The university sector is continuing to create innovative spaces for the next generation of students and researchers. This month a report by Oxford Economics for UUK revealed universities generate £95bn for the country’s economy and support more than 940,000 jobs across the nation. AUDE’s Higher Education Estates Management Report 2017, supports this positive view and demonstrates how the university sector is transforming its estate to meet the demands of teaching and research despite a digital 24-hour learning environment. We’re continuing to see best-practice quality facilities throughout the UK. However, although there is great work being done across the sector, the report also found there’s set to be a difficult student recruitment period ahead as the number of young people decreases and Brexit poses a potential international student shortage.
Capital expenditure in UK university estates reached £3bn a year for the first time, with funds spent on refurbishing old buildings and on building newer, more carbon-efficient premises to decrease running costs long term. However, HEFCE’s recent ‘Financial health of the higher education sector: 2016–17 to 2019–20 forecasts’ report found that although the sector is currently in a financially sound position overall, forecasts to 2019–20 show modest and reduced surpluses, declining cash levels and an increase in borrowing that, unless addressed, will not be maintainable in the longer term. It’s crucial we manage estates effectively and efficiently in order to keep ensuring a sustainable future.
Our recent EMR found that 20 institutions with the largest capital spend, spent 50% of the total HE sector spend and 80% of the entire sector’s capital was expended by 54 out of the 154 institutions. Four of the biggest institutions spent £100m a year each on new buildings – these were the University of Cambridge, Imperial College, University College London and University of Edinburgh.
However, despite the large expenditure figure, the experience of most universities with capital investment will be much more modest, with many directors of estates having to make difficult decisions about what they invest in. There will be a greater impact for those institutions where income is not increasing at the same rate as costs, and universities will have to be very focused on the size of their estate, ensuring they match their estate to the demands of the staff and students.
These decisions will only become more difficult. Smaller institutions will be keeping a very close eye on their bottom line, choosing between refurbishing older buildings to cut backlog maintenance costs or creating entirely new more carbon-efficient spaces.
Alongside the uncertainty of Brexit resulting in a positive or negative effect for the sector, and studying in the UK becoming a potentially more difficult process than ever before for overseas students, driving efficiency, reducing costs, improving service and increasing the commercial income from the estate will be vital for the survival of many institutions.
A key driver for investment is the age of the university estate: approximately one third of the estate was built between 1960 and 1979 and will be at the end of its design life soon. These buildings will continue to need substantial refurbishment or replacement and demand continued capital investment. This provides opportunities to give some of our older and neglected buildings a new lease of life. Overall, however, with investment over recent years, the age of the university estate is now getting younger.
The university estate is, today, so much more than it has ever been. It is often the central hub for communities, creating a range of economic and social opportunities and benefits. It is comprised of everything from innovative and impressive learning, teaching and research facilities to social spaces, entertainment venues, sports facilities and restaurants and cafes. The estate is also being used for residential accommodation to space for start-up companies, enterprise space and collaboration spaces with business and companies. Universities will continue to evolve and be dynamic in the face of changing demographics, funding and political upheaval, and directors of estates will strive to provide excellence in facilities alongside world-class education.