Many colleges are partnering with mainstream developers to place shopping centers and other commercial projects on or near university land. It’s part of an effort to augment campus amenities to entice students and staff in the face of declining enrollment.

For example, Terrapin Development Co. — a joint venture between the University of Maryland and its foundation — has formed aJV with two private developers to bring 400 living units and 70,000 square feet of retail to the new Southern Gateway development. It will include the area’s first Trader Joe’s, said SiteWorks Retail Real Estate Services founder and president Nick Egelanian. Residential developer Bozzuto and Willard Retail also are active in the project. Southern Gateway sits less than a mile from another recent campus-area development, Riverdale Park Station, that features multistory residential units, townhomes, a Whole Foods and an array of fast-casual and upscale eateries. Egelanian, who once attended and now teaches at the university, said it has become a compelling main street-style setting.

In Tampa, RD Management is redeveloping portions of the former University Mall near the University of South Florida campus into a 113-acre multimodal, mixed-use community called Rithm@Uptown. The center will feature new construction for Burlington and Sprouts Farmers Market and at least 30,000 square feet for additional retail, plus offices, incubator spaces, a robotics lab, research facilities, lecture halls and a future hospitality piece. Rithm@Uptown, a key component of a newly walkable urban corridor stretching from USF to Interstate 275, “is being married with the successes of our top-20, public-research university, a world-class medical research district and a rapidly growing, immersive arts and technologies community,” said RD chief development strategist Christopher Bowen. Portions are expected to open by late 2022.

Anecdotally, more than a dozen other retail-related campus projects are rising across the country. “These projects are being developed with high performance expectations by the developers and their lenders and investors and the retailers choosing to locate in them,” Egelanian said. “The days of students and universities accepting the minimalist housing and retail standards of the 1970s have long passed.”

Such changes bring to the fore ample opportunities for developers and retailers alike “to profit handsomely from what once was considered a relatively weak and unattractive market segment,” Egelanian added. “Students now arrive with late-model cars in tow, and they consume on par with that reality, expecting Starbucks as a minimum standard for coffee and other goods and services once thought unnecessary for college students.”

College Square Shopping Center, a short jaunt from the University of Delaware, is being redeveloped into The Grove at Newark. It will feature 306 living units, generous green spaces and standalone retail buildings, plus restaurants with outdoor seating, part of the 60,000 square feet planned for new retail/restaurant space. The phased project is expected to open by year-end. And in Chapel Hill, North Carolina, University Place center owner Ram Realty Advisors plans to add 253 apartments, offices, sizable green spaces, shops and restaurants to the 1970s-era, Harris Teeter-anchored center across from the University of North Carolina’s east campus.

The University of Pennsylvania was one of the first major colleges to build a full-fledged shopping center on campus, Sansom Commons, transforming underutilized parking into storefronts and eateries in the early 2000s. Tenants like Loft and Urban Outfitters pay rent to the university. Penn now owns or manages around 400,000 square feet of retail on or around campus, it reported. Such real estate assets, noted business advisory Plante Moran, stand as a significant and untapped means of unlocking capital and driving down school costs. They also give colleges an opportunity to enhance student/faculty retention and support academic missions, the firm said.

A later project, completed at the University of Southern California in 2017, renovated obsolete campus buildings into the Shops at USC Village at a cost of $700 million, with retail and restaurants below student housing. Taco and burger shops, salons and other businesses followed the initial tenants: a Trader Joe’s and a small-format Target. Most tenants pay market rent, and profits are farmed back into the project.

Maryville University plans to expand its Town and Country, Missouri, campus near St. Louis by redeveloping the 11.5-acre Woods Mill Center mall. The project will feature a 3,000-seat multipurpose sports arena, 400 units of housing and at least 6,000 square-feet of retail. The school is partnering there with St. Louis-area developers Keat Properties and Keeley Properties.

Several smaller centers also are on the drawing boards. Earlham College in Richmond, Indiana, broke ground in May on a neighborhood-style retail and restaurant center. School president Anne Houtman said the project, expected to open in early 2023, strengthens the college-community connection “in a way that wasn’t available before.” The college holds sway over tenant selection and project design. Thor Construction Co. and DeMao Retail have inked a 60-year lease on the university-owned property. And Talley Riggins Construction Group has completed a 20,130-square-foot retail center across the street from the University of North Texas at Frisco near Dallas. It’s expected to open in 2023.   

Changes in consumption power and student expectations have paved the way for campus commercial development, as students find themselves in quarters vastly improved from their spartan past, Egelanian said. Enhanced retail offerings, including a pair of small-format Targets, now occupy spaces on the periphery of the University of Maryland campus. Such projects conform with a new urbanist plan that the school and the College Park community jointly adopted years ago, he said.

Some colleges, including The University of Iowa and Liberty University, are buying malls outright. The Iowa institution will take full control of Old Capitol Town Center — it already owns a 62% stake — by the 2024-25 school year, it said. The 41-year-old center in downtown Iowa City blends retail and university services. Similarly, Liberty bought River Ridge Mall — near its Lynchburg, Virginia, campus — in phases in 2012, 2016 and 2017 except for two independent anchors. The center attracts “the buying power of more than 45,000 students, making it a top destination for retailers,” JLL said when it took over center management in 2018.

RELATED: How Liberty University Bought and Reinvigorated River Ridge Mall

Retail aside, many of the nation’s more compelling public-private partnerships on campus have a decided commercial flair, yielding hotels, performing arts centers, multipurpose arenas, healthcare campuses, corporate-sponsored research parks and for-profit housing, said Strategic Partnerships Inc. CEO Mary Scott Nabers. In such projects, she said, “the economic vitality of the entire area is enhanced, and the benefits to all stakeholders are great.” 

Real estate is always one of the largest items on any institution’s balance sheet, said Nabers. And as competition for students incentivizes universities to recycle minimally productive assets, “most public officials are eager to listen to ideas from developers and investors,” Nabors said.

The pressure to impress is on for colleges, as enrollment declines are expected to become only more acute. Since the pandemic, U.S. undergraduate enrollment has dipped by 1.4 million students, or 9.4%, according to a May report by the National Student Clearinghouse Research Center. College administrations warily are eyeing a demographic cliff that’s expected to begin after high school graduate numbers peak in 2026, forcing colleges to become more creative in luring what will be a dwindling number of recruits. 

Expect other college centers to proceed with commercial real estate strategies. The University of Wisconsin-Madison approved the sale of an undisclosed amount of campus land late last year to University Research Park, which will lease it to developers to build housing, retail and other commercial space. Rent revenue would flow into an endowment, a percentage of which would be used to fund operations. Project consultant U3 Ventures said the school wants to create a threefold real estate strategy that monetizes the university’s underutilized assets, better connects the school to the city and attracts new corporate research partners.

“We can only expect to see more and more of these types of projects at colleges and universities,” Egelanian said. “They come as students’ expectations evolve and more and more opportunities are created for universities, developers and retailers alike.”