Universities have spent more than £8.8 billion on capital projects over the past five years. But this key source of income for many architects could soon dry up, writes Richard Waite
The amount of money ploughed into university building projects over the past four or five years is staggering. Since June 2014 the UK’s higher education golden goose has created more than £8.8 billion-worth of capital projects, according to industry tracker Glenigan, which compiled the data. This is nearly as much as the entire cost of staging the 2012 Olympic Games.
Over this period, construction began on 593 separate schemes for the 24-strong Russell Group of leading research universities, with the University of Manchester alone pumping £625 million into 47 projects, including the £350 million Mecanoo-designed Manchester Engineering Campus development. Other recent big-spenders include Swansea University (more than £550 million) and the universities of Edinburgh and Cambridge (both £330 million-plus).
But now there is a problem. Work in the university estates sector, so long a key source of income for many architects, is drying up. According to those commissioning and designing university jobs, the appetite for projects is cooling, especially for shiny new-builds.
Many universities that realised their campuses had to be of a higher quality to attract students have now done the majority of their major estate works
Julian Robinson, director of estates at the London School of Economics (LSE) and chair of the independent Higher Education Design Quality Forum, says: ‘While there is still a relatively long tail of higher education development in the pipeline, the halcyon days of [university] capital development are certainly over, in my view.’
Robinson is currently delivering big-budget schemes for the LSE by Rogers Stirk Harbour + Partners and Grafton (pictured top). But he admits that another potential £100 million-plus scheme, details of which could be revealed soon, is likely to be ‘the last for some time’.
Only two years ago the AJ reported that the higher-education building boom, backed by increasingly competitive universities, was steamrolling through campuses and threatening a number of 1950s and 1960s buildings.
So what has caused this slowdown and created, as Robinson puts it, ‘a distinct nervousness in the sector’? And what are the implications for the profession and the university estates themselves?
The situation is complex, and the factors differ widely between institutions. Of course, the uncertainty caused by Brexit and its potential impact on EU funding and the numbers of overseas students coming to study in the UK cannot be ignored. But the chaos surrounding the UK’s impending departure from the EU is not the only reason universities have become jittery about continuing to invest so heavily in their estates.
The sector is still anxiously awaiting the outcome of the prime minister’s root-and-branch review of post-18 education, led by former investment banker Philip Augar, which was launched last February. University bursars fear the review will call for tuition fees in England to be cut to £6,500 (although fees may be hiked for some mainly non-arts subjects that lead to professions with higher earnings). This would potentially reduce universities’ income and spending power.
‘The combination of uncertainty over the Augar report and Brexit is creating a perfect storm,’ says FaulknerBrowns Architects partner Andrew Kane. ‘It is leading some institutions to exercise a great deal of caution in how they promote their emerging capital plans.’
The picture is complicated further by the significant increase in debt within the sector – prompting warnings of a university ‘credit crunch’. This month The Times reported that the ‘record borrowing spree’ had seen the sector’s debts balloon to £10.8 billion over the past year – three times more than before the global economic recession.
And that isn’t all. One university director of finance, who wished to remain anonymous, told the AJ not to underestimate the fall-out as higher education ‘effectively stopped being a quasi-public sector’ with the abolition last year of the Higher Education Funding Council for England (HEFCE). The body, which used to provide grant funding for universities, has been replaced by the Office for Students – an organisation now focused more on ‘the fee-paying client’ (ie the student).
The Research England Development fund is still open to higher education institutions that could have made bids for funding through the HEFCE, but this favours universities that are research-focused. Also a factor is the natural life-cycle of the growth that began with the announcement in 2010 that £9,000 tuition fees could be charged to students.
‘Many universities that realised a few years ago that campuses had to be of a higher quality to attract students in the future have now done the majority of their major estate works,’ says the university director of finance.
One university that has completed a range of capital projects is the University of Lincoln. In 2017 it spent £53 million on capital projects and reported a £61.9 million debt. Last year its capital spend had dropped to £10.8 million while its net debt had risen to £64.7 million.
The unnamed director of finance, who works at a separate university, adds: ‘The sector is now operating in a highly competitive and regulated environment, with the government stating that it will not assist any university that fails financially.
Universities are choosing to repurpose existing buildings, rather than demolish and build new
’Combine [this cyclical dip] with the 15 per cent drop in the number of 18-year-olds in the country compared with 10 years ago – and hence a drop in intake – then there may be a short-term lull, at least for a number of universities.’
For architects, the threat of reduced funding has resulted in changes to what their higher-education clients are asking them to do. This includes new ways to deliver students’ education more efficiently.
BDP’s northern region education lead, Sue Emms, believes current thinking on how to deliver teaching could be called into question.
She says: ‘We may see a move away from the smaller, collaborative, active learning pedagogies, which are now commonplace but exert a high demand for space and resources. Just when many thought the lecture theatre was dying, we may see its renaissance.’
Emms adds that the biggest consequence of the shifting economy of higher education is an emerging move from new-build to rebuild.
She says: ‘Universities are choosing to repurpose existing buildings, rather than demolish and build new. Given the extent of 1960s and 70s building within university estates, we will see an increase in this. It has to be the right approach.’
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Tony Skipper of 5Plus Architects agrees, saying: ‘I would always advocate a review of the existing estate before embarking on significant plans for expansion. After all, the sector still operates at inexcusably low rates of utilisation, which, if addressed, could save significant capital and revenue expenditure.’
This reuse-first approach is applauded by Catherine Croft, director of The Twentieth Century Society, which has been battling to save a growing number of post-war buildings, including Durham University’s threatened but unlisted Dunelm House, built in 1966 by the Architects Co-Partnership. She says: ‘If the slowdown encourages more considered decision-making about existing buildings, it could be good news, particularly for those examples of Brutalism which are not yet listed and which hover on the edge of being widely accepted as historically significant.
‘The more time that passes, the more likely it is that their merits will be recognised, and refurbishment rather than redevelopment will seem the obvious solution.’
Croft adds: ‘In the meantime universities should be urged not to slap paint on to board-marked concrete as a short-term measure, and to be careful not to drill into fair-faced concrete when fixing extra services. Both cause damage that is tricky and expensive to sort out once funds for major refurbishment have been found.’
Of course, many universities are still forging ahead with overhauling and expanding their estates. Only this week the Royal College of Art launched the next phase of its Battersea campus masterplan, featuring a building by Herzog & de Meuron.
And universities are increasingly looking at hooking up with the private sector.
Emms says: ‘Placing academic researchers side by side with industry ensures research is focused on industry’s challenges at the same time as ensuring students develop the right skills for industry – it’s a key recruitment tool, too. With this blurring of academia, industries and businesses, we are also seeing the impact on estates from the growth of new flexible “learn and earn” pathways.’
In the longer term, universities will still have to keep investing in their estates and find different ways to leverage money and assets from new sources.
Jerry Tate, co-founder of Tate Harmer, which is designing a 200-seat venue and teaching space for York St John University, concludes: ‘There have been some fantastic recent university buildings, but in this global competition we still [trail] some other countries for facilities – particularly new types of collaborative spaces.
‘Although some institutions may have overreached, inevitably ambitious universities that want to attract the best talent will feel the need to invest in their estate or risk lagging behind.’
It is unlikely anything will stop the build-out of existing projects over the next couple of years but it is the subsequent wave of super schemes that is in potential jeopardy.
A cleverer approach to reworking existing stock is already becoming a preferred option for many universities. Architects willing to reimagine ageing estates, including the Brutalist post-war goliaths, should be well-placed to keep their higher education workload ticking over.
Comment: Jane White
Executive director, Association of University Directors of Estates
The picture is complicated. The diversity of universities within the sector contributes to this. The UK’s biggest universities – the ones with international reputations and significant research-based income – may well be in a very different position to a small teaching university in terms of their ability to raise and service loans for estates investment.
And we should remember that some universities – Huddersfield comes to mind – are building new without borrowing.
But across the sector there are many similarities: every university competes for both domestic and international students and staff; every university awaits the outcome of the Augar review with some nervousness as the potential for disruption to existing business models is so great; every university wishes the uncertainty associated with Brexit was over; and every university tries to balance an affordable mix of new builds and maintaining older buildings and repurposing their learning and accommodation spaces.
We [as directors of estates] are just as interested in this latter aspect – reshaping learning spaces to current need – as we are in the rather grander new-build ‘statement building’.
Comment: Fionn Stevenson
Professor of sustainable design, University of Sheffield School of Architecture
Over the past seven years, capital expenditure across the higher education sector has increased by 34.9 per cent, while staff expenditure has been cut by 1.9 per cent (source: HESA).
For some time, universities in the UK have been in a race to the bottom to produce shinier, newer, more attractive individual buildings to attract students, believing that investing more in buildings (at the expense of investing in teaching staff) is the way to grow.
This is a chimera, since richer universities in the USA and Far East are easily able to outgun most UK institutions when it comes to delivering flashy, fashionable icons. It has also resulted in a plethora of second-rate buildings in the UK, put up rapidly and with little accountability in terms of genuine economic, environmental and social sustainability, compared with when we had more considered, holistic and integrated whole-campus planning, such as is found in the work of Feilden Clegg Bradley Studios.
Universities are now paying the price for this ‘Liquorice Allsorts’ approach as the financial chickens come home to roost.
It is far more resilient to invest precious university resources in nurturing good staff and looking after or repurposing their existing buildings properly, particularly in times of budget cuts and austerity.
Hopefully this will happen now, and there will be more work for architects that specialise in retrofit or reuse – which is often better for the planet, in any case.