An opportunity to rethink education?
Coronavirus has put a pause on momentum in the UK property market but once the crisis is resolved, demand is expected to pick up. In the meantime, there are opportunities to re-imagine how real estate is used across several sectors.
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In the education sector, remote learning – first “invented” by the Open University in 1969 ¬ – has flourished. This has led to increasing investment in platforms such as Emerge Education whose new £10 million edtech seed fund is expected to double in the coming months. The London-based firm is a seed fund for startups focused on skills training and education. Portfolio companies include Tailor-ED, which provides online educational resources for maths subjects.
While online learning is unlikely to ever be a complete substitute for face-to-face learning, it could enable educational property owners to use their real estate more efficiently and creatively. This could generate new income streams to alleviate potential drops in fee income.
As Emma Cleugh, partner and head of institutional consultancy which covers the educational sector, at Knight Frank, commented: “There is an opportunity to rethink what we’ll need from education when things feel more normal and what that will look like.
“What we are seeing now is that owners and investors in educational property are increasingly looking at the technology but also closely at their buildings and seeing what works well for them and what is now potentially going to be underutilised and could be used differently and how the educational experience can be further enhanced and enriched.”
Underused education facilities could be redeployed to provide more employment opportunities on university campus such as incubators for innovation; larger educational owners could consider sale and leaseback over say their student halls of residence to generate capital; or surplus space could be used for new technology to deliver remote learning to a wider global audience.
For example, prior to the outbreak of coronavirus, leading institutions such as Imperial College were already innovating their campuses to meet demand for a new wave of London-based entrepreneurs, such as those shaking up the UK’s £70bn health and life sciences sector.
The capital’s property market has struggled to provide them with the research space on the scale they need and over the coming years research and development laboratory facilities are likely to be in demand.
For universities, more employment on campus will also help attract prospective students. Cleugh said: “Education providers should think about how their offer can create greater employability, so students can transition seamlessly from university to employment.
“Generally we expect to see most educational organisations look at how their real estate can work ‘harder’ for them as they look to boost their income in a time of volatility and potentially changing student numbers to see how they can use their space more efficiently and repurpose surplus assets and leverage off it more creatively.
Here at Knight Frank we are already working with some of the largest educational providers and looking to the future on how their requirements will change – intelligence from other rapidly evolving sectors we operate in such as retail and office markets, serve to inform and assist in fresh thinking for owners of educational property on their real estate strategy which ultimately must serve to ensure education continues to have the power to enrich students’ lives and change the world.