The Board of Directors of the University of Oulu will decide next week if it begins a property strategy analysis.
The aim of the analysis is to find “financially sustainable, long-term university property solutions that support the university’s operations.”
The analysis has three options: maintaining the current building stock, partial demolition and reconstruction of the current buildings on the current campuses, and new construction near the city centre of Oulu. The analysis evaluates financial, functional and societal impacts of all the alternatives.
Especially the third option has raised discussion: would the University really move from Linnanmaa?
The campus is getting older, costs are increasing
The bulletin by the University and an article in the newspaper Kaleva that broke the story state that the primary reason for the proposed analysis is the high cost of rent the University is paying for the properties.
According to the bulletin, property costs are the second largest expense item for the University, after personnel costs.
The announcement also says that based on preliminary findings, “the rent level of the renovated Linnanmaa premises may be higher than the market rent of corresponding premises in the area.” Therefore, new construction might be a more financially viable option. The University also thinks that new construction would improve the energy efficiency of the premises and sustainable use of resources. The University premises at both Linnanmaa and Kontinkangas campuses are owned by University Properties of Finland Ltd (Suomen Yliopistokiinteistöt oy, SYK).
Rector Jouko Niinimäki is proposing starting the evaluation. He says that the individual increments of rental prices by SYK are not the reason for the proposed analysis.
“Rents are always going up, that is not the direct reason for the analysis, but rather the general direction we know the rents will be heading towards. Now we have renovated plenty of spaces, and from experience we can tell how the rental prices are going to behave. So, we have not had any notification from SYK, rather this is a solution that has grown over time”, says Niinimäki in our interview.
The Chief Financial Officer of the University Pekka Riuttanen says that the University pays around 26 million euros annually in rental costs for the premises. Roughly 17 million is from the Linnanmaa campus.
“As a whole, the number of spaces we have has decreased radically over the years. Scaling down the premises has been a way for the University to keep the property costs acceptable. At the moment, we feel like we cannot downscale more, and the costs for the premises will only increase.”
According to Riuttanen, one of the main reasons for the increase in property cost is due to Linnanmaa being an old campus, and there are plenty of areas that need renovation in the future.
“The increase in property costs is money away from research and education. That is something we do not want, quite the opposite: we want to invest into research and education.”
Sanna Sianoja, the CEO of the University Properties of Finland, says that the company takes the feedback from the University of Oulu seriously.
“The principle is that we offer affordable spaces for the University. We want to be involved in developing things forward with the University, and in thinking how we can resolve this situation. It is not in our interest to offer overpriced spaces.”
Is the rent level for the spaces in Linnanmaa higher than the market price for the area, as the bulletin says?
According to Sianoja, there is not a clear answer to the question.
“Of course, I have heard the message and received the feedback. I cannot say without a doubt one way or the other. The largest thing is that if a thing such as this is brought forward, we want to investigate the causes. We want to serve our customer as well as possible.”
SYK owns, builds, and develops building stock for higher education institutes outside the capital region of Finland. The company is co-owned by nine universities outside the Helsinki area along with the State of Finland. The University of Oulu has a 10.41 % share of ownership.
Two years ago, YLE published an article regarding the property costs. Even back then Niinimäki noted that he believed the property costs for the University were “higher than the market rent in the surrounding area.” According to the article, both the Chief Financial Officers of the University of Vaasa and the LUT University also thought that the rents charged by SYK are high.
Has there been feedback about the property costs from other universities?
“It is hard to say. Naturally, we have discussions with the organisations who rent our spaces regarding the rental costs and how they compare to the surrounding areas. Of course, we understand that for the user the space is an expense, and that provokes discussion,” Sianoja says.
Time to pack things again?
The Chair of the Board of the Student Union of the University of Oulu (OYY) Miriam Putula says that the Student Union is observing the situation.
“This [proposal by the rector] is a good starter for conversations, and I hope students are involved in it as well. As a student, I want the solutions to benefit the students. If the prices by SYK are too high and we cannot have enough resources for research and education, something must change. The University cannot spend too much money on the properties.”
Putula says that the Student Union has met with student representatives in charge of educational affairs from the umbrella guilds of the University. According to her, the news about the possible changes has caused some concerns.
“Are we going to have to move again? As everything has been concentrated to Linnanmaa, what would happen to the housing, cycling, and bus lines in the area? Would this proposed move stop all the development in the area?”
Did the proposal by the University come as a surprise for the Student Union?
“There has been speculation for a long time, as there have been discussion on the high level on property costs, and that they affect the basic functions of the faculties. But the proposal for the analysis itself was a surprise. I had to do a double take as I picked up the newspaper Kaleva in the morning.”
Talks of co-operation at Kontinkangas
The analysis mentions possibilities for renovating both the campus at Linnanmaa and Kontinkangas, partial demolition and rebuilding of the current building stock, and building something new at a new location near the city centre of Oulu.
Even though the relocation would go forward, Niinimäki says the move would not concern the Kontinkangas campus. “It is natural for the campus to be at Kontinkangas, it would not be relocated.”
But does the University aim to have a shared higher education institute campus at Kontinkangas as well?
The University has two faculties at Kontinkangas (Faculty of Biochemistry and Molecular Medicine as well as the Faculty of Medicine) while the Oulu University of Applied Sciences has social and health care education at Kiviharjuntie. Oulu UAS and the University are already collaborating in Dentopolis that was opened in September 2017, as the dentist students of the University and the dental hygienist students of Oulu UAS are working together there.
“In a way, we already are on a common campus, as the area is large, and it has the University, Oulu UAS, and the hospital. But we need to think about their locations in relation to one another,” says Niinimäki.
“At Kontinkangas, [the main building of the Faculty of Medicine] Kieppi and Dentopolis represent new and high-quality building stock. But for example, the premises of Tellus Kontinkangas and the Faculty of Biochemistry and Molecular Medicine are starting to approach the end of their lifecycle. Some decisions need to be made about them,” Niinimäki muses.
Jouko Paaso, the Rector of the Oulu University of Applied Sciences, notes that the collaboration between the higher education institutes at Kontinkangas has been discussed already. “Yes, it has been brought forward, as we are part of the same concern, a functional co-operation would be natural. Preliminary discussions have been had, now we are continuing those and thinking if shared premises would be a good solution.”
Paaso emphasises that no concrete plans have been made yet.
“The number of students in the area is large, we have more than 2,000 social and health care students there. One cannot do this in a jiffy, but we must ponder what areas could we co-operate on.”
“Oulu UAS would not be left alone”
What would be the role of the Oulu University of Applied Sciences in the possible change?
Oulu UAS decided on relocation to the Linnanmaa campus in October 2016. The campuses from Teuvo Pakkala and Kotkantie are moving to the Linnamaa campus during the year 2020.
The University of Oulu owns a majority of the stock of Oulu UAS, and the two higher education institutes belong to the same concern. At the moment, the institutes are planning how to organise shared services. Rector Jouko Niinimäki is also the Chair of the Board of Oulu UAS.
According to Jouko Niinimäki, the management of the University of Applied Sciences has been made aware of the discussions held last week. The Board of Oulu UAS was sent a bulletin yesterday, and the staff has been notified today on intranet.
“Of course, Oulu UAS would not be left alone. If we decide on relocation, the University of Applied Sciences would be included in the plans from the very beginning. Oulu UAS is an independent entity that will make its own decisions. We will place no team orders for Oulu UAS.”
“The question is about extremely long-term things, basically a strategy for the next 20 years. For sure, the first movements of it would start rather soon. The possible relocation of Oulu UAS would happen near the end of this strategic period.”
Jouko Paaso, the Rector of the Oulu University of Applied Sciences, says that Oulu UAS has no need to renegotiate the rental costs. Oulu UAS has a twenty-year rental agreement on properties at Linnanmaa.
“At the end of 2017, we made a rental agreement that included renovations according to our needs. Back then and during the tendering process we had negotiations, and we think we reached a reasonable price which we though matched the general prices in the Linnanmaa area. There has not been a need to reopen the discussions [on rental prices].”
“Though I do understand that as the University has renovated spaces, the increase in rental costs has been seen as too high. From the perspective of someone who organises the education, this is a difficult task as the resources should be aimed at something else than the increasing property costs.”
According to Paaso, the Oulu UAS staff has been informed that the relocation to Linnanmaa proceeds as planned. The property strategy analysis can have an impact on Oulu UAS premises, but only in the long term.
What would be left if the University leaves?
In preparation for the relocation of Oulu UAS there has been a great deal of improvements in the Linnanmaa area. In preparation for the increased amount of people and traffic in the area, public transportation, cycling routes, and student housing have all been improved. In addition to improvements in cycling routes and bus lines, the brand of the campus area has also been developed. In August, the Board of the City of Oulu accepted an overall framework of the area that acts as an unofficial and guiding document between a master plan and street plan of the area.
What effect would the possible relocation of the University have on Linnanmaa?
According to Jouko Niinimäki, the area would maintain its importance: the area is relatively close to the city centre, it has good traffic connections, and the Technopolis Science Park is next to it. He reminds that if the decision to relocate happens, it will be done gradually.
“If the change were to occur, other activity would take our place, and this activity would support the employment in the area,” Niinimäki says.
“The city decides which direction they want to develop the area. A lengthy timeframe guarantees that the area would have positive new functions.”
The University of Oulu has had “preliminary discussions” with the City of Oulu, says Jouko Niinimäki.
“We have been involved with people from planning, especially [Director of Urban and Environmental Services] Matti Matinheikki, Mayor Päivi Laajala, and the Chair of City Board Kyösti Oikarinen. The end result has been that the plan is worth investigating.”
Why was the information put out now? Jouko Niinimäki says the Board of Directors of the University has had “free-form discussions” on the matter previously.
“The issue came naturally on the agenda, there is no special reason why it popped up just now. As the agenda for the next board meeting goes public today, we want to inform people ourselves, and also to control rumours.”
Jouko Niinimäki says that there have not been any decisions made on who would pay for the possible new construction. “We are not that far yet; we have not even decided are we building something new or not.”
“But if one has to speculate, I would guess that we would partly take a loan, and partly use our own money for the construction.”
The Linnanmaa campus has also had its share of moves within the University. Within a few years the architecture students moved from the city centre to Linnanmaa, and the Faculty of Humanities and the Faculty of Education relocated inside the campus building.
Do the rental agreements enable moving away from Linnanmaa?
“Naturally we aim that we stay put until the rental agreements are up”, says Niinimäki. According to him, the campus has a wide variety of rental agreements in place: some could be discontinued immediately, some have a rental period of a few years, and some are rather long.
“We have looked both at the map and the rental agreements, and the proposed move would be feasible. On the financial side, we have also made some rough calculations. All three options are economically viable, none of them are impossible or just wishy-washiness.”
The Board of Directors of the University of Oulu will discuss starting the property strategy analysis in their meeting on the 20th of November.
It has been 60 years since the first opening ceremony of the University of Oulu. The University did not have a one shared space during the initial years. The proposed location of the campus had plenty of options, from Sanginsuu to Virpiniemi, and even near the city centre in the region of Hupisaaret. The construction of the Linnanmaa campus began in the early 1970s, and continued all the way into the 2000s, when the Tietotalo segment near the administrational wing was completed.
Translation: Kalle Parviainen