For years, colleges and universities have successfully monetized their non–mission critical real estate assets. In this Q&A, expert Kim Wright, a senior associate at B&D (full bio below), sheds light on why the practice is likely to become increasingly common in the coming years, focusing on the monetization of campus land for commercial development.
Wright: To put it simply, monetization as we’re talking about it is taking a real estate asset, typically land, and developing it to improve its value. Monetization extends to other campus assets, but for this discussion, I am only focusing on underutilized land. So I am not picturing schools monetizing their student housing portfolios, energy programs, or power plants, but developing their land into multifamily housing, retail, office space, medical office space, industrial uses such as logistics warehouses, etc. This can happen on-campus or off the main campus with land owned by the institution. Typically, B&D recommends that an institution not give up ownership of its land so it maintains control. Monetization does include ground leasing land to developers, but the ground leases need to be longer to drive developer interest.
When done well, monetization strengthens a school’s ability to optimize its real estate assets to achieve its goals. For smaller private institutions that are heavily tuition-dependent, monetization may ensure their survival.
This is an excerpt from an article originally published on the P3 Resource Center. Read the full piece here.