(Bloomberg) -- Kerry Hall is the crown jewel of the Cornish College of the Arts.
Adorned with a red-clay-tile roof that hangs over a white-stucco exterior — vestiges of the Spanish Revival style that swept across the West Coast a century ago — the hall houses nearly 32,000 square feet of dance studios, performance venues and classrooms. Nearby, there’s an espresso bar and trendy little spots serving up Japanese Wagyu beef and vegan pancakes in Seattle’s bustling Capitol Hill neighborhood.
So when school officials dangled a for-sale sign on Kerry Hall in April, it triggered an uproar. Students, faculty and alumni — including Faith Vanchu, class of 2021 — rallied around the building to protest. “Everyone kind of panicked,” says Vanchu. “It’s just sad.”
It’s also the harsh new reality confronting scores of small, often little-known, private colleges across the US.
Squeezed by a steady decline in the national birth rate that’s shrinking the pool of college applicants, the schools are struggling to fill classrooms and cover costs. So they’re rushing to sell off prized assets — housing complexes, presidential mansions, apartments, even some paintings — to receive an injection of cash and, for the most vulnerable of the lot, stave off the financial collapse that has already done in many others. School closures have spiked in the past couple years. So too have bond defaults by colleges.
“Like a lot of small colleges,” said Emily Parkhurst, Cornish’s interim president, “we’re property rich and cash poor.” When Parkhurst says small, she means small. There are 488 students on the Cornish campus this semester. That’s down from nearly 800 a decade ago.
To be clear, many bigger, more prestigious US private and state institutions are doing fine. They boast deep endowments and robust enrollment, allowing them to thrive financially. But at the other end of the spectrum, the strains of lower-profile schools like Cornish reveal a larger picture of stress, resulting in sometimes painful and contentious decisions.
Selling cherished assets is a tricky calculus. While the funds generated can provide immediate relief, the effect of the disposals may hurt schools’ appeal, ultimately deepening their plight without even solving structural issues. After all, these sales don’t lead to a steady stream of revenue they can rely on, said Emily Raimes, a higher education analyst for Moody’s Ratings.
“If you’re looking at a long-term problem, which many of these colleges are, selling an asset is not a long-term solution,” Raimes said.
Case in point: the College of Saint Rose in Albany, New York, which ended up shuttering earlier this year despite selling real estate. It filed for bankruptcy protection in October and is selling its campus to pay off creditors.
Others have faced backlash for selling beloved assets. In Indiana, Valparaiso University’s decision to sell three works of art from its Brauer Museum of Art collection — most notably modernist masterpiece “Rust Red Hills” by Georgia O’Keeffe, which is expected to be worth as much as $15 million — faced ire from professors, students and even the wider art community.
In Ohio, Attorney General Dave Yost earlier this year sought to block Hebrew Union College-Jewish Institute of Religion from selling copies of the Talmud and other ancient books housed at its Cincinnati library. While a spokesperson for the school said it had “merely conducted an assessment” of some of its rare books and that the AG’s action was “unfounded,” Yost cited reports that it was looking to sell to cover its deficits.
Students and alumni of Cornish, meanwhile, staged a sit-in earlier this year to protest the proposed sale of Kerry Hall. They were worried about what it would mean for its dancers and musicians, especially since the building — a short bus ride from the main campus — was considered a safe haven for its students.
“I know a lot of people, myself included, went to Cornish because of that space,” Vanchu said. “A huge selling point for everyone was that you can practice, you can work on your art whenever you want.”
Belt Tightening
Not all sales indicate a school is in financial distress, but it’s telling that schools are taking stock of what they can sell. That’s the case with the New School in New York City.
Its endowment grew to nearly $450 million in fiscal 2023 and it has nearly 10,000 students, though total headcount has dropped for two consecutive years.
Against this backdrop, it sold a housing complex in Manhattan, which is a nine-minute walk from the Chelsea Market food hall, for $30 million earlier this year, citing poor demand among students. Amid a deficit, it also put its president’s home on the block for $20 million, later marking it down to $12 million.
A New School spokesperson said that the decision to sell the president’s home wasn’t related to its efforts to bridge the deficit, which has since been resolved. The spokesperson added that the college regularly assesses its space needs.
“We will continue to consider all options, including the sale of real estate, to position the university strongly for the future,” the spokesperson said in an emailed statement.
In the case of Pacific Lutheran University, the costs to maintain a four-bedroom, five-bath home in Tacoma, Washington — that previously housed the institute’s presidents — outweighed its benefits, a spokesperson said. The property, which is two miles from campus, sold for $1.6 million earlier this year. It had been donated to the college in 1971 and no president had lived there since 2017.
“Realistically, you don’t have to have a president’s house,” said Jeff Denneen, higher education consultant at Bain & Company, who was speaking broadly about colleges. He advises that, when necessary, colleges sell assets that are non-core to their mission, like power generation facilities and stadiums.
Kerry Hall, though, is still a treasured part of Cornish College, because it was actively used until earlier this year.
It’s unclear how much it’s being sold for — its real estate agent CBRE declined to reveal the potential price range. The statuesque building is being marketed as a potential office, daycare center or apartment complex.
Once the sale goes through, the college will no longer have a footprint in Capitol Hill, completing its “decades-long plans” to consolidate the campus in the South Lake Union neighborhood, Parkhurst said in a September letter to the community. Separately, she acknowledged that selling real estate isn’t a sustainable way to raise cash longer term.
“Like many small colleges, it’s really hard to operate a college sustainably when you have fewer than 10,000 students,” she said. “and we have just under 500.”
--With assistance from Nic Querolo.
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