A strong majority of university leaders expect to see an increase in partnerships with the private sector as higher education continues to face headwinds.
That's according to the latest annual
Seventy-four percent of university leaders said they expect to see P3s increasing at their schools, a 1% downtick from last year's poll and higher than the 2022's figure of 71%. Another 4% predicted a decrease and 22% said P3s would likely stay at the same level.
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Higher education has been among the P3 sector's fastest-growing areas in recent years. Many colleges and universities face pressure from enrollment that has failed to rebound to pre-pandemic levels coupled with higher project costs and the depletion of federal stimulus. Schools also face a so-called enrollment cliff, with peak enrollment of high school students predicted as soon as 2025, according to Deloitte's April
Of those polled, 28% said they were interested in pursuing P3s for student housing and 24% said real estate development marked another potential area of interest. The P3 student-housing sector makes up a small niche in the muni market, often offering relatively high yields. Last week, a $70 million University of Memphis student-housing deal, with BB-plus ratings, proved popular among investors and was strongly oversubscribed, according to Birch Creek Capital's weekly commentary.
The P3 survey found that 72% of leaders cited loss of control as their top reservation for entering into a P3, and 63% cited cost as a barrier. Of those that already have private partners, 74% reported being satisfied with the state of their fee-for-service partnership, while 61% reported satisfaction with their revenue-sharing P3.
Universities are most interested in partnering with the private sector for workforce development and health services.
Nearly three-quarters of leaders said they're interested in P3s because the private sector brings "unique competencies/superior service" to in-house service, and 40% said the availability of investment capital drives their interest.
The group released the survey ahead of its annual event for university leaders to share best practices around P3s. The invitation-only conference will be hosted by the University of Colorado, Denver Oct. 7-9.