University Business - December 2008 - (Page 21)

VIEWPOINT Learning to Thrive: The University as Developer Reasons to consider real estate development now—and how to get started By Kurt Culbertson A USA TODAY HEADLINE states, “Tuition Hikes Will Ease.” e article opens, “ e price tag for college tuition is continuing to climb this year, but experts are predicting less sticker shock than in the past two years.” e American Council on Education’s nonprofit subsidiary Solutions for Our Future (www.solutionsforourfuture .org) claims that in the last decade college tuition has increased by an average of 76 percent at public four-year schools and 62 percent at private ones. Median income during the same period has risen 5 percent. e biggest cause for tuition increases at public institutions has been variables in state appropriations. During recessionary years earlier in the decade, state spending at best increased by minimal rates. With current headlines screaming recession, where will the money come from? As funding for higher education decreases, the number of students seeking admission will increase. Not all higher ed institutions have the endowments of a Harvard or Stanford. So the real question is: What can IHEs do to ensure their fiscal sustainability for the future? ere are more than 100 U.S. land grant universities and many other IHEs that have received endowments of land or have purchased land whose value has exploded. Some urban campuses are engaging in development activities to clean up the blighted boundaries of their campuses, hoping to create a safer, more pleasant environment with which to lure the best and brightest faculty and students. Other IHEs are beginning to investigate how best to fully realize the potential of their Real estate development is not to be undertaken by stodgy authorities. land to accommodate long-term growth. Enlightened higher ed leaders are focusing on promoting the economic health of their institutions, their academic populations, their surrounding communities, and the environment. e university as real estate developer is an exciting and challenging opportunity not to be undertaken by stodgy authorities, but relished by forward-looking leaders able to combine the interests of the institution with the needs of the community. With careful planning and creative vision, institutions can generate significant revenues to serve their academic needs, fulfill their land grant missions, and develop partnerships within their communities that benefit all. THE TIME IS RIGHT Why become a real estate developer in the midst of a housing recession? Real estate markets are historically cyclical. It’s in the doldrums now, but the market will return to health. Planning and entitlements for real estate projects take time, often years, to complete. By preparing and positioning projects for development now, landowners will be in a position to capitalize on the value when the market returns. Is the risk inherent in real estate appropriate for an academic institution? Value in real estate can be harvested at many points along the evolution of the property, from raw land to built product. An institution could sell surplus raw land. is, however, is typically the lowest value that might be achieved. It also leaves the use and quality of the development to the new owner, who may decide to use the land in a way that reflects poorly on the university. Value is added by creating an initial vision for the property through a master planning process, providing the university’s development partner and its stakeholders with a clear understanding of the institution’s desires and standards, which must be met in the development. Some IHEs choose to sell the land once they have articulated their vision and the guidelines needed to ensure its implementation. Obtaining entitlements and approvals from a variety of state and local entities adds further value without committing funds to building roads, utilities, or buildings, and other institutions harvest value at this point in the process. Still others choose to construct Kurt Culbertson is CEO of Design Workshop (, an international firm that practices landscape architecture, land planning, and urban design for education and other industries. December 2008 | 21

Table of Contents for the Digital Edition of University Business - December 2008

University Business - December 2008
Editor's Note
College Index
Company Index
Advisory Board
Behind the News
Sense of Place
Human Resources
2009 Annual Directory to Financial Services
Future Shock
Independent Outlook
Endowment Management
Look Before You Leap
50 Best Branding Ideas
Remedial Nation
What's New
Facilities Focus
End Note

University Business - December 2008