University Real Estate in the Knowledge Economy
Prologue
Real estate is an innate asset of the modern university and an index of its status and relationship with internal and external constituencies. Traditionally, campuses have been growing for mission-related purposes, while contemporary developments reflect university responses to diverse external pressures.
A study conducted by the Lincoln Institute of Land Policy in 2007 surveyed 604 US non-profit colleges and universities and found that more a third had expansion projects outside or on the periphery of campus boundaries between 1 Jan 1998–5 May 2005, concluding that “no space was lost, only gained.”1 In the year of 2015, one could only expect a further expanded knowledge economy, and yet rather than applauding knowledge itself, the detailed makeup of 506 real estate development projects reveals varying motivations in institutional growth, neighborhood development, and revenue diversification. Projects not constructed solely for core educational functions count for a surprisingly 40 percent, and those not related to research, more than 88 percent.
When investigated beyond face value, university real estate performs as the tangible infrastructure and intangible proxy of knowledge commercialization and its economic benefits. Under the recent global agenda in innovation, not only do universities appear more aggressive in pursuing development activities, but they have also become more inventive and strategic about the non-monetary value of real estate assets. The resulting projects in return are perhaps indicative of universities’ self-advancement efforts and potential paradigm shifts within high education.
This article examines various university real estate strategies related to innovation and entrepreneurship and their performances in advancing the university as well as inferring its structural changes in the knowledge economy.
To begin, university real estate is a convoluted term, implying both direct and indirect holdings in different domains. For instance, Cornell University’s Real Estate Department, under Facilities Services, is responsible for the acquisition, sale, leasing, development, encumbrance, and strategic planning of all Cornell’s real property assets, and the management, construction, and financing of non-academic real estate.2 Common non-academic spaces include science/technology/research parks, commercial and residential properties. Since property tax exemption is conditional upon both an ownership by an educational institution and usage for educational purposes, these properties are taxable.
Of all development activities, capital projects are defined by substantial investment, large scale and long-term planning relative to other projects, and are in many cases handled by an entity specializing in capital project services.3
On the other hand, some real estate assets belong to a university’s investment portfolio based on endowment funds and other financial resources. It differs from case to case whether properties in this class are managed directly by university personnel or by external fund managers. While listings of a school’s development properties for sale and for lease are open information, universities are less forthcoming about indirect investment properties which might spread across the globe and involve various uses.
It is unclear how these pools of real estate holdings overlap and interact. Nevertheless, university real estate projects engage public and private concerns beyond the campus, and their design and organization allude to questions of urban development, economic growth, and the status of education. Therefore, rather than imposing flawed overarching correlations between data and ideologies, this study uses case studies to establish a broad picture of different university strategies in managing real estate and to examine concrete real estate projects in deriving interpretations of the university’s role in the knowledge economy and related imaginations on what might be the next.
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