Western University: Building a Brighter Future
By: Ningsong Shen & Ethan Chen
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Ethan Chen is a member of the Board of Governors at Western University. This article was sourced with public information. The author's opinions are personal and do not represent the views of Western University or the Ivey Business School.
Western University’s Home Turf
The University of Western Ontario (Western) in London, Ontario, Canada, is a major public-research-intensive university, ranked among the top universities in the world. The university has a student population of over 33,000 and covers 1,120 acres along the Thames River. The university’s strategic plan, Towards Western at 150, aims to grow to over 50,000 students by 2030 and to be more inclusive, sustainable, and diverse. Western has a substantial presence in the London area, being the second-largest employer and supporting the local economy with a budget exceeding C$900 million in 2022-23. Known for academic excellence and great student life, Western is popular among students from across Ontario and around the world. Its residence and housing program is ranked among the best managed in Canada. However, it has encountered capacity problems as the demand for residence space among students grows.
Western's Growing Ambitions and Housing Homework
Most Ontario universities are funded through three primary sources. First, Ontario government grants comprise most of the funding at 40 percent, as post-secondary education is a provincial responsibility. Second, student tuition also comprises around 40 percent, and finally, private donations and investment returns fund the remainder. Despite strong enrollment numbers and ambitious growth plans, Western faces significant funding headwinds as Ontario operating grants have been frozen since 2017 and domestic student tuition has been fixed at 2019 levels. In the current high-inflation environment, operating expenditures have naturally been reduced in real terms, negatively affecting student welfare.
Thus, Western has attempted to decouple the success of its strategic plan from the volatility of public financing and regulations. So far, international students, whose tuition is unregulated, have funded significant portions of growing operating and research costs. In addition, private donations and endowment fund returns have been growing contributors. Western has an endowment of over C$1.1 billion and growing, of which it can use the returns to finance operations and its strategic priorities.
Due to funding challenges, and restrictive zoning, the London area has seen a housing shortage in recent years, which has escalated into the public view as a major crisis. Rents have risen 50 percent over the last 3 years and the city’s population has grown to over 400,000 residents. Students in particular face mounting issues of unresponsive landlords, and high competition for accessible housing, leading to extremely high rents for accommodations in the university area. Meanwhile, the housing supply has been unchanged over the years. London’s housing crisis compounds issues relating to transportation and food insecurity and threatens the city’s quality of life, and the accessibility of post-secondary accessibility. As such, inaccessible housing has the dual impact of jeopardizing Western’s status as an attractive and accessible student destination, while deterring prospective talent. Further, it constrains the university's focus on its strategic priorities. As the crisis becomes a priority for government, student, and staff stakeholders, the university must devote its limited resources away from its academic mission to resolving the crisis.
Therefore, increasing enrollment and an ambitious strategic plan mean that Western must find a sustainable source of revenue while also dealing with the ongoing housing crisis. Without action, Western risks the social license and community support it has built up over the years as a reputable institution.
‘Homing’ in on Solutions: A Plan to Grow Housing and Revenue
To simultaneously address the funding shortfall while contributing new housing supply to the London market, Western should act as a local developer and landlord for university-area lands. Western has a significant endowment fund, policy and local regulatory powers, deep expertise in development, and an eye toward integrated planning, giving it the right incentives to accomplish this task.
First, Western needs to obtain the funding to conduct the development. While multiple financing options exist, using existing endowment funds for development is the ideal route. The endowment fund has a six percent exposure to the real estate sector currently managed by third parties. While these investments generate returns and diversify the university's endowment, the current real estate allocation does not contribute to the university’s strategic goals. By asserting more direct control over its real assets, it can better capture the value of its land holdings and ensure that the economic value the university generates can flow into local communities. As a bonus, the re-allocated funds will reduce third-party management fees, while giving agency to the university to create built environments which appeal to students and other stakeholders.
Next, Western needs to select lands to develop. These lands should be near the university, have existing student-heavy neighbourhoods, allow for scale to meet housing goals, and have the opportunity to be integrated into the university campus. With this in mind, we suggest three key hubs – the Near South area around Oxford/Wharncliffe, the Old North area around Richmond/Broughdale, and the vacant lands west of Western Road toward the Huron/Brescia campuses.
At Oxford/Wharncliffe, there is an opportunity to redevelop existing strip mall plazas and car repair facilities. The university can create a pedestrian-oriented, student-friendly community which would boost housing supply and generate additional revenue for local businesses through the influx of new residents. The additional density, coupled with better design space for all seasons will improve student life and add vibrancy to the neighbourhood. Finally, there is room for a transportation hub with easy connections to both downtown and the campus via a bus rapid transit system (BRT). Should this transit link be built it would allow the university to take advantage of transit-oriented development, further increasing the value to the university.
There is a similar but smaller student hub near Richmond/Broughdale. This would have the added benefit of integrating the King’s campus with the existing residences of Medway-Sydenham Hall and Elgin Hall. Although there is less space, this neighbourhood has a very high concentration of students and as the ‘front door’ of the university, could certainly use more development.
West of Western Road, there is significant undeveloped land on the Springett parking lot and in areas around Brescia and Huron. This is prime real estate that can hold thousands of students, retail, and classrooms. With the construction of a few new grade-separated pedestrian crossings under Western Road, this area can be transformed from a dead zone to a lively student hub.
In all cases, Western will build mixed-use developments that include retail, commercial/research, and housing. This will inject new housing stock into the London market, and offer the university a sustainable source of revenue. More importantly, it would remove competition from students seeking housing, making it easier for locals and students alike in the off-campus housing market to compete. The opportunity to create mixed-use facilities in the developments will make the neighborhoods livelier and create opportunities for connected transit, and allow the university to further contribute to the economic development in the region.
Our top selection would be to begin development in the ‘Near South’ area. The heavy student concentration, poor use of existing land, and potential for new BRT transit connections make it an ideal area for new developments. There is a significant opportunity to improve the urban landscape and make it accessible to students while improving affordability and ease of access to essentials. To execute this strategy, Western should take advantage of its unique strengths as a public institution, namely deep community ties, expropriation powers, and building experience and proceed as soon as possible. It should continue to use its world-class facilities management and housing services to retain students and manage the property.
Taking Inspiration from UBC and Waterloo's Blueprints
Western is not alone in facing Canada’s housing crisis. As institutions across the sector confront the challenge, various factors ensure Western is a prime candidate to address the crisis. First, Western lacks a high-density student housing market. Most students live in low-rise housing, duplexes, and triplexes that sprawl around the northwest sector of the city. Given the strain in the current housing market, the ring of exclusionary zoning around the university is unsustainable. Fortunately, zoning liberalization is on the horizon for the university. As such, space will become available for more dense housing, and rental developments that the university could offer. Finally, London rents and housing prices have increased significantly more than other regions in Ontario, owing to a growing economy and two large post-secondary institutions that attract large numbers of international students. Being a cornerstone in Southwest Ontario and a major employer in London, Western University attracts heightened scrutiny to the issue, intensifying the urgency for its resolution.
A good model for development is the University of British Columbia (UBC) in Vancouver, which is facing similar tensions. Their development differs in that they have a lot of endowed land that is already owned, and underutilized. This is in contrast to Western, which while owning some pieces of underutilized land, requires zoning reform and needs to manually acquire the land. Nonetheless, UBC has pursued mixed-use developments with classrooms and student housing that are affordable at 85 percent below market rents. They also collaborate with developers and have the potential to construct much taller buildings. Finally, the university has built at a consistent rate meaning it has retained institutional capacity for property development, something that Western also seeks to follow in.
A model closer to Western would be the Waterloo region with the area between the University of Waterloo and Wilfrid Laurier University. A flurry of new condos and apartment rental buildings was constructed in the few blocks that straddle the two universities. Land values have skyrocketed with zoning changes and the profits are all going into the pockets of private landlords. As the university has ceded control over local development, it has missed out on the profits that are generated from the value of the university, while also neglecting an intentional design and feel of the new communities. As a result, the university has not increased its revenues while ceding control of designs to private actors with little interest in the long-term sustainability of the institution. Perhaps one benefit is that the housing supply has increased significantly, relatively quickly, and so students have many options for where to live. However, in a land-scarce university context, we believe a bit of planning and design goes a long way in making student life better. Western has an opportunity now to manage the housing situation for the better, and it will go a long way in helping it achieve its strategic goals.
Building a Brighter Future
Universities cannot ignore the housing affordability crisis by explaining it away as a side-effect of a growing city and economy. The problem impacts the universities’ ability to stay competitive by limiting its most valuable resource, talent. As demographics change, and the funding of post-secondary institutions comes under scrutiny, the founding of post-secondary institutions on housing puts their funding, and public legitimacy at risk. For an issue that leading economist Mike Moffatt calls for a “war-time-like effort” to solve, universities must be a core part of supplying new housing for young people. Western must take advantage of a focus on housing to ensure its stability and long-term sustainability as a public institution. As zoning liberalization accelerates in Canada’s major cities and the province establishes ambitious housing targets, London will follow. This reform opens a crucial window to secure the future of public education. If Western is not proactive in seizing this opportunity, it will miss an opportunity to make the university more sustainable for generations to come and concede public sector leadership in a fundamental aspect of Canada’s economic future.
