Roommates Joya Mukherjee, left, and Bianca Ponziani share a standard double room - each have a queen-sized bed - at McGill University's newest student residence, formerly a Four Points Sheraton.Christinne Muschi
It's a little weird living in a luxury hotel, says first-year McGill University undergraduate student Amanda Tucker. "My roommate and I each have a queen-sized bed, there's a private bathroom with a marble countertop and a TV with cable."
In September, Ms. Tucker moved into McGill's newest residence, the Carrefour Sherbrooke. Up until April, it was the Four Points Sheraton - a swanky 20-storey four-star hotel on the edge of downtown Montreal, just blocks from the university. McGill scooped it up for a cool $18.8-million.
Hard times for the hotel industry have put many properties on the block at deep discounts, and experts say they haven't seen prices this low since the early 1990s.
Since 2003, universities and colleges across Canada have turned to hotels to relieve an increasing demand for student housing.
"With the market being what it is today, this is the perfect time to buy," says Bill Stone, executive managing director of Colliers International Hotels. As the economy claws forward, converting hotels into residences is a boon for universities, hotel owners and students alike.
"It was significantly cheaper to buy the Four Points than to build a new residence nearby," says Michael Porritt, McGill's executive director of residences and student housing. "For what it would cost to buy the land and build, there's no way we could do it. In most of the surrounding area there's a height limit, so we could only build four storeys tall."
Many local buildings and houses are also considered heritage sites, so they can't be levelled.
Enrolment is up at universities across the country. Not only that, Mr. Porritt says, the number of first-years who want to be in residence is climbing. And despite the fact that a double room in the new Carrefour residence costs roughly $2,000 more annually than older residences, the new building is at 99 per cent capacity already.
Last year McGill had to lease four floors of an apartment building to cope with an overflow of almost 200 new students. The school's guarantee to house all incoming first-year students meant they couldn't be turned away.
"The Four Points houses 360 students, and is two blocks from the school. So when it came on the market it was a natural choice," Mr. Porritt says.
"Yet, even though it eased our housing problem, I doubt we would have bought it if it hadn't been on sale."
Large franchises are eliminating underperforming hotels and slashing their prices to attract buyers. The 240-room Valhalla Inn in Etobicoke sold for $15.5-million, and a 199-room Days Hotel and Conference Centre near Toronto's airport recently sold for only $12-million.
"2009 has been challenging for the hotel industry, no doubt," Mr. Stone says. "The market has been overbuilt. In recent years, many hotels have gone up in high supply areas and with erosion in room rates and occupancy, there isn't much to sustain them."
It's doubtful the market will fully recover in 2010, industry representatives say.
Nevertheless, universities that have purchased hotels and similar commercial properties in the past say it's one of the best investments they've made. To cope with the double cohort, a huge influx of students following Ontario's 2003 elimination of Grade 13, the University of Toronto bought the Colony Hotel in downtown Toronto for $72-million, when prices were at their highest.
Cathy Riggall, the university's vice-president of business affairs, says that at the time the school was spending between $3-million and $5-million annually to keep students in hotel rooms. "The Colony came on the market at just the right time," she says. "It gave us almost a thousand new beds at once."
The University of Ottawa also faced a similar problem, says Claudio Brun del Re, director of physical resources. "We had the double cohort in mind back in 2003 and by chance the owners of a nearby condo project were struggling, so we scooped it up. It saved us all the time and money required to build a new building."
The Colony Hotel offered other benefits, too, Ms. Riggall says. "It has a conference facility that we're using quite successfully, and lots of people who work in the area rent a parking spot in the building's large garage."
The school even kept on the hotel's gourmet chef, Jaco Lokker, who now runs the residence restaurant. These are perks the university would have never designed into a new residence building, she says.
McGill intends to take full advantage of the new Carrefour Sherbrooke's extra perks as well, Mr. Porritt says. "The building comes with four large conference rooms, a restaurant and dining hall, so it's perfect for conferences. We're going to rent it out year-round."
The school has already had success with a similar model, renting out conference space at its New Residence Hall building, a former Renaissance Hotel, which it converted into a 700-bed dormitory in 2003.
Right now Ms. Riggall says the University of Toronto's Scarborough and Mississauga campuses desperately need more space for students.
"Unfortunately there aren't any hotels or buildings close to the campuses that would make a purchase worthwhile. Enrolment is up here at the university and we're trying to find spaces for everyone."
Not your usual classroom
With little space to build in major city centres, urban universities are acquiring and repurposing other commercial properties as well:
Ryerson University
Last year, Ryerson rolled out the red carpet on a partnership with AMC Yonge & Dundas 24 movie theatres in downtown Toronto. The school is using 12 new theatres as lecture halls, investing $1-million in the property to equip each with a high-definition projector, Blu-Ray DVD player and mobile lectern. With limited space to build in the area surrounding the school, Ryerson says the arrangement is "a highly sustainable alternative to building new facilities."
Concordia University
In May of 2007, part of the Hôpital Général, a 340,000-square-foot property owned by the Grey Nuns in downtown Montreal, was turned over to Concordia University. The school paid $18-million for the property and construction began immediately to convert a wing into housing for 227 students. Over 15 years, $50-million in renovations will be made to the property. In 2011, Concordia's fine arts faculty will occupy the chapel and central wing. The school says the building "will become a gathering place for Concordia's artistic community and hub for creative synergies and cultural debate."
Special to The Globe and Mail