Construction firms must adapt to universities’ ever-increasing demands from their estates, according to Sue Holmes, chair elect of the Association of University Directors of Estates (AUDE).

Holmes presented an overview of the higher education development market at the Built Environment Networking event on Thames Valley Universities Investment Plans 2014, held in Oxford Town Hall.

Holmes, who is also director of estates and facilities management at Oxford Brookes University, said universities are spending more on their estates to meet students’ “higher expectations” now that they are paying higher tuition fees.

Much of this capital expenditure is spent on space for self-learning and “improving the student experience”, rather than on direct teaching space, which makes up just 14% of universities’ estates, Holmes said.

University estates are being reshaped by various trends, including trends towards more open plan offices, universities sharing facilities with local authorities and mergers and takeovers of struggling institutions, although these moves are typically resisted by academics.

Potential risks

Potential risks to the higher education development sector include potential falls in student numbers and student retention in a competitive market, which makes universities wary to commit to major schemes.

“I think everyone’s concerned about managing major capital investments,” Holmes said. “It’s challenging to commit to a large programme that may take five or six years when we don’t know what our student numbers will look like in three or four months time [in September when the university year starts].”

Other potential risks include a rise in the cost of borrowing, “further unanticipated public spending cuts” and a “failure to achieve overseas recruitment targets”.

Overseas student numbers are currently “static” due to higher fees and the “popularity of parties like UKIP”, Holmes said.

A massive market

Higher education institutions spent £3.9bn on capital expenditure in the 2012-13 financial year, up 46% on the previous year.

All 147 higher education institutions boast a total of 26 million sq m of floor space – more than the NHS or Tesco.

Higher education institutions generated £29bn of income in 2012-13, up 4.5% on the previous year, generating an operating surplus of 3.9%.

Holmes said the trend of the “last five to ten years” was for institutions to spend surpluses on their estates, adding: “We need to make sure we’re investing any surplus in our estate.”

A total of 2.34 million students were enrolled in higher education institutions in 2012-13, up from 2.2 million in 2010.