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Higher education leaders should be asking how to move forward most effectively with facilities investments on their campuses.

Focus on the future

July 3, 2023
4 business variables for colleges and universities to consider when assessing campus facilities.

For more than 350 years it has been possible to attend an institution of higher education in the United States. And since the middle of the 20th century, a growing interest in attaining a college degree has meant an extraordinary expansion in the number of institutions and their scale. A 2021 study by the Georgetown University School of Public Policy validated that surge in the pursuit of higher education: It found that college graduates would earn nearly 75% more in their lifetime than those without a degree.

But in fact, enrollment has been declining of late. The National Center for Education Statistics reports that undergraduate enrollment fell from 17.5 million in 2009 to about 15.9 million in 2020. The decline has continued; fall 2022 numbers show a 1.2% reduction in enrollment. There are numerous reasons for this trend. 

The high cost of the collegiate experience has driven people to question its immediate value, even if the long-term financial returns remain strong. Those costs have become more problematic at public institutions where legislative support has been waning or politicized, forcing schools to find more of their money from non-governmental sources or through increased tuition. More students want a collegiate experience that will lead directly to a job, and some businesses are offering specific technical training that enables students to avoid the time and expense of four full years in college.

Since campuses were disrupted in 2020 by the Covid-19 pandemic, many students were displeased with how colleges and universities responded. Those students wanted a traditional in-person, intimate educational environment. Some deferred attendance during the pandemic, and not all of them have come back.

Other students who have carried on with pursuit of a higher education degree now find themselves saddled with debt and have become a symbol of caution to those deciding whether the cost of college is justified. Finally, a drop in the birth rate drop that began in 2008 means that the number of American-born 18-year-olds available to choose a collegiate experience will start a long, steady decline in 2026.

Higher education isn’t going away, but the landscape has changed, and institutions must adapt to be more fiscally prudent, including the stewardship of their built environment. A 2021 report by APPA (formerly the Association of Physical Plant Administrators) and Gordian found that U.S. colleges and universities manage more than 6 billion square feet of campus spaces in 210,000 buildings; that equates to a replacement value of $2 trillion; those campuses have a backlog of urgent capital renewal needs of more than $112 billion. That backlog cost is climbing as recent supply chain problems and inflation have significantly increased the costs of construction. Campus facilities will be critical in defining the financial future of nearly all higher education institutions.

Institutional leaders should be asking how to move forward most effectively with facilities investments under these conditions. For each campus to optimize its built environment and invest prudently, strong facilities leaders can help guide a conversation that considers four business variables essential to making the best possible choices going forward.

By exploring embodied debt, risk exposure, future program compatibility and adaptability, colleges and universities will be able to align facilities actions and investment with the key drivers for institutional success. 

Embodied debt is a label for the often-overlooked costs tied up in the buildings and grounds of each school — the costs to operate the campus. These include existing, backlogged and impending capital renewal costs to address components and systems that have reached or exceeded their useful life, as well as the expectation for wholesale replacement when the programs and activities have begun to exceed the capabilities of the existing buildings and infrastructure.

Coming out of the pandemic, higher education institutions also must assess whether existing investment in space is necessary and if programs can be undertaken in a hybrid or fully remote fashion. A deep understanding of all of these costs is necessary to properly evaluate their value to the evolving institutional mission.

Risk exposure must be considered in a wholesale fashion. It could be tempting to fret exclusively about physical failure that presents risk to human safety. Consideration of failures that compromise student or research success is equally important to an institution’s future. Further, the risk of long-term program and reputational decline should be factored in when determining how to invest in campus facilities. Perhaps most insidiously, building performance failures could unexpectedly siphon away resources earmarked for program investments.

Buildings are crucial underpinnings to a great percentage of the activities within an academic community. An important balance must be struck between operating only what is required to support student success while also having the resources to assure that facility shortcomings don’t compromise that success.

Future program compatibility may be challenging as programs evolve and teaching, learning and research techniques adapt to keep up. These changes may test the ability of existing facilities to support excellence. The pandemic, social justice issues and cultural and political upheaval have all been important reminders that forces outside the academic community can lead to internal transformations.

The built environment does not change quickly, and stewardship of properties is best focused not on what has been but what will be. A willingness to let go of the idea that all of the spaces on today’s campus are sacred will enable campus leaders to consider whether it is wise in some cases to remove and replace facilities.

Adaptability must be understood to be a hallmark of both space and the programs using it. The accelerating pace of change is expected to continue. Historical practices of creating space that is so unique and purpose-built that it resists adaptation is rooted as much in celebratory grandeur as it is in a lack of design restraint.

Every space (renovated or new) must be developed under the assumption that it will not retain that use for even a full system lifecycle, let alone the 100-plus-year life that campuses can aspire to for their buildings.

Embracing the notion of an integrated approach to understanding and tackling problems will bring the greatest opportunity for success. Practitioners within the educational community must see their work as connected to the work of others so that the entire organization can move forward. And facilities professionals must regularly step away from focusing exclusively on what they are responsible for today and engage in work that assures that investment in campus facilities will create the most effective tomorrow for student success.   

Pete Zuraw ([email protected]) is vice president for market strategy and development at Gordian. He formerly served as a campus facilities executive at two colleges.

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