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UW-Madison turns to real estate development as new potential revenue source
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UW-Madison turns to real estate development as new potential revenue source

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Humanities building

The Humanities Building on the UW-Madison campus will eventually be demolished. UW officials are considering potentially redeveloping the space in a way that benefits the campus and also establishes a sustainable revenue stream. 

When George Smith looked at the area between the main UW-Madison campus and the hospitals on the city’s Near West Side, he saw a “dead zone.”

But Smith, a real estate consultant who works with universities across the U.S., saw something else, too. An opportunity.

UW-Madison could redevelop some its land to create an anchor for the area that would more closely connect the campus to its city surroundings, attract corporate research partners and maybe even make the university some money.

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Real estate redevelopment is transforming other colleges across the country and it could shape the University of Wisconsin System campuses, too.

The UW Board of Regents earlier this month approved a general framework agreement allowing UW-Madison to sell its land to University Research Park, which would in turn lease the land to developers to build housing, retail or commercial space. Revenue from rent would flow into an endowment, a percentage of which UW-Madison would receive each year for university operations.

Rob Cramer UW-Madison headshot


UW-Madison officials stress that the strategy is long term and will be carefully managed. A joint group of UW-Madison and University Research Park employees will vet projects to ensure they benefit the university’s mission. Each parcel sale requires approval from the Regents.

“A straightforward privatization ploy this is not,” Rob Cramer, the university’s interim chief financial officer, said in an interview. “This is really about trying to find higher and better uses for our space.”

UW-Madison’s strategy could be replicated by other UW campuses, interim System President Tommy Thompson said at a Regents meeting earlier this year. UW-Green Bay owns a golf course that could be developed, and UW-La Crosse is eyeing a plot of land that is of potential purchase interest.

UW-Madison doesn’t anticipate buying a bunch of new land, Cramer said. Instead, the university is taking a close look at its existing real estate, though there may be properties adjacent to campus whose owners may want to align with the university’s future development direction. City staff would offer input on all projects.

The University Research Park board, which the UW-Madison chancellor sits on, will manage the investment and decide what amount to return to campus, Cramer said. If over the next 20 years, for example, University Research Park built up an endowment between $250 and $500 million, even a 4% annual return would be a “significant” contribution to UW-Madison.

“The real success of this will be judged in 20 or 30 years,” Cramer said. “Has this led to both development that makes sense, aligns with the mission, supports the community and has created a financially strong UW-Madison?”

Long-term approach

More than a decade ago, UW-Madison was keeping pace with peer schools in terms of revenue growth, officials say. Around 2013, however, the university started falling behind.

UW-Madison over the following years pursued a number of money-making strategies that Chancellor Rebecca Blank has described as “low-hanging fruit.” The university increased tuition for out-of-state students and professional programs, grew its summer term, expanded its undergraduate student body, added professional master’s degree programs and boosted philanthropic donations.

But with a shrinking share of its budget coming from the state, a trend that is unlikely to change in the coming years, Blank said there had to be a longer-term financial fix. She asked a group a few years ago to look at ways for UW-Madison to diversify its revenue streams.

One of the most promising ideas to emerge was developing a real estate strategy in and around the campus area. The group’s report offered as a case study the University of British Columbia, which developed some of its land for student and staff housing along with retail and office space.

Kris Olds, a UW-Madison geography professor and planner who studies universities and cities, was an undergraduate at the University of British Columbia during the 1980s when this transformation was launched. Developing residential neighborhoods not only generated revenue for the university but also made the area safer, more vibrant and more aesthetically pleasing, he said.

The endowment has grown to $1.5 billion in Canadian dollars over the past several decades, though Olds and others noted that each institution’s real estate market is unique and will yield very different levels of return.

“This is absolutely not a way to make a quick buck,” said Olds, who led the revenue innovation work group. “It takes decades” to ensure a university’s real estate strategy supports its broader missions and also aligns with the city’s goals.

Potential ideas

No specific projects or land parcels have been approved yet. UW-Madison officials may bring a few initial ideas to the Regents in December for approval.

Surface parking lots are ripe for redevelopment, Cramer said. There may be fewer of these needed in the future, considering how the COVID-19 pandemic highlighted the possibility of remote work and the city’s planned Bus Rapid Transit System will allow more employees to commute without a car.

A parking lot on the edge of campus, for example, could be refashioned into a multifamily apartment building with ground-floor retail space, he said. UW-Madison could establish criteria for developers, such as the number of affordable housing units to be included in the project. The idea could help address the city’s housing shortage, add another lot to the property tax rolls, improve the campus aesthetic and make some money.

Another area of interest is the Humanities Building, which takes up nearly an entire block in the heart of the campus and is slated for demolition sometime in the next decade. It’s unclear at this point what may take its place but Cramer called the location itself “on the bigger end of the spectrum of possibilities.”

Eagle Heights and Harvey Street Apartments, both of which are university-owned, could also be redeveloped. The report also throws out the ideas of an “Alumni House” where retired alumni could live and a “UW-controlled entertainment zone” around Camp Randall Stadium using a model developed by professional athletic teams.

Eagle Heights

The Eagle Heights apartment complex is one of many redevelopment ideas proposed in a university report.

Research potential

Establishing “innovation zones” on campus could also be part of a broader real estate plan.

Aaron Olver


A lot of companies like the location of University Research Park, director Aaron Olver said, but he sometimes hears from faculty and students who want incubator or startup space within walking distance from campus. More companies across the country are showing interest in establishing “corporate innovation centers” directly on campus where they can hire students, sponsor research and engage with faculty.

UW-Madison officials identified two potential “innovation zones.” One located on the west end of campus centers around the health and life sciences. Another area focused on engineering, computer and data sciences could potentially emerge on the south end of campus.

Smith, managing director at U3 Advisors, the real estate consulting company UW-Madison hired to help assess its land holdings, said Madison’s market is “pretty favorable,” with high residential demand, an active startup scene and a number of established, growing companies like Epic Systems.

Another advantage UW-Madison has is University Research Park, which has decades of experience in managing ground leases. Some other research parks are unsuccessful with real estate development and can even be a “drag” on the institution, Smith said.

“I’m optimistic about this setup,” he said.


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