Universities are now critical drivers of innovation-led growth

At this year’s UKREiiF, Avison Young hosted a number of closed-door roundtables, inviting in senior commercial real estate professionals to capture fresh perspectives on some of the biggest topics dominating the sector in 2026.

Stephen Cowperthwaite, Principal and Managing Director of UK Regions at Avison Young, chaired a conversation between higher education leaders and sector partners on the subject of university estates and their evolving role as catalysts for innovation, investment and regional growth.

The hour‑long conversation didn’t shy away from the challenges that universities are facing, or the local pushback that has followed some estate expansion, but the discussion also highlighted the emerging key opportunities as universities begin to work more closely and strategically with both public and private sector partners to unlock opportunity.

Are our universities at a crossroads?

Right now, we’re seeing headlines about declining overseas student applications due to UK visa policy changes and the closure of departments to mitigate financial deficits. But at the same time, businesses continue to rely on the facilities, research capabilities and talent that universities offer, and spinouts are on the rise. While some parts of university infrastructure usage are contracting, others are clearly accelerating.

What was clear from the discussion was that there is a definite challenge in the oversupply of space across university estates. Several participants acknowledged that their core campuses are now significantly larger than what their current teaching and research activity requires.

Alongside physical oversupply, as current academic requirements and demand for space change, participants highlighted the issue of low space utilisation, with national averages hovering as low as 12%, reflecting a mismatch between estate size and actual patterns of academic presence. This misalignment is creating operational inefficiencies at a time when universities can least afford them.

Recognising the superpower of universities

In response to both financial pressures and new commercial opportunities, universities are re-evaluating the purpose of their campuses and how they contribute to regional economic priorities. Throughout the conversation, participants reflected on how universities can be better embedded in their cities and regions, and different examples of what this could look like were provided. For example, students could be offered more real-world industry opportunities as a routine part of their learning, and universities could increase their “visibility” as central innovation hubs that sit within their urban centres, not apart from them, taking on an increased civic role.

Unlike commercial developers or private landlords, many universities sit on large, strategically located campuses woven into the fabric of towns and cities – places where research, industry, students and wider communities already intersect. With open labs, shared workspaces, incubators, civic‑facing research centres and mixed-use environments, the sector now has an opportunity to bring students and businesses together as an integrated community.

As plentiful as these opportunities are, what can’t be forgotten or neglected in university estate planning and regeneration is student experience, one of the core reasons that universities exist.

One concern is that students increasingly move between older buildings and new, innovation-focused spaces with leading facilities, many of which are often located off campus. This creates an imbalance between some students benefiting and others feeling disconnected from institutions’ newer amenities, impacting on the student experience, which universities are scored on.

Addressing this imbalance requires universities to recalibrate and repurpose existing space, rather than prioritising building from scratch, so that every student benefits from the institution’s innovation and civic presence. This is an approach that also plays to longer term sustainability challenges.

The rise of place‑based strategies

In recent years, expectations have shifted, with universities increasingly playing the role of place-based economic anchors and centres of innovation. While they were once viewed primarily as educators, their role now clearly extends to that of civic partners, with universities featuring strongly in Mayoral Growth Plans.

Several examples from the conversation illustrated how universities are already stepping into this role. Institutions are aligning their research assets with regional industrial priorities, such as clean energy, AI innovation, advanced manufacturing, and life sciences. They are co‑designing skills pipelines with employers, creating incubators to retain spinouts locally, and working with councils and combined authorities to shape innovation districts in city centres.

The conversation also surfaced the candid recognition that traditional capital funding models no longer work and how this pressures universities. New funding approaches are needed that allow universities to invest in their estates without “selling the family silver.”

Several models were highlighted. Joint ventures with local authorities and private partners are becoming more common, particularly where universities can anchor innovation districts or student accommodation schemes. Participants referenced examples where councils used tax increment financing or accelerated development zones to unlock investment, leveraging mechanisms that recycle future business rates to fund present‑day infrastructure.

There was also discussion about the untapped potential of pension fund investment. With large pension schemes under pressure to invest locally, universities represent stable, long‑term partners. However, the roundtable attendees acknowledged that universities often lack the commercial expertise to negotiate these deals effectively, especially compared to private developers who do this “365 days a year.”

Another emerging model involves mixed‑use buildings that blend academic space with commercial tenants to offset capital costs. But this would naturally come with its own set of complexities when sensitive research is involved. Overall, it’s clear that new approaches to funding are available, and that universities need to become innovative in how they finance estate transformation.

As one participant noted, the goal is to retain control, retain value, and retain the ability to shape the estate in line with institutional mission.

Reaching a turning point

The pressures facing universities are increasingly becoming a catalyst for change, prompting a reimagining of what university estates can achieve when positioned as central hubs for regional innovation. What’s needed is a bespoke approach that ensures local priorities are embedded in regeneration plans, while safeguarding the quality of both teaching and student experience.

Institutions must strike a careful balance between financial realities and civic ambition. Getting this right will enable estates to play a central role in the economic and social life of their regions. Avison Young is well-positioned to support this shift, using place-making and regeneration expertise to help universities become platforms for growth and collaboration.