2018 State of Facilities in Higher Education. December 13, 2018

Transcription

1 2018 State of Facilities in Higher Education December 13, 2018

2 Meet the Speakers Peter Reeves Regional Director Sightlines, a Gordian Company Pete Zuraw Vice President, Market Strategy & Development Sightlines, a Gordian Company

3 2018 State of Facilities A Shaky Foundation Space growth outpaces enrollment Institutional space vs. wealth is largely out of balance Is Debt driving the latest investment trends? A Controlled Slide Reliance on new space to balance age profile Capital investment increasing, eclipsing prerecession levels Despite investments, backlog continues to grow unimpeded Operational Resiliency Flat operating budgets remain the norm Staffing reductions continue Are institutions finding efficiencies in new technology instead of staff?

4 A Shaky Foundation

5 Percent Growth since Space Growth Continues to Outpace Enrollment Enrollment largely flat over the last 6 years 16% Space Growth vs. Enrollment Growth 14% 12% 10% 8% 6% 4% 2% 0% Space Growth Enrollment Growth

6 Percent Growth since Space Growth with Declining Enrollment is an Exposure Master s universities show the largest divergence 18% 16% 14% 12% 10% 8% 6% 4% 2% Space Growth vs. Enrollment Growth Baccalaureate Master s Research 0% -2% Space Growth Enrollment Growth

7 How to Finance New Space? Tuition Endowment Gifts and Grants Appropriations Debt

8 Tuition Rate Changes College Board Trends in College Pricing

9 GSF/Student Baccalaureate Institutions Show Linear Relationship Wealth/Student Avg: $96K Space vs. Wealth by Constituent Group Baccalaureate Space/Student Avg: 558 GSF 0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Endowment/Student

10 GSF/Student Master s Universities Have Limited Institutional Wealth Wealth/Student Avg: $96K Space vs. Wealth by Constituent Group Master's Space/Student Avg: 558 GSF 0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Endowment/Student

11 GSF/Student Variation Explained by Revenue Sources Available to Research Institutions Wealth/Student Avg: $96K Space vs. Wealth by Constituent Group Research Space/Student Avg: 558 GSF 0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Endowment/Student

12 GSF/Student Variation Explained by Revenue Sources Available to Research Institutions 1800 Space vs. Wealth by Constituent Group 1500 Research /Grant Dependent Wealth/Student Avg: $96K Research Endowment supported Space/Student Avg: 558 GSF 0 Tuition Dependent $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Endowment/Student

13 State Higher Ed Financing per Capita - Eight (8) - increase funding One (1) neutral Forty one (41) decrease funding US average 10% decrease State Higher Education Executive Office Association

14 Debt has Grown Enthusiastically The Other College Debt: Amount American Colleges and Universities have Borrowed through Municipal Bonds Why Colleges are Borrowing Billions The Atlantic Oct 10,

15 % of GSF Waves of Construction Drive Increasing Capital Need 12% 10% 8% 6% 4% 2% Driver: Enrollment Growth Driver: Program/Amenity Growth 0% Sightlines Database- Construction Age

16 % of GSF Waves of Construction Drive Increasing Capital Need 12% 10% 8% 6% 4% 2% Driver: Enrollment Growth Driver: Program/Amenity Growth 0% Sightlines Database- Construction Age

17 A Controlled Slide

18 % of GSF Renovation Age Profile by Constituent Group 100% Baccalaureate Master s Research 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Over to to 25 Under 10

19 $/GSF Capital Investment: Highest Level in Last 11 Years $6 $5 Existing Space Capital Investment (Does not include Grounds & Utility Infrastructure) $4 $3 $2 $1 $0 Asset Reinvestment Annual Stewardship Average

20 $/GSF Capital Investment: Stewardship +50% since $6 $5 Existing Space Capital Investment (Does not include Grounds & Utility Infrastructure) $4 $3 $2 $1 $0 Asset Reinvestment Annual Stewardship Average

21 $/GSF Existing Space Investment Increasing Across Institution Types $6 $5 Baccalaureate Master s Research $4 $3 $2 $1 $0 Asset Reinvestment Annual Stewardship *Investment Amounts Shown do not include Grounds + Utility Infrastructure

22 $/GSF New Space Drives Growth in the Annual Investment Target $6 $5 Existing Space Capital Investment vs. Target $4 $3 $2 $1 $0 Asset Reinvestment Annual Stewardship Target *Investment Amounts Shown do not include Grounds + Utility Infrastructure

23 Recurring Dollars Continue to be Used for Envelope and Mechanical Projects 100% Recurring Capital Spending Composition 100% One-Time Capital Spending Composition 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% AS Env/Mech AS Space/Prog 0% AR Env/Mech AR Space/Prog *Investment Amounts Shown do not include Grounds + Utility Infrastructure

24 $/GSF in Need Asset Reinvestment Backlog Growing and Significant $120 $100 Baccalaureate Master s Research $80 $60 $40 $20 $0 AR Need $/GSF

25 Net Asset Value Index Net Asset Value Falling Gradually for Non-Master s Institutions 80% Baccalaureate Master s Research 75% 70% 65% 60% 55% 50% Net Asset Value

26 Operational Resiliency

27 $/GSF Managing Costs, Maintaining Value Added Spending (PM) $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 Daily Service PM Utilities CPI_U Utilities Natural Gas, Steam, Electricity, Water & Sewer Planned Maintenance Daily Service People (Salaries, Wages & Benefits) + Expenses (supplies, contracts, etc.)

28 GSF/FTE Maintenance Staff: Not Keeping Up or Using Technology? 120,000 Baccalaureate Master s Research 100,000 80,000 60,000 40,000 20,000 -

29 GSF/FTE Custodial Reductions Slowing in Recent Years 45,000 40,000 Baccalaureate Master s Research 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -

30 Acres/FTE Grounds Show Less Impact, Highlight Importance of Curb Appeal Baccalaureate Master s Research

31 What will success look like in the next 5 10 years?

32 Make Communication a Priority To prevent further decline of facilities conditions and operations, facilities organizations must communicate directly with customers and tell their story throughout the institution What is most important to your customers and how do you deliver on it? Do your customers understand the constraints you are under? How can you involve your customers in the decision around resource trade offs?

33 Proactively Implement Portfolios Successful institutions will intentionally allocate resources to certain assets and avoid others. These priorities must be developed and communicated throughout the entire institution Which assets are not long term assets? Will these receive any funding? Are these targets for demolition or replacement? Which assets are core to the mission/strategy of the institution? How will these be invested in differently from other assets? What is our strategy around new space? Replacement or net-new space? What is the strategy for understanding operating and future capital costs?

34 Develop Resiliency and Efficiency in Operations Operating without the resources you had a decade ago, it will be critical for facilities organizations to leverage data and technology to improve efficiencies and create operations that are resilient to economic uncertainty or demographic headwinds. 1 2 How can data be used to target limited resources to the highest needs? Tying capital needs to operational costs through the work order system Where can technology be implemented to minimize the personnel needed to maintain a building? Building automation to control systems and pinpoint problems Sensing and detection technology to predict component failures or reduced operating capacity

35 Questions & Discussion 35

36 Thank you for your time. Contact Mary-Neil Jackson for more Sightlines Sightlines360 36