Dive Brief:
- Colleges and universities with the neighborhood conditions and revenue to do so often look to real estate holdings as a long-term investment opportunity and a chance to revitalize their communities.
- University Business reports schools like George Washington University, in prime real estate locations, have been able to use their long-time holdings for lucrative mixed-use development projects and also to create more attractive neighborhoods for faculty, staff and students.
- To remain tax-exempt, schools have to limit their real estate purchases to those that align with their mission, and revenue goals are often simply to break even — but some institutions have sought out partners to minimize the inherent risk to massive new construction.
Dive Insight:
Beyond mixed-use developments that revitalize neighborhoods and offer opportunities for local businesses, major building projects common to colleges and universities also include student housing. Like the risks inherent to real estate investments, there is always a chance building a new student dorm will come before massive enrollment drops that make it irrelevant. A growing number of small, private colleges are partnering with private investors to fund the costs of construction of new dorms and then turn over a portion of revenues from students who end up living in them. The practice of turning to private investors for any higher education initiative, however, continues to be controversial.