It is becoming increasingly apparent that higher education institutions will need to review their considerable investments in real estate to optimize the returns and secure financial stability to deliver public service for the future. Rating agency Moody’s says that most universities need to lower their cost structures to achieve long-term financial sustainability and fund future initiatives. 1And of the 925 colleges Forbes graded on financial fitness, more than half would be considered C students, and 108 schools earned a D–.2
Real estate assets are often expensive, outdated and inefficient. As approaches to learning evolve, these facilities cannot accommodate. Learning is the cornerstone of every academic institution and higher education leaders need to use their academic mission as the foundation for structuring their facilities portfolio.
Facilities can support where, when and how learning environments are used creatively to attract and meet the needs of 21st century students and faculty.
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1 Moody's Investors Service, Inc.; “Moody's: 2013 outlook for entire US Higher Education sector changed to negative;” January 16, 2013; https://www.moodys.com/research/Moodys-2013-outlook-for-entire-US-Higher-Education-sector-changed--PR_263866
2 Schifrin, Matt; Forbes; “Is Your College Going Broke? The Most And Least Financially Fit Schools In America;” April 13, 2013; http://www.forbes.com/sites/schifrin/2013/07/24/is-your-college-going-broke/
Australian colleges alone manage $33 billion worth of land/building assets, $3 billion in annual construction and renovation, and $7 billion in annual maintenance, operating and utilities3. At $42 billion, real estate costs continue to rise especially with the majority of higher education assets being several years old. 4 These assets are often outdated, inefficient and don’t have the infrastructure needed to support new technology. As approaches to learning evolve, these facilities cannot accommodate. What if higher education leaders were to remodel their portfolios of brick and mortar assets to a facilities strategy that enables flexible environments for learning? Some education institutions have begun to proactively and critically evaluate the role of real estate in the organization.
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3 APPA: Leadership in Educational Facilities; http://www.appa.org/index.cfm
4 Kadamus, Jim; Sightlines; “The State of Facilities in Higher Education 2013 Benchmarks, Best Practices, & Trends; page 3; 2013
Education leaders can ask questions that may reveal how facilities might be used to support learning objectives and the academic mission. These include:
Where do students learn?
Create the learning environment where the learners are. Are they at home, abroad, in the classroom, in transit, in a workplace? Answers may inform decisions to use non-traditional spaces, such as community spaces, which are distributed versus concentrated on campus.
When do students learn?
Today’s students are learning all the time—nights, weekends and even year round. They are also learning at different times in their lives, such as after retirement. Learning would be more accessible if academic institutions could integrate it where people live and work.
How do students learn?
Learners of all ages and abilities respond to interactive, real-time, accessible learning. Some academic institutions are appealing to different learning styles by delivering information in new ways, such as moving a class lecture online, but keeping face-to-face discussions in the classroom.
Once universities have defined the where, when and how, they need to translate that into a strategy for how they should alter physical space to accommodate the future mission.
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Education leaders need to create a blueprint for change. A variety of stakeholders—financial officers, administrators and outside partners—must work together with real estate planners to architect the plan for developing and using space in creative ways that support the academic mission. Universities cannot rely on facilities managers alone to develop a strategy.
Steps to developing a portfolio strategy might include:
Map out the learning environment that can support modern learners and flex capacity to accommodate student enrollment.
Create a strategic plan to fill gaps and eliminate misalignments in the current portfolio.
Work with private and public entities to develop plans to leverage and transition current assets.
Assess the real estate investment income and budget savings to support universities academic mission.
As universities map out a mission and transition the old real estate portfolio to match that blueprint for delivering learning, they can also lay the foundation for more effectively serving future generations of learners.
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Higher Education Real Estate: Cost or Catalyst for Achieving Your Academic Mission?
Higher education institutions must review their considerable real estate investments to optimize the returns and secure financial stability.
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