Victoria U is in a deep hole and the only way is up – so it’s moving its city operations into a tower block.

The university will consolidate pockets of property in Melbourne’s CBD into a vertical campus. Developer ISPT, backed by Australian superannuation funds and investors, including UniSuper and the University of Melbourne, will build and own a tower-block, that VU will lease for 30 years.

All 32 stories will be used for administration and teaching by, VU Polytechnic, and VU College, plus the university’s business school, college of law and the health and biomedicine college. This City West project will generate “a reborn urban experience in the western parts of the Melbourne CBD,” VU says.

The state government has approved the sale of sites the university is leaving, agreeing with the university’s proposal that revenues will go to new infrastructure. State law requires government approval for property sales by Victorian universities.

Looks like cost-effective expansion for the university, which lost $29m last year, on $443m in revenue.

This is the second time in a month when VU has benefited from a solid relationship with the state government, which has committed to building a new hospital at VU’s Footscray campus. VU says this will be “of major significance” for education and research in biomedicine, exercise and sport.