The financial pressures on the higher education sector cannot be overstated.
In the last year, one in four institutions have operated at a deficit. Combined with ever-growing government cuts to funding and possibly to tuition fees, a decrease in overseas students, and the recent demographic dip in students overall, higher education bodies must find alternative sources of income to make ends meet. While research universities can take advantage of their staff’s advances to provide income options, other bodies struggle to find a workable alternative. One possible solution can be found in the rental market.
At first glance the rental market seems a tailor-made solution to the problem. University facilities can provide a host of different services from sports facilities, health and fitness, research, leisure options, and even temporary accommodation, developments that have been optimised for the student experience can easily be taken advantage of for the private sector.
But while the rental market may seem attractive, it comes with caveats. The value of university facilities can be as dependent on the popularity of their location as any other venue. In Edinburgh, the city’s massive tourist trade (and of course Edinburgh Festival and the Edinburgh Festival Fringe) provides a massive resource to tap. In 2017, the Fringe took in over £4.5m, selling 2,696,884 tickets to 53,232 performances of 3,398 shows at about 300 venues.
“We become Europe’s biggest hotel over the summer,” says Lyndsay Wilkie, the University of Edinburgh’s director of business development, accommodation, catering and events. “We rent out a lot of our accommodation to performers and performance groups from the festival. A huge range of people, either visiting the festival, performing in the festival or organising the festival.”
But for locations without such high footfall to local areas, the rental market can be less lucrative. “It’s not huge in the overall scheme of things,” says James Hayter, director of sport at Nottingham Trent University. “Our external hire income is less than £100,000 a year, so in the scheme of things it’s not huge, but it all helps.”
We rent out a lot of our accommodation to performers and performance groups from the festival
And yet, despite the difference in opportunities, certain options are available to both universities. “We have the Nottingham conference centre on our city campus,” says Simon Smith, Nottingham’s interim director of estates. “Obviously that rents facilities out for various conferences and events.”
The conference market is also in use in Edinburgh. According to Wilkie, “We’re lucky in that we have a huge amount of student space that can become conference venues over the summer. A lot of international conferences come and use us – business tourism as well as leisure tourism.”
This option – taking advantage of student spaces when not in use by renting them for conference use – is readily available to any university. The knock-on benefits are also worth considering. Conferences can provide networking opportunities to develop the financial aspects of university research, and attract further business interests for investment.
Outside of renting to business, they can also help build a relationship with the surrounding community. “There are plenty of opportunities around the high-demand times for students,” says Hayter. “Daytime, for example, we’ll have schools in, or other community groups. We particularly host lots of young people and young adults on campus using the facilities. We know that many of them will go on to university later in life and we’re hoping that some will come to us. It’s a good way of raising aspirations and familiarity with the higher education sector.”
But while taking advantage of existing spaces offers many possibilities, few institutions seem interested in developing their campuses specifically for further rental. “Very rarely are spaces developed just for commercial use,” says Wilkie. “We try and think creatively about how we use our space but again the student is at the heart of it. I wouldn’t say it’s not considered at all but it’s not the driver.”
Smith agrees. “I suppose in a way we’re always mindful that we try to make the space as flexible as possible. We try to avoid bespoke space. I wouldn’t say we actually review it so we could look to lease it.”
While these institutions have chosen not to focus on rental opportunities when developing their campuses, whether other universities should will vary depending on individual circumstances. Obviously, the main focus of any higher education body is to provide students with the best possible education. But at the same time, given the current economic climate and the need for resources to provide that education, other income sources can be hugely important.
With this in mind, how can university facilities make themselves more attractive to the rental market? The question comes down to the nature of the space offered. Specialised venues such as high-performance sports centres can be one method of bringing in income. Nottingham Trent’s most recent development, a professional-standard tennis centre, is top of the line. “If you’ve got a particularly high-level competitive squad based in your facility then you will need that high-end facility for them to use, and the support facilities around it as well,” says Hayter.
But these hyperspecialised spaces may not be the best route a university can take. Tracey Francis, director of sport and leisure at LK2 Chartered Architects, has 20 years’ experience developing sports and leisure properties.
“What we’re now seeing are more flexible spaces, so that when the next fad comes along, you can mobilise and accommodate that,” she says.
Hayter agrees: “If you want a facility that’s high-performance focus, then the opportunity for flexibility is quite limited. If it’s more for mass-participation purposes then I think yeah, there are a lot of opportunities for flexibility.” This philosophy holds true in more general facilities too. According to Wilkie, “A blank canvas of a space becomes much more usable for an event, especially for a business event.”
In many ways, this flexibility serves the student experience as much as it does future rental opportunities. As space becomes more and more of a premium, universities may find these multi-purpose venues allow them to provide their students with an appropriate level of education without sacrificing future financial possibilities.
Obviously, the rental market’s relevance to modern universities will vary case by case. But ignoring it completely is leaving a potential income source untapped – one that requires minimal effort to take advantage of.
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