We all know that real estate is a prosperous industry. Its profit-boosting powers have been catching the eyes of a new demographic. Can you guess who?
If universities came to mind, then you’re right on the ball. Colleges have been heavily investing in their surrounding communities for a while, and they’ve been reaping the rewards. Universities are now playing a far more active role in their local commercial markets.
Let’s take a look at how colleges are using commercial real estate to increase their profits.
Expanding the Campus Grounds
Today’s colleges aren’t set up the same way they were 30 years ago. The business has changed and universities have evolved into larger and more dynamic campuses.
The traditional college setup has expanded to include student housing, top-rated facilities, school buildings, shops, bookstores, cafes, and more. In diversifying their business platform, colleges are expanding their money-generating potentials.
Colleges are known to capitalize on CRE spaces like restaurants, multifamily complexes, entertainment options, off-site gyms, and other amenities for their student bodies. Universities are broadening their investment possibilities, fattening their portfolios, and increasing their income.
Filling the Gaps Between Semesters
Colleges undergo extreme on-and-off seasons. Profits inevitably take a huge hit when classes are let out for summer vacations, holidays, and spring break. Real estate is a great opportunity for universities to subsidize these slow periods.
Investing in their Facilities
Due to the diverse needs of a college campus, it’s common for universities to design their own buildings. Renovations and upgrades happen at regular intervals to ensure that the institution remains up to date with the latest advances in technology and design.
This system generates tons of wealth towards commercial real estate investment. By investing money into their commercial assets, colleges are playing a role in boosting the market value for the surrounding businesses.
Integrating into Local Communities
As colleges expand their range of commercial properties, they extend their reach into their communities. College-run businesses give their hometowns a unique flare that attracts community locals and tourists alike, boosting their potential reach beyond just the students.
This gives the university a chance to broaden their profit margin even further. Educational institutions that take on the roles of a service-based industry are capitalizing on both areas of business.
Another perk associated with a college extending its reach is the ability to market to a larger audience. Getting involved with local communities will give people in the area first-hand experiences with the university. This can attract interested students – even local youths considering future education options.
Driving Profits in Both Directions
The education system is rethinking the way they approached CRE and it’s generating tons of revenue for both industries. When colleges are doing business with commercial real estate, they’re acting as a prime client for our industry. This is benefitting local markets around the country.
At the same time, colleges are also expanding their profit margins by jumping into the CRE game. It’s a win-win relationship that’s strengthening everyone involved.
Colleges are making the most of commercial real estate investment. By expanding their portfolios, universities are broadening their financial resources.
For more CRE-centric news, explore the NAI Blog.