DePaul Layoffs Could Signal A Shift In Chicagoland Educational Real Estate
The layoffs announced at DePaul University this fall are not an isolated operational adjustment. They are a visible marker of a much broader structural shift underway in higher education across Chicagoland and the United States, one that is beginning to reshape how universities think about real estate, capital allocation, and their role as long-term property owners.
DePaul confirmed that every area of the university will be affected by staff and operational cuts as it works to close a roughly $27 million budget gap. Approximately $11.4 million in savings will come from eliminating merit raises, instituting a hiring freeze, reducing 403(b) retirement contributions, and cutting executive compensation. The remaining $16 million will be achieved through layoffs and other operating expense reductions. University leadership described the decision as one of the most difficult moments in the institution’s history, with severance packages offered to impacted staff.
Behind those cuts is a convergence of forces that extends far beyond DePaul’s balance sheet. The university reported 755 fewer international students enrolled compared with last fall, including a nearly 62 percent decline in first-year international graduate students. Continuing undergraduate enrollment has also dropped by roughly 300 students. Rising financial aid costs, higher healthcare expenses, and benefit obligations that have increased by $23 million over the past five years have compounded the pressure.
This same pattern is playing out across the region. Northwestern University in Evanston eliminated roughly 425 staff positions in July after facing a $790 million federal funding freeze. The University of Chicago announced spending and hiring reductions to address its own structural deficit. Columbia College Chicago laid off 20 faculty members as it works to close a $40 million shortfall. Illinois Institute of Technology, Loyola University Chicago, Roosevelt University, Northeastern Illinois University, and others are all grappling with demographic headwinds, federal funding uncertainty, and declining enrollment in certain programs.
What is changing now is that these financial pressures are beginning to directly affect how universities manage and monetize their real estate.
Declining Enrollment Meets Oversupplied Campuses
For decades, many universities expanded their physical footprints based on enrollment growth assumptions that no longer hold. New academic buildings, residence halls, student centers, and specialized facilities were financed under the expectation of steady or rising student populations, particularly international enrollment.
Those assumptions have cracked. Increased visa vetting, travel restrictions, and pauses in visa interviews have created significant barriers for international students. At the same time, the Midwest is facing a well-documented demographic decline in college-aged populations. Fewer high school graduates, combined with higher tuition sensitivity and skepticism about student debt, are shrinking the applicant pool.
The result is a growing mismatch between space and demand. Classrooms sit underutilized. Administrative offices occupy prime urban real estate without corresponding revenue generation. Residence halls face fluctuating occupancy. For institutions like DePaul, with major campuses in Lincoln Park and the Loop, real estate is both a core asset and a rising liability.
University Real Estate Portfolios Under Scrutiny
Historically, universities treated real estate as a strategic end in itself. Land was acquired to ensure long-term control, not near-term return. Today, that mindset is shifting toward portfolio rationalization.
Universities across Chicagoland are beginning to evaluate:
- Which buildings are mission-critical versus legacy assets
- Which facilities can be consolidated through hybrid learning models
- Which properties could be sold, ground-leased, or repurposed
- How to unlock value without undermining academic identity
This creates direct implications for local commercial real estate markets. Urban campuses often sit adjacent to office space, retail corridors, multifamily neighborhoods, and transit-oriented districts. Decisions to sell or reposition even a single academic building can materially affect surrounding property values, leasing dynamics, and redevelopment pipelines.
In some cases, institutions may explore office conversion strategies, transforming underutilized academic or administrative buildings into modern office space, life science labs, or mixed-use facilities. In others, university-owned land may be repositioned for residential or mixed-income housing, particularly where zoning and community priorities align.
Spillover Effects on Local Commercial Markets
The effects extend beyond campus boundaries. Universities are anchor employers and economic engines. Layoffs reduce daily foot traffic, impacting nearby retail, restaurants, and service providers. Fewer students living near campus can soften demand for multifamily housing. Reduced capital spending can slow neighborhood revitalization projects that once relied on institutional partnerships.
In downtown Chicago, where DePaul and Columbia College Chicago both maintain significant footprints, reduced utilization of academic space intersects with broader office market challenges. Vacant or partially vacant institutional buildings may compete with traditional office inventory, accelerating price discovery and forcing creative repositioning strategies.
For suburban campuses, including those tied to commuter schools or satellite facilities, the implications may be even more pronounced. Buildings designed for peak enrollment decades ago may no longer pencil operationally, pushing universities to consider dispositions that would have been unthinkable ten years ago.
This is where experienced advisors, including commercial real estate agents familiar with educational assets, zoning constraints, and adaptive reuse, become critical. Universities are not typical sellers, and the reputational, political, and community considerations surrounding these assets demand careful execution.
A National Shift in How Educational Assets Are Treated
What is emerging in Chicagoland mirrors a national realignment. Across the country, universities are rethinking how much real estate they truly need and how it should perform financially.
At the same time, policymakers and communities are watching closely. University-owned property often benefits from tax-exempt status, and large-scale dispositions or conversions can trigger debates around tax base, housing affordability, and neighborhood character.
The long-term outcome is likely a more disciplined approach to educational real estate, one that treats campuses less like static monuments and more like dynamic portfolios.
What Comes Next for Chicagoland
DePaul’s announcement underscores that higher education’s challenges are no longer abstract. They are operational, financial, and spatial. As universities launch new strategic plans to create alternative revenue streams and build resilient futures, real estate will be at the center of those conversations.
Expect to see:
- Increased consolidation of academic and administrative space
- More university-owned assets entering the market quietly through off-market processes
- Greater emphasis on mixed-use redevelopment near transit and employment centers
- Heightened collaboration between universities, municipalities, and real estate professionals
For Chicagoland’s commercial real estate ecosystem, this represents both disruption and opportunity. Educational institutions remain some of the region’s largest landholders. How they adapt will influence office markets, housing supply, neighborhood retail, and long-term urban form.
The layoffs at DePaul are painful. But they also mark the beginning of a more honest reckoning with how universities occupy space, deploy capital, and interact with the markets around them. That reckoning will shape not just campuses, but entire communities, for decades to come.
If you need help reevaluating your commercial real estate portfolio, our commercial real estate agents are working with educational institutions across Chicagoland to reevaluate their assets and maximize value!