City Campus Revitalization
Cities have to run like any business — they have to have enough revenues to cover expenses. The difference for cities is that they don’t actually generate any revenues on their own; they rely on the economic success of local businesses. That’s why smart cities pay attention to what’s happening to the major employers in town and they work hard to help their major industries grow and succeed.
Kent State University is the largest employer in Kent so I keep a close watch on what’s happening in the business of higher education. I want to understand the economic trends in higher education so that I can make sure that the city is doing what we can to support our largest employer and position ourselves to take advantage of all the economic opportunities that the university creates in Kent.
The good news is that overall higher education is outperforming a lot of sectors in our economy. As the US economy transitions from a traditional manufacturing base to more knowledge and technology based industries, universities are playing a critical role in leading this economic change. In our rapid pace, globally connected markeplace, economic performance isn’t so much about being in the right place at the right time as it is anticipating where the next right place will be and getting there first — that’s a core function of universities and that’s why 9 out of the 10 top rated cities for business vitality are university cities.
It’s an exciting time for cities with universities as major employers because the universities also understand that their success is linked to the vitality of the town they call home. More than ever before, universities are partnering with cities to revitalize campuses and downtowns to drive economic success. The challenge is figuring out how to convert all this emerging economic potential into actual business activity in Kent. A few examples are provided in an article that I downloaded from University Business magazine that provides a good example of the kinds of activities cities and universities are doing for mutual gain:
“It’s not enough to add shops. It’s not enough to build housing. As universities all over the country are discovering, university-led urban revitalization is all about creating an environment where an institution and its neighboring community cannot only coexist, but also benefit from one another.
The University of Pennsylvania has occupied several core blocks in West Philadelphia since 1870 and has steadily revitalized and expanded its 269-acre campus over the past 134 years. Until the 1950s and the advent of “urban renewal,” West Philadelphia had been a thriving neighborhood of Victorian homes and small businesses. Then, it gradually slid into decay in the 1970s becoming dilapidated and dangerous. As little as 15 years ago, it was not uncommon for students to be warned against venturing into certain parts of West Philadelphia. “The 1992-93 year was rock bottom,” recalls Omar Blaik, senior vice president for Facilities and Real Estate Services at Penn. A student was killed and a professor was stabbed. Local businesses were closing, and students had to be bused downtown just to grocery shop. “The neighborhood was empty,” Blaik recalls. About that time, Penn made the decision to engage in urban renewal in its pure sense, recreating a neighborhood of local shops and homes.
First, Penn had to address its campus issues. The Ivy League campus was designed to face inward toward the central tree-lined walkways and common areas and toward other campus buildings. “The buildings didn’t even have street addresses. We were saying ‘We’re not part of this neighborhood,'” Blaik explains. Existing buildings were re-designed to have their main entrances on the city streets. The campus turned itself around and looked out over the neighborhood instead of turning its back on the streets. “We realized we cannot exist in a desert and imagine we are not part of what surrounds us,” he says.
At the same time, the university put into effect its West Philadelphia Initiative, a five-pronged plan, developed with neighborhood input, to revitalize the struggling neighborhood and make it a livable, workable community. All five were implemented concurrently. The first issue was to make the environment cleaner and safer. The newly formed University City District, in partnership with other large entities like the University Hospital, began patrolling the neighborhood and organizing cleanup of graffiti and garbage.
To increase home ownership and decrease absentee landlordism, the university paid mortgage incentives of $15,000 to university employees who bought a house in the neighborhood, and $7,500 to homeowners who improved their existing property. By making ownership and beautification a priority, Penn hoped to increase the stability of the whole neighborhood and create a sense of pride in West Philadelphia instead of the perceived stigma. Penn also went out of its way to contract with local businesses for goods and services required by the university, such as laundry and catering. This policy of economic inclusion kept neighborhood money in the neighborhood, and went a long way toward convincing skeptics that Penn was sincere in its desire to do right by West Philadelphia.
“It took a lot of hard work to get the community to believe we weren’t pulling a fast one,” says Blaik. Building a new elementary school and turning it over to the public school district, while continuing to fund $1,000 per child helped, the cause. Creating a neighborhood where university employees would want to live goes a long way toward cementing the relationship between Penn and the neighborhood. “We live in the community. My kids go to the new public school. I am the community,” says Blaik.
Penn worked with retail planners to recruit and maintain diverse and local retail tenants, and helped create a rich neighborhood tapestry by keeping unique buildings and creating new structures in harmony with the existing architecture. Despite all efforts, however, there are still mixed reactions to Penn’s policies. Joyce White, a 30-year resident of West Philadelphia and an employee of the university’s museum, is enjoying the benefits of increased property values and cleaner, safe streets. “I often feel I live in a heaven of some sort: sitting on the back deck of a home with three fireplaces and three sets of pocket doors, listening to the crickets and birds under old-growth trees, chatting with neighbors across adjoining yards, all within walking distance of my job at Penn,” White says. Though she admits that she couldn’t afford to buy in now that house prices are catching up with the rest of the city, she’s glad the university is creating greener, safer streets. Others question Penn’s right to “revitalize” a neighborhood that was in many ways already a vital and functioning community, and accuse Penn of co-opting the neighborhood and creating, in effect, a Penn colony. Those who can’t afford to buy into the neighborhood, like George Poulin, a Drexel University architecture student, criticize Penn for creating “a yuppie enclave. It’s great to see a neighborhood become so popular and well-maintained, but it’s disheartening to know that I’ll be left out of the picture because of my income level,” Poulin says.
Redding sees the real potential for campus retailing about five years out. At the rate Starbucks is growing, the need for employees is getting dire. Starbucks is “looking to take a more holistic approach” to coffee on campus by setting up reciprocal arrangements with a university to develop cross-programming with the school and make Starbucks an attractive place for students to work. The hope is, that by having Starbucks on campus, it will be a way to get students into a Starbucks management track and use Starbucks as more than a way to sell coffee but as a management training ground.
When the University of Illinois at Chicago was looking to expand its campus and increase its profile as a desirable place to go to college, they looked south to a dilapidated area of boarded-up buildings and warehouses. The university had been slowly acquiring property over the years, but there was no coherent plan for what to do with it. “We wanted to give people a reason to stay on campus,” says Ellen Hamilton, director of Real Estate at UIC. “The campus was virtually lifeless after 4 p.m. We wanted to populate it and create a 24-hour environment,” she says. The university needed to become a neighborhood instead of just a school.
It isn’t just the university benefiting from the retail boom on campus. Companies that set up shop on campus reap the rewards of not only the built-in foot traffic from students but from the neighborhood as well. Ken Redding, vice president of Business Development at Starbucks Coffee, says that Starbucks approaches a campus location as it would any other potential retail location. “It’s all about studying traffic patterns,” he says. “The two sources of traffic–student life and neighborhood–make them a good market.” There are roughly 100 Starbucks on college campuses nationwide.
The new grocery store is earning $750 per square foot and the gross sales per year from the two developments has topped $200 million. Retail rents have gone from $7 per square foot to $20 per square foot with Penn owning the majority of space. “We’ve proved the concept, and now [retailers] are flocking to us,” says Blaik, but it’s not like the neighborhood had suddenly gotten rich. It was the result of diverting the money that had previously been leaking out to the shopping centers downtown and outside the city.
But the cornerstone of the entire approach was retail. In the 10 years since the initiative began, almost 40 new businesses have opened on Penn property. One development is located on what used to be the university border on West 40th Street, and the other is along the north side of campus, an outdoor urban shopping center called University Square. It contains the Hilton Inn at Penn above and shops like Urban Outfitters, Ann Taylor Loft, and Barnes & Noble below. The university funded and built the $100 million project, which it now owns and operates. The latest addition, Cereality, a new food-service concept that touts “all cereal, all day, all ways,” is opening its first sit-down cafe in University Square in November. The university acquired money to construct the project by floating bonds, while acquiring debt. Fortunately, the revenue from the retail rent is helping to pay the debt service.