ANCHORED BY EDUCATION
by Lim Lay Ying
Property Times, New Straits Times
15th January 2004

Over the last decade or so, higher education development has been changing the landscape of large swaths of the Klang Valley, including the downtown area. In some cases, the colleges and universities there are replacing outmoded facilities; in others, they are replacing retail tenants by occupying large portions of empty space originally meant for retail anchors.

Along the way, they have given life to old or even abandoned buildings, served as economic anchors in their respective urban neighbourhoods, and as actual anchors for other projects. They have demonstrated the power to enhance real estate values and demand for complementing real estate types. Residential townships such as Subang Jaya, Bandar Sunway, Damansara Jaya, and Bukit Jalil, have all benefited enormously from the rising student enrolments in their respective institutions of higher learning.

These institutions have brought vitality to the surrounding community as well as economic benefits in the form of jobs, rents, and retail expenditures on the part of students and faculty. They have gained the economic clout to reshape the communities that surround them, and in the process, affect real estate values, aside from their primary role of being the source of “knowledge workers” – the smart, creative, and skilled people forming the foundation of successful companies.

Increasingly influential in urban development

Colleges and universities are also becoming increasingly influential in urban development circles. On January 5th, Majlis Amanah Rakyat (MARA) purchased a 32-storey office building at Bandar Wawasan (Vision City) situated along Jalan Sultan Ismail in the heart of Kuala Lumpur, from RHB Daewoo Sdn Bhd (a subsidiary of Rashid Hussain Bhd.) to set up a city campus for Universiti Kuala Lumpur (UniKL).

With a budget of RM100 million over and above the RM105 million acquisition cost for the office tower, MARA intends to operate the UniKL Institute Infotech MARA which is currently at Pertama Complex, Pusat Pengajian Persediaan, and three facilities – Faculty of Product Design and Manufacturing, Faculty of Computer Engineering and Telecommunication, and Faculty of Technical and Vocational Education.

Along with Bank Industri Bhd and Kuala Lumpur City Hall (DBKL) which are anchoring Office Towers 1 and 2 respectively, UniKL will be the third anchor for the RM1.3 billion Vision City project – a commercial and retail development spread over 4.6 hectares (11.5 acres) of land located in the Kampung Baru vicinity. The development will culminate with the fourth tower which comprises 228 apartments on a retail podium.

UniKL however is not the first university to choose to locate in the city. University of Nottingham from the United Kingdom set up its branch campus – University of Nottingham Malaysia (UNIM), at Jalan Conlay four years ago and has since then seen its number of student enrolment increasing steadily. UNIM offers Foundation Studies, Undergraduate, and Post-graduate programs for Business Management, Computer Science and IT, and Engineering students. The expanding university, is in the midst of building additional facilities at its Semenyih campus.

Converting commercial real estate space

In major cities throughout the world, from the United States to the United Kingdom to Australia, it is not uncommon to find colleges and universities in city centre locations. Chicago in the United States is host to 21 institutions of higher education with over 52,000 students and 12,000 university employees.

Established universities such as Roosevelt University, DePaul University, and Columbia College, have been occupying downtown buildings for several decades already and are continuing to add on more classroom and office space by converting commercial real estate premises.

Roosevelt University has been in the Auditorium Building – a national historic landmark, since 1947, and rehabbed the Gage Building on South Michigan Avenue for the Centre for Professional Advancement in 2001. DePaul University in 1993, spent US$70 million (RM266 million) converting the former Goldblatt’s department store at the southeast corner of the State and Jackson in the Loop into the DePaul Centre to house classrooms, offices, and retail space.

Columbia College bought its first building in Chicago in 1972, and has been a major anchor in the south Loop since then. With 13 buildings totaling about 1.2 million square feet, it is now the largest property owner there. University Centre of Chicago (UCC), a US$150 million (RM570 million) student residence which it built jointly with Roosevelt University and DePaul University, is its first residential building in the locality. The 18-storey centre houses 1,680 students and 43 staff in apartment-style units, and offers 31,000 square feet of ground-floor retail space.

Reshaping communities and downtowns

Other established universities in Chicago such as the University of Chicago and the University of Illinois have long been anchors in their respective surrounding communities. The former is in the Hyde Park neighbourhood and over the last few years, has added several buildings including an athletics centre and a dormitory. The 25,000-student University of Illinois is adding 900 residential units for about 2,000 residents to its current two apartment-style residences which already house 750 students. Over 640 units have been sold.

In the United Kingdom, renowned universities such as the University of London, including Imperial College London, King’s College London, and London School of Economics, operate out their city campus buildings located in the global financial centre. Australia’s RMIT University, University of Technology Sydney, and University of South Australia, for example, have either their bases or branch campuses in the country’s major cities.

This global trend is unlikely to be any different this century after persisting through much of the 20th century. In fact, as the intellectual capital of universities, particularly in the sciences, increasingly becomes a critical component in global economies driven largely by high-tech and biotechnology interests, these institutions can expect to gain further economic and political clout to reshape not only their own campuses but also the surrounding communities and downtowns as well.

With this, the increasing number of students residing downtown will not only change the demographics of the downtown population, but will also create a 24/7 environment and contribute to the vitality of their surroundings.

The bottom line is that the benefits to real estate (and their corresponding values) will be enormous.