University Business - July 2009 - (Page 24)

VIEWPOINT Building the Long-Term Value of Assets Why it’s an opportune time for colleges and universities to rethink physical space By Marisa Manley HE NEWS COMING OUT of higher education these days can seem like an endless stream of updates on shrinking endowments, rising tuition costs, and across-the-board budget cuts. e recession is hitting higher education hard; it seems no one is being spared. So it might seem counterintuitive to think about investing in growth—acquiring property, expanding your campus footprint, upgrading facilities or making other real estate changes—at a time such as this. But the truth is, when it comes to real estate, the recession is creating excellent opportunities to create long-term value for colleges and universities. NEW REAL ESTATE LANDSCAPE e current economic climate is producing a new real estate landscape for much of the country. Vacancy rates for commercial space—which can be suitable for classrooms and student programs as well as administrative and other functions at urban campuses—are high in most cities across the country, and landlords are willing to make concessions that were unheard of just a few years ago in order to execute deals. Rents and sales prices are also falling, in some markets by as much as 50 percent. For higher ed leaders who are thinking strategically, this all adds up to opportunities to meet existing and future needs. Recessionary times also create demand for new university space. Historically, when the job market tightens and unemployment is high, more and more professionals take the opportunity to go 24 | July/August 2009 T Landlords are making concessions unheard of just a few years ago in order to execute deals. back to school. Likewise, college graduates are more likely to put off entering the job market until conditions improve, choosing instead to go straight to graduate school rather than delay an advanced degree while gaining work experience. During the recession of 2001-2002, some top university law and business programs saw their applicant pools increase by as much as 90 percent as laid-off workers attempted to ride out the recession in graduate school. What’s more, the demands of a topnotch university setting are greater than ever before. If students are accustomed to Olympic-caliber sports facilities and state-of-the-art research laboratories, then aging and outdated buildings become more of a drawback than ever before. ese factors suggest that institutions will need more and more technically complex spaces. Even without factoring in expanding matriculation and complex technology, it is practically a guarantee that at some point in the future every institution will need to find new space to keep operations running. Buildings will either become outdated or need tremendous work to continue functioning, or the campus will simply run out of space for all that a modern university needs to do. Whether it’s a plan to own or rent, this is the time to consider strategic decisions that will add value to operations in the long run. Too often, we put off dealing with the inevitable until it is too late in the process. It is all too common for universities to face an immediate need to find a new location for a student organization or a site for a new dorm. By the time that happens, time constraints and the increasing pressure of the situation make it impossible to achieve optimal value. It is important to realize that reconfiguring spaces, moving locations, or starting a new project take time. THINKING STRATEGICALLY Capturing value during an economic downturn requires institutional leaders to think strategically about needs, goals, and physical space. When devising a strategic plan: • View facilities as part of an overall business plan. Universities do well when their leaders consider property and Marisa Manley is president and founder of Commercial Tenant Real Estate Representation (, a real estate advising firm that works with colleges and universities on leasing, acquisition, and construction.

Table of Contents for the Digital Edition of University Business - July 2009

University Business - July 2009
Editor’s Note
College Index
Company Index
Advisory Board
Behind the News
Sense of Place
Financial Aid
Human Resources
The State of Student Aid
Out of the Gym, onto the Desktop
EduComm 2009
Internet Technology
Community Colleges
End Note
SPECIAL SECTION: Annual Directory of Higher EdConsultants

University Business - July 2009