In the 21st century, perhaps no kind of community has greater upside economic potential than the American college town or university neighborhood.

And the key to realizing this potential may paradoxically lie in the apparently inauspicious changes higher education has recently experienced. The best lemonade always starts with a lemon.

Less money from state governments, endowments and donors as a result of the slumping economy has put colleges and universities on tight budgets. Soaring tuition costs now burden graduates with five-figure debt. With the growth of Web-based distance learning, more students will be able to earn degrees without spending much time on campus.

Computerization is eliminating more college graduate jobs. Degreed workers overseas work for increasingly cost-conscious U.S. companies for much less money than their American counterparts. And the cost and performance of U.S. colleges is under attack — even by academics — in a spate of critical books and articles in national media.

Gloom and doom? No — opportunity, for both colleges and college towns.

Though colleges can advantageously now sell their product on the Web or at branch locations, having fewer students in town for shorter periods obviously impairs the economy of the oft-overlooked town or neighborhood outside the campus.

The professor can deliver his services electronically almost anywhere. The campus area barber cannot.

While some authorities are even warning that U.S. higher education could become the next Detroit, there is strong potential for college towns to become instead the next Florida, because in coming years college town economies will no longer have to be completely dependent on traditional academic activity.

Building still more university-related research parks is, however, an unlikely economic option. They are now overbuilt, also face international competition, and often do not work well in small, isolated university towns. And they are infeasible for smaller colleges not strong on scientific research.

The “smokestack chasing” strategy that has been the mainstay of economic development elsewhere is also unpromising. Most college towns have limitations in competing with non-college towns for recruitment of industry.

But college towns still have a potent economic upside because of the distinctive milieu colleges have created and the emotional attachment of thousands of alumni.

Because of their significance as the third most important residential experience in many alums’ lives (after the childhood hometown and the most important adult living place), these “third lifetime places” can become attractive places to settle both during working years and later in retirement.

Retirement communities are already being built near college campuses nationwide, and telecommuters no longer have to live near suburban office parks or big city downtowns.

But since college towns are seen by most adults as “not for me” places for young students only, these communities will need to better market themselves for other purposes.

Fortunately, there are excellent possibilities for doing that. A college town can position itself as a place for sports and entertainment. Domestic medical tourism can make some university towns a place to heal.

With some campuses already hosting non-academic conferences, the college town can compete with pricey big cities and resort areas as a place to meet. And being paradoxically devoid of people during the most pleasant weather of the year, college towns can for many edge out the mountains and the seashore as a place to vacation.

Renewed exposure to alumni and others in any of these ways can, with good marketing, put the college town on the path to becoming the next Florida.

For decades one of our fastest-growing states, Florida did not become the capital of retirement as well as a popular place to spend the working years just by dint of sun and surf. It owes its success to marketing that first made it a favorite vacation place.

The traditional third lifetime place for most families has been the year-after-year “second home” vacation locale. But for many of the Baby Boomers and later generations, the college town and not the vacation destination has become their third lifetime place and a better candidate as a place to live or retire to.

College towns’ distinctive natures do pose significant obstacles to their being marketed as a place for no-longer-young adults to live.

But those that hope to continue and enlarge their success will do well to consider supplementary economic roles. With their educational product increasingly accessible just about anywhere, college towns’ ace in the hole may instead be to sell themselves as the very special places so many of them are.

— John L. Gann, Jr., formerly with the College of Human Ecology at Cornell University, is the president of Chicago area-based economic development marketing consultancy Gann Associates. He is currently working on “The Third Lifetime Place: A New Economic Opportunity for College Towns.”

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