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PROPERTY COSTS OF THE UNIVERSITY ESTATE REMAIN LEVEL for THIRD YEAR IN A ROW

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The University of Cambridge © iStock

6 October 2017 | Herpreet Kaur Grewal


The total property cost (revenue spending) of the university estate has remained relatively level for the third consecutive year at £2.04 billion, according to the Association of University Directors of Estates’ (AUDE) annual report, released today.

 

The publication, entitled Higher Education Estates Management Report 2017, spans the academic year 2015/16, and details the evolving profile of the university estate in the UK.

 

The UK university estate is managing an additional 500,000 square metres of space as well as the comprehensive refurbishment of older buildings.

 

Despite this increase in the size and complexity of the university estate, the report says directors of estates have worked to keep costs down, hence the £2.04 billion figure for three years in a row.

 

The size of the university estate is difficult to envisage, but it is about the size of 230,000 three-bedroomed houses (CABE dwelling size survey 2010). 

 

Key findings:

  • • Estate size increases by 500,000 sq m from 21,400,000 to 21,900,000 sq m (GIA).
  •  
  • • Total property costs remain at £2.0bn a year, the same as previous three years.
  •  
  • • Income per sq m (a measure of estate use) continues to rise above the rate of inflation.
  •  
  • • Capital expenditure is significant in some institutions:
  1. 20 institutions with the largest capital spend, spent 50 per cent of the total HE sector spend
  2. 80 per cent of the entire sector’s capital was expended by 54 out of the 154 institutions
  3. Four institutions spend £100m each a year – Cambridge, Imperial, UCL, Edinburgh.

  • • There has been an increase in estate use of 4 per cent between 2014/15 to 2015/16 and it has risen 14 per cent between 2013/14 and 2014/15, as universities make every square metre work hard to accommodate demand for world-class facilities.
  •  
  • • The number of young people available for recruitment from the UK into universities will continue to decrease to a historic low over the next four to five years. 

 

Capital expenditure in UK university estate reached £3 million a year for the first time, with funds spent on refurbishing old buildings and also on building newer, more carbon-efficient premises to decrease running costs long term.

 

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, added the report.

 

These decisions will only become more difficult, according to Mike Clark, AUDE’s chair, and director of estate & facilities management at the University of Brighton.

 

He said: “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. While it’s likely these decisions cause sleepless nights already, with the threat of further decreased income as a result of the Teaching Excellence Framework’s sanctions, and a historic low in those available to recruit to university, more turbulent times are almost certainly ahead. For many institutions, the challenge will be to develop capital programmes to update their estate whilst student numbers remain level, or for some, even reduce.”

 

The demographics of the UK show that the number of people available to go to university will continue to fall for the next four to five years to a historic low, before numbers start to recover again.

 

Clark added: “Alongside the uncertainty of Brexit, and studying in the UK 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 the investment is the age of the university estate: about one-third of the estate was built between 1960 and 1979 and will be at the end of its design life soon, continuing to need substantial refurbishment or replacement and demanding continued capital investment. Overall, however, with investment over recent years, the age of the university estate is now getting younger.

 

The report says the overall figure of healthy expenditure levels may be misleading – with 20 institutions with the largest capital spend of 2015/16, spending 50 per cent of the total capital expenditure. Similarly, 80 per cent of the capital was expended by 54 out of the 154 institutions, and four of the biggest institutions spent a £100 million a year each on new buildings – these were the University of Cambridge, Imperial College, University College London and University of Edinburgh.

 

George Griffith, head of university consulting at CBRE, who was involved in authoring the report, said: “Wages make up a large part of total property costs and as salary costs increase, so do overarching operating costs. This will be 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.”