Creating retail real estate development strategy within modern university campus – Case Aalto University Campus Master’s Thesis Department of Built Environment, Aalto University School of Engineering Espoo, 11 January 2016 Jatta Reijonen Bachelor of Science in Technology Supervisor: Professor Kauko Viitanen Instructor: M.Sc. (Tech.) Eetu Ristaniemi Aalto-University, P.O.BOX 11000, 00076 AALTO www.aalto.fi Abstract of master’s thesis Author Jatta Anneli Reijonen Title of thesis Creating retail real estate development strategy within university campus – Case Aalto University Campus Degree programme Degree Programme in Real Estate Economics Major Real Estate Management Code M3003 Thesis supervisor Professor Kauko Viitanen Thesis advisor M. Sc. (Tech) Eetu Ristaniemi Date 11.1.2016 Number of pages 74 + 4 Language English Abstract Since the ways of education and working have changed dramatically in the past decades and universities have become networking places for students and other actors, in the priorities of many universities is creating attractive and vibrant campus environments to support educational and corporate functions and to provide adequate level of services for students and faculty. This can be achieved by systematic retail real estate development within campuses. This study is implemented to determine the most suitable retail strategy for Aalto University Campus and to explain the background and reasons for these newly arisen needs and why are they getting a lot of attention among top universities and campus development projects in the world. Research methods applied in this research were literature review and descriptive case study. Globally the universities compete for the best people, and the fact is that innovative spaces and the overall attractiveness of the campus play a big role in becoming internationally noticed top university. From the research of the ongoing campus development projects, three major trends in terms in retail development were recognized: revitalizing campus environments, making interaction between students, faculty and employers easier through various meeting places and increasing positive student experience, attractiveness and the quality of life with services within campus. In the case of Otaniemi, retail real estate development strategy was created through a development framework, consisting of strategic, financial, functional and physical dimensions. The results indicated that the need for retail space until year 2030 is approximately 14 000 square meters, concentrating in grocery sector and food services. By altering the service structures, Aalto University could save up to 1,6 M€ per year in space costs and gain also revenue from external tenants, to support necessary university functions. The main strategic goals for Otaniemi campus is to create a commercial center around Väre, encouraging encounters, interaction and innovations, and boosting the brand image of Aalto. Keywords Real estate development, retail, university, campus development, services Aalto-yliopisto, PL. 11000, 00076 AALTO www.aalto.fi Diplomityön tiivistelmä Tekijä Jatta Anneli Reijonen Työn nimi Kaupallisen palvelurakenteen kehittämisen strategia yliopistokampuksella – Tapaus Aalto-yliopiston Kampus Koulutusohjelma Kiinteistötalouden koulutusohjelma Pääaine Kiinteistöjohtaminen Koodi M3003 Työn valvoja Professori Kauko Viitanen Työn ohjaaja Diplomi-insinööri Eetu Ristaniemi Päivämäärä 11.1.2016 Sivumäärä 74+4 Kieli Englanti Tiivistelmä Koulutuksen ja työn kulttuuri on muuttunut merkittävästi viime vuosikymmenten aikana – yliopistoista on tullut verkostoitumispaikkoja opiskelijoille ja yrityksille ja eläväisen yliopistokampuksen kehittäminen on tärkeässä roolissa koulutuksen, tutkimuksen ja myös kaupallisten toimintojen tukemisessa. Käyttäjille on myös tarjottava riittävät päivittäiset palvelut kampusalueen sisällä. Tämä voidaan saavuttaa kehittämällä systemaattisesti kampusalueen palvelurakennetta ja kaupallista toimintaa. Tämän tutkimuksen tavoitteena oli luoda Aalto-yliopiston pääkampukselle Otaniemeen kaupallisen palvelurakenteen kehittämisen strategia ja selvittää myös syitä tämän kaltaisen kehittämisen tarpeelle myös kansainvälisessä kontekstissa. Tutkimusmetodina on sovellettu kirjallisuuskatsausta ja kuvailevaa tapaustutkimusta. Yliopistot kilpailevat parhaista opiskelijoista ja kyvyistä, jolloin innovatiiviset tilaratkaisut ja yliopistokampuksen viihtyvyys ovat suuressa roolissa houkuttelevuuden ja kansainvälisen kilpailukyvyn luomisessa. Käynnissä olevien retail-kampuskehittämisen projektien osalta voidaan tunnistaa seuraavat trendit: kampusympäristöjen elävöittäminen, opiskelijoiden, henkilökunnan ja työntekijöiden kanssakäymisen korostaminen, opiskelukokemuksen parantaminen ja houkuttelevuus sekä elämänlaadun parantaminen palvelujen kehittämisen kautta. Otaniemen tapauksessa, kaupallisten liiketilojen ja palvelurakenteen strategian kehittämiseen käytetiin frameworkia, joka koostui strategisen, taloudellisen, toiminnallisen ja fyysisen osa- alueen kokonaisuudesta. Tulokset osoittivat, että Otaniemen palvelutarve on vuoteen 2030 mennessä n. 14 000 m², painottuen päivittäistavarakauppaan ja ravintolapalveluihin. Säästöpaineiden alla, nykyisten ravintolapalvelujen sopimuskäytäntöjä muuttamalla Aalto voisi säästää jopa 1,6 M€ vuodessa tilakustannuksissa ja kerryttää myös tuottoa tiloista. Keskeisimpinä tavoitteina Aalto-yliopiston retail-strategian toteuttamisessa ovat kaupallisen keskittymän luominen kampuksen ”keskukseen”, kohtaamisten ja innovaatioiden mahdollistaminen ja Aallon brändi-imagon kohottaminen. Avainsanat Kiinteistökehittäminen, retail, yliopisto, kampuskehittäminen, palvelut Foreword The definition of Master’s Thesis emphasizes maturity in the processes of scientific thinking and implementing it in an organized and efficient manner. For me personally, this process has been one of the most unorganized ones if ever completed. At the same time the most interesting, inspiring, and fun. I was supposed to learn a lot of new things and put in the practice the ones I’ve already learned, but instead I learned something very profound about myself and also managed to fell in love with the topic. Campus development has been under a lot of attention recently both internationally and nationally. It’s a field that is not afraid to try, develop, and innovate – or at least that is a work in progress. It’s a field that shares a lot of history and therefore also a lot of passion, which can be seen as a tremendous advantage. I feel privileged to be a part of this process and hope to continue it with an equal amount of passion. First of all I want to thank Antti Tuomela for this opportunity and trust. I also owe my deepest gratitude to my instructor Eetu Ristaniemi for inspirational conversations and guidance in daily basis, I’ve definitely learned a lot. And enjoyed myself doing it, probably because of the amazing people in Aalto University Campus & Real Estate. It has not always been just fun and games, but there are two partners in crime that have taken care of the fun part – my co-thesis workers Aino Alastalo and Sini Kuusela, thank you girls, it would have not been the same without you. One more thank you to share, and it just might be the most important one. It goes to my troops at home: mom, dad and bro. You’ve supported me and listened to my tiring babble of existential crises, and a special thanks for my mother for keeping the fridge, and my stomach, full. You have the warmest heart. There, I rest my case. Jatta Reijonen Espoo, 11 January 2016 Contents 1 Introduction .................................................................................................1 1.1 Background ...................................................................................................... 1 1.2 Research questions and limitations ................................................................. 2 1.3 Literature review .............................................................................................. 3 1.4 Research methods ............................................................................................ 3 1.5 Research structure ........................................................................................... 4 2 Commercial real estate development ..........................................................5 2.1 Urban planning and real estate development .................................................. 5 2.1.1 Context .................................................................................................... 5 2.1.2 Commercial real estate ............................................................................ 6 2.1.3 Actors in real estate development ............................................................ 6 2.1.4 Commercial real estate development process in a nutshell ...................... 8 2.2 Retail development ........................................................................................ 11 2.2.1 Fundamentals of retail development ...................................................... 11 3 Campus development ................................................................................. 15 3.1 University Campus - from isolation to interaction ......................................... 15 3.1.1 History of campus development ............................................................. 15 3.1.2 Campuses of today ................................................................................. 16 3.1.3 From university campuses to ”univer-cities”