by Brianna Crandall — December 21, 2016 — Global professional and financial services firm JLL just released its Outlook for Higher Education Facilities in 2017 highlighting four facilities / real estate trends that will support institutions’ strategic goals next year, as highlighted below.
Intense competition for students and faculty. Skyrocketing tuition costs. Aging facilities. These are just a few of the pressures faced by universities as they enter 2017, finds JLL. But next year their leaders will continue their turn to a historically unlikely channel for relief: the private sector. Early adopters of private-sector strategies have discovered that they can preserve their resources by accessing expertise, funding and co-funded research endeavors. These partnerships in turn allow the university to invest in students, faculty and research.
David Houck, managing director and national leader of JLL’s Higher Education practice, pointed out:
Universities are vulnerable to pressures common in the business world, such as raising capital and intensifying competition. They are turning to private sector experts for operational expertise and financial solutions that allow them to focus on their core mission of educating students.
JLL has identified four real estate trends that will impact institutions of higher education in 2017:
1/ Donors, debt and privatization will make new buildings and other capital projects possible. Public Private Partnerships (P3s) are becoming the financial model of choice to fund both facilities development and address deferred maintenance on buildings, which now averages $100 per square foot. In 2016, education construction was still in a post-recession slump — in fact, hovering at its lowest point in more than 15 years — due to reduced state/local funding and tuition increase limits.
“In 2017, both public and private universities will recognize that P3s are an effective and strategic way to meet long overdue development goals,” Houck noted. “A P3 model gives universities flexibility to retain control of their facilities, while managing debt and providing a potential revenue stream.” To properly position a P3 project for success, Houck recommends universities take a close look at the important factors to consider before embarking on a P3.
2/ “Core Mission” focus will prioritize students and faculty. Universities will engage the private sector for its expertise in the construction and management of facilities. Cost savings will be diverted to the university’s core mission: educating students. And for the private-sector teams offering P3 funding and operational expertise, better, faster and less expensive is the new mantra for 2017.
Despite pervasive budget crunches, JLL expects construction on university campuses to accelerate in 2017 as institutions strive to build and renovate facilities that better reflect their brand and appeal to students. For example, many of today’s dormitories are at least 40 years old, and current students are demanding more modern accommodations. And today’s student housing designs are more conducive to successful learning outcomes.
3/ Universities will go even greener. When energy use is reduced, so are energy costs. As a result, installation and analysis of new smart building technologies is one of the ways that the private sector will support universities’ ongoing public commitment to become “carbon neutral” in 2017. And it is not just a noble gesture. According to the Princeton Review, nearly two-thirds of prospective students value commitment to sustainability when choosing a school. In 2017, universities will increase collaboration with the private sector as they work to implement energy management systems that help reduce resource consumption.
4/ To compete, universities will borrow workplace and FM strategies from the private sector. Universities are taking cues from the private sector for ways to make their offices more engaging and productive. They are reconfiguring space to support collaboration and building campuses close to amenities to attract new faculty talent, mimicking the workplace strategies of the tech sector.
University administrators are also striving to improve the efficiency of their offices by giving each school or department greater accountability for the cost of their space. Universities are increasingly charging each department for the real estate they occupy, a trend that Houck anticipates will continue in the coming year. And universities with revenue-generating research, technology and incubator projects will need to develop strategies to compete with private-sector coworking spaces to attract and retain startups.
JLL’s Higher Education division helps colleges and universities uncover innovative solutions to address their biggest challenges and achieve financial and recruitment goals, offering services from securing private-public partnerships to finance development projects that produce revenue, to reducing operating costs through outsourced facilities management.
