The Real Deal Miami

SF seeing higher education real estate boom

By Alexander Britell | May 31, 2011 04:29PM

You probably won’t see a jackhammer at the sites of many South Florida condominium towers anytime soon, but a number of new residential development sites are going up — with a common theme: they’re funded by universities.

South Florida is seeing a mini-boom in university real estate, with higher education institutions both adding new space and expanding beyond their walls.

Last week, Moss Construction announced it had been awarded a $14 million contract to build a new dorm at Barry University in Miami Shores. Earlier this month, it was awarded a similar, $27 million deal to build a new student center at the University of Miami’s Coral Gables campus.

“We’ve actually seen a lot more request-for-production proposals from higher education institutions,” said Sherri Werner, Moss’ project manager at the Barry site. “There are several more projects that we’re in pursuit of and are short-listed for.”

In March, Florida International University signed a $12 million lease for a new 32,000-square-foot campus in downtown Miami’s Brickell submarket. In addition, a new, 30,000-seat football stadium is currently being built at Boca Raton’s Florida Atlantic University, with completion expected by the fall.

Two factors have led to a move by schools to build newer, more up-to-date facilities, catering to an increasingly competitive market for applicants.

“There are a couple of things going on,” said Herman Bulls, CEO of public institutions at Jones Lang LaSalle. “If you think about when all of the major construction took place on college campuses, a lot of that happened in the mid-1970s. The second issue is, students are accustomed to having, should I say, non-Spartan environments.”

These two factors have led to a move by schools to build newer, more up-to-date facilities, catering to an increasingly competitive market for applicants.

But the schools are also among those taking advantage of affordable financing and cheaper construction rates. Given the dramatic drop in residential development, the construction industry is far more available for universities seeking to build new projects.

“A favorite saying of mine is that you buy straw hats in the winter,” Bulls said. “Those organizations that are able to float bonds now, you have interest rates that are at an all time low. And other than public works processes such as roads and things of that nature, the construction industry is certainly not tapped out.”

He said he recently had a university client that saw bids for a project come in at 23 to 24 percent below what the estimate had been.

But campus spending isn’t the only way universities are getting in the real estate game. There is also a trend of universities moving into research parks, highlighted by developer Wexford’s University of Miami Life Sciences and Technology Park. (Wexford is the developer, and University of Miami is the park’s largest tenant.)

The park topped off construction on its first phase last fall.

While Bulls said research parks were more of a trend of the 1990s, these types of parks, along with other types of expansion like that of FIU into downtown Brickell, are important for schools trying to stay on the map.

“For any university that is attempting to be relevant, you’ve got to be able to find a way to bring the real world into your environment,” he said.