One of the big new higher education trends is internet classrooms. Star professors from top universities teach on-line courses or new web-based colleges provide curriculums for credit totally remotely. The grand idea is that college degrees can be obtained without the high-priced trappings of campus life—you don't need facilities, student housing, meal plans, or transportation back and forth. Students and their families now faced with the prospect of decades paying off student loans would get relief from education bills at a fraction of current costs. More people would have access to college and potentially the dividends gained from better employment opportunities. A better educated population will spur more business, innovation, and economic productivity, etc., etc. and etc.
So called massive open, online courses (MOOCs) sound like a great idea. But what would this all mean for real estate and the real estate industry? Over the last few years my friends at the Urban Land Institute rightly have been touting cities which have retooled around so-called “Eds-and-Meds” industries—major universities and colleges. These institutions of higher learning not only attract student and professor brainpower, but also many start-up and tech businesses looking to draw on the localized concentrations of high voltage intellect.
Of course, college-related populations also support local businesses and universities employ significant numbers of support staff from administrative, maintenance and food service workers to security personnel. From cities like Boston, Austin and Columbus, OH to small towns like Hanover, NH and Richmond, IN, higher ed institutions are critical to economies and the vibrancy of real estate markets.
If significant fractions of students can earn degrees virtually without actually going to a bricks and mortar place, you would have to expect that many schools will shrink their campuses or go out of business entirely. Harvard and Stanford may live on, but some second and third tier schools may be threatened, and various state university systems would be encouraged to downsize—why should taxpayers support their high priced tabs in the MOOC world?
All those investors in student housing might want to consider the implications on their exit strategies. On line colleges at the very least will take any froth out of demand and at worst could deflate the market for these facilities in many university areas.
Now MOOC curriculums may be great for the bottom lines of top- tier branded schools, their senior executives and top professors, but then think about all the assistant and associate professors these schools will no longer need. And of course, the requirement for support staffs shrinks… So local housing markets take a hit as well as retail and office—fewer people with jobs and or making less translates into less demand… If brainpower no longer is concentrated in certain places, then various incubator businesses will not be attracted to them either. In the real estate world, there would be few winners if MOOC comes into vogue and really gets traction.
Separately, we might argue over the merits of online courses— can the quality be as good as classroom learning, do students really apply themselves and can they game the system more easily to pass or get better grades, do they miss out from direct interaction with professors, can their work be properly evaluated and tested, how valuable is actually experiencing campus life to social maturation and well-being, and the big issue-- will missing out on attending school football and basketball games be detrimental?
In any case it's time for all of us to smarten up—the virtual world now positions to wobble what so recently was such a promising pillar for sustaining many real estate markets.
Boola, Boola.
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
