By: Dean Monnin, Senior Vice President, JLL
Now more than ever, both students and faculty are being more selective about the schools they choose to attend. With the amount students now pay for tuition, room and board, students expect modern amenities and world-class learning environments. Similarly, attracting top-tier faculty is just as competitive, as more schools look to implement the latest technology and research tools.
To accommodate, colleges and universities are turning to the private sector to help preserve resources and finding new ways to fund higher education construction. JLL’s Higher Education Mandate has identified four real estate trends that will impact universities this year.
1. Donors, Debt and Privatization Will Make New Buildings and Other Capital Projects Possible
Last year, education construction was at its lowest point in more than 15 years, while other industries experienced a 97% recovery peak in construction. As a result, many universities are turning to Public Private Partnerships (P3s) to fund facility development, as well as maintenance needed in older buildings.
P3s can ultimately help universities ease the burden of financial constraints while maintaining efficiency in the delivery of new construction and maintenance of it. In order for a P3 to be effective, however, universities will need to identify their key risks and how they should be shared among their public and private sectors.
When it comes to student housing, institutional investors remain interested due to the higher returns they will likely see compared to multifamily housing. But, higher interest rates may make it difficult to finance some housing projects in a handful of markets. The south and southeast regions are among the most popular for new housing development, while markets in the Midwest and Northwest still hold potential, but have more to tap into.
2. ‘Core Mission’ Focus Will Prioritize Students and Faculty Demands
While many universities remain tight on budget, construction is expected to increase through 2017 in order to meet the demands of both students and faculty. Higher education continues to be a competitive market. Schools look to attract top-performing undergraduates, while the students, in turn, seek out an institution with modern, career-enhancing amenities.
Universities will also take into account renovating or rebuilding student housing. Most of today’s on-campus dormitories are at least 40 years old and in need of maintenance. Some maintenance needs, such as a lack of air conditioning or worn out furnishing, can become a distraction to students’ learning. Students are demanding a living environment that will also help them thrive in their studies.
As a result, universities will allocate most of their costs to their core mission: educating students. To do this, more money will be invested in renovations and new, modern construction to reflect the school’s commitment to providing a top-tier educational setting.
3. Universities Will Go Even Greener
To help reduce costs where possible, universities are taking further steps to reduce their green footprint. With new construction and renovations comes the ability to implement smart building technologies that are more energy efficient, thus reducing energy costs.
To date, more than 650 schools have joined the American College & University Presidents Climate Commitment (ACUPCC) to become “carbon neutral” in 2017. Schools will measure their greenhouse gas usage and make it a priority to reduce them.
This may also lead to slight enrollment increases. Research from the Princeton Review found that roughly two-thirds of prospective students value commitment to sustainability when choosing a university.
4. To Compete, Universities Will Borrow Workplace and Facilities Management Strategies from the Private Sector
To make offices more productive, engaging and efficient, universities are following in the steps of the private sector when it comes to workplace management by mimicking similar strategies. Along with attracting undergraduate talent, universities are also reconfiguring space to attract new faculty talent by mimicking common strategies from the technology sector.
To strengthen learning opportunities, universities are designing classrooms and faculty workspaces like the collaborative spaces prized by some of the nation’s top companies. Departments are now being held more accountable for the cost of their workspace, too. Schools are beginning to charge each department for their on-campus space in the hopes that faculty and directors will continue to implement strategies to boost efficiency.
About the Author
Dean Monnin is a Senior Vice President in the Columbus, Ohio office. Since joining JLL in 2004, he has successfully led teams of architects, engineers, vendors and contractors to complete over $100 million dollars of development projects.Mr. Monnin has nearly 20 years of experience across a wide range of project types including industrial, office, retail, meeting, cinema and multi-site development projects. He is currently the Owner’s Representative for Bowling Green State University managing a team in the development of a $200M Master Plan. Connect with Dean on LinkedIn.