Growing pains: It is possible that the UK higher education sector is approaching ‘peak campus’

Imagine running a business that has increased throughput by 62% in seven years. It sounds good doesn’t it? The sector that has seen this explosive growth isn’t technology driven, like ride-sharing or video-streaming, it’s founded on bricks and mortar – the UK’s universities.

It’s hard to imagine a part of the UK economy less likely to see an explosion in growth, but that’s what an recent article in The Economist spelt out. Rule changes governing undergraduate recruitment have been pretty much deregulated since 2015. Higher-status universities, usually members of the elite Russell Group, are permitted to recruit as many high-scoring students as they like – targeting the £9,250 in annual tuition fees that each place filled guarantees for at least three years. This has enabled universities such as UCL to invest in transformational programmes such as the Stratford campus.

For all of the winners – including Bristol, Exeter and Newcastle – there have been some conspicuous losers, either among the former polytechnics, such as London Metropolitan, or those in relatively remote locations including Cumbria and Aberystwyth. London Metropolitan’s undergraduate intake has declined by a hair-raising 42% since 2012.  

How many businesses in our industry have been exposed to such a violent swing in their markets? The stability of the higher education sector matters for construction, because university clients have become an increasingly important growth market – volume has doubled in real terms since 2012, as universities have invested in new facilities to tempt and retain footloose students. If associated residential development is taken into account, the universities construction market was worth £6bn in 2018. The strains associated with fluctuating headcount must be severe.

However, despite all of the disruption, no UK university has so far found itself in terminal financial difficulties. This points to a great deal of resilience and flexibility in the way that universities face their markets, which may in turn have some implications for their estates and the businesses that design and deliver them. London Metropolitan, for example, has increased its emphasis on courses aimed at older, part-time students as well providing more courses aligned to apprenticeship programmes.

The first important lesson is that current boom conditions are unlikely to be sustainable – indeed, spend levels fell during 2018 and latest data shows volume in real terms at levels last seen in 2014. What facilities universities choose to invest in once they have their student centre, library and technology campus has always been a moot point – it is possible that the UK HE sector is approaching “peak campus”.

A second issue is that the drivers behind a university’s successful recruitment campaign are dynamic and will always be subject to change. According to The Economist, close-knit campus-based universities are particularly popular with the current generation of hard-working and relatively abstemious students. But at some point, priorities for students – and the direction for investment – will change.  

A third point is that the current system – which appears to be resulting in the development of surplus capacity – could easily be subject to changes in policy or further reform. Further opportunities are likely to come from a change to the status quo rather than from the maintenance of business as usual.

So how should the construction sector view the future of its engagement with the HE sector. One clear area of opportunity should be the extension of the decarbonisation agenda to the whole estate rather than a small number of high-performing, trophy buildings. The acceleration of sustainability-awareness among younger generations in response to climate emergency means the priorities of future students are likely to be well ahead of the government’s 2030 carbon reduction agenda. It would be a fantastic development if universities were to take on the system-wide decarbonisation of their estates in response to student demand – is construction ready as an industry to support them? 

A further area for change should be the opportunity for adaptation – many universities, particularly those currently going through a phase of consolidation already face the challenge of making the best use of their existing assets.  Once again, institutions may find it increasingly difficult, from an economic and environmental perspective, to start from scratch with new-build options. Once again, this is an area where designers and constructors excel – highlighted by the reinvention of so many obsolete buildings for the tech and start-up sectors.

Finally, there is another area of change, which I think represents the greatest challenge to our sector – the challenge of building less through the more effective use of data. Utilities like water companies and property businesses like WeWork are already setting their data to work, capturing user feedback, increasing asset utilisation and optimising investment plans. Through the smart application of analytics, universities may build and maintain fewer assets, but the ones that they do hold will be managed and maintained more intensively and more intelligently.

It’s hard to imagine any business that is experiencing double-digit growth or contraction prioritising their long-term real estate strategy. There are simply too many other issues to deal with. However, for universities, this is area that is becoming increasingly significant and as a result, one to which construction should pay close attention. 

Simon Rawlinson is head of strategic research and insight at Arcadis and a member of the Construction Leadership Council