A rising number of regional universities are setting up campuses in London to increase their appeal to international students. Just as top companies in the corporate world want to occupy the best buildings in order to entice the highest calibre of employees, the education sector is also realising it must make the same levels of investment if it is to attract the best students.

The universities' take-up in the capital has increased by 4,034 per cent between 2001-2007 and 2008-2014. The largest deal so far is Liverpool University’s acquisition of 33 Finsbury Square, EC2 (73,746 sq ft) last year, but University of Warwick, University of East Anglia, Sunderland University, Coventry University, Ulster University, Glasgow Caledonian and Cumbria University have all set up campuses in the capital.

Universities require large buildings capable of accommodating thousands of students, primarily in key locations with amenities and transport links in close proximity. With current lack of this type of space available in Central London, these institutions are increasingly turning to buildings that have traditionally been used as office space with the intention of changing use to D1.

The most popular areas are the City Fringe and north of Oxford Street (East). The 5,000 to 10,000 sq ft size bracket is generally the most sought after, though 11 deals completed since 1993 have exceeded 50,000 sq ft.

Rental levels in London are competitive and the educational sector has become increasingly willing to pay the market rate, with the average rent paid at £39.50 per sq ft this year, compared with £26.33 during the last peak in 2007/08. This acknowledgement of current market office rents, together with the need to compete, has elevated the standing of educational institutions to many landlords as more serious occupiers.

Obviously universities, particularly those from the regional markets, will need to analyse the financial viability of taking space in an increasingly competitive London market. It will only be those successful campuses that can attract enough students to cover costs and ultimately make a profit, that flourish.

London’s appeal to international students will continue to draw educational institutions from outside the capital, although the downward trend of the Central London vacancy rate could prohibit these occupiers from finding space to fit their requirements. This could open up the opportunity for a joint-venture between a regional university and a global investor to develop a new campus.

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