLLOW INSTITUTIONAL EXPECTATIONS The reasoning behind an institution becoming a landlord generally drives decisions that real estate managers make. At the University of Idaho, Real Estate Officer Gerard Billington explains, Our core mission is not to do com- mercial leasing. It's education, outreach, research. That's why most of UI's office and research space tenants are con- nected to the university's work in some way. We're not really trying to get into the real estate business, Billington says. On the other hand, it is a business that can produce income, so we engage in the activity. Though, some land across from campus is an income producer that's not connected to university activities. Acquired in the 1920s for farming, it gained commercial value when a highway was constructed. Now UI has a ground lease deal with a regional mall. It was a great place to have cows, but we've got a lot of great places to have cows, he says. East Hill Plaza Shopping Center in Ithaca, N.Y., was actually purchased by Cornell back in 1984. It was run down, and the owner was not investing in it, says Majeroni, who oversees 600-plus properties in 25 states. With the shopping center's close proximity to the university, we didn't want it to end up being an eyesore. Now the 110,000-square-foot center features restaurants, a Best Western hotel, a bank, and other services, as well as university office space. Cornell has also done its part to strengthen downtown Ithaca. Through a public-private partnership, the $32 mil- lion, nine-story Seneca Place building features retail space, a Hilton Garden Inn, and office space. Also involved in leasing as part of an effort to revitalize a neighborhood is the University of Illinois at Chicago. The South Campus project, located in a formerly dilapidated area a few blocks from the main campus, includes about 750 apartment units and 750 dorm-style units, all with ground-floor retail space. The development allows the institution, which had been largely for commuters, to create a 24-hour living, learn- ing environment, where our students would be happy to stay, exchange ideas over a cup of coffee or a smoothie, says Ellen Hamilton, director of real estate Managing an institution's and auxiliary enterprise support. The proj- ect wasn't created because we thought it would be a good idea to have retail space as an investment. requires careful planning and Our investment was in build- ing a neighborhood around solving all while keeping the school's 68 | September 2006 universitybusiness.com 86 ddni.porP MP 15:41:4 60/12/8 http://universitybusiness.com

Table of Contents for the Digital Edition of University Business - September 2006

Contents
College Index
Company Index
Advisory Board
Editor's Note
Behind the News
Viewpoint
Marketing
Human Resources
Money Matters
Community Colleges
Summer Conference Report
Learning After Loss
Not Your Typical Textbook Advice
A Greener Attitude
Mobile Technology: One For All
Lessons in Landlording
Business Technology
What's New
Calendar of Events
Direct Connect
End Note

University Business - September 2006