For years, America’s colleges and universities have been engaged in a race to provide students, faculty and prospective donors with the most capable and prestigious facilities—ranging from laboratories to dormitories and athletic centers. This competition has been terrific for the nation’s nonresidential construction sector.
Between 2004 and 2008, U.S. colleges and universities spent between $13 billion and $15 billion on new buildings, additions and renovations. The peak year for construction volume was 2006, when the higher education sector spent $10.3 billion on new construction, $2.1 billion on additions and $2.6 billion on retrofits—yielding total construction spending of slightly more than $15 billion.
From a broader perspective, the level of investment in U.S. educational facilities of all types expanded from 74 million square feet in starts in 1981 to a cyclical peak of 273 million square feet in 2001. By 2008, starts were back up to 223 million square feet, or almost three times the level of 1981.
Predictably, battered endowments and stiff credit markets have slowed this segment of the economy. Last year, U.S. colleges and universities completed slightly more than $11 billion in construction projects, according to the 2011 Annual College Construction Report. This included less than $8 billion in new construction, $1.4 billion in additions and $1.7 billion in renovations.
Colleges and universities are expected to complete $11.6 billion in construction this year: $8.5 billion in new facility construction, $1.1 billion in additions and nearly $2 billion in renovations. Circumstances are improving, in part because endowments expanded last year with the continued rebound in financial markets. This helped finance new projects, as well as instilled greater confidence in college and university trustees to move forward with ambitious projects. For example, the University of Washington recently authorized spending $250 million to renovate its football stadium under the presumption that most of the funds could be raised through private donations.
Caution Ahead
Even as financial markets and the broader economy recover, all is not well. Many schools depend heavily on their respective state legislatures for funding, and the majority of U.S. states have serious fiscal problems. According to the Center on Budget and Policy Priorities, the upcoming fiscal year (FY2012) is shaping up to be one of the states’ most difficult budget years. Through March, 44 states and the District of Columbia were projecting budget shortfalls totaling $112 billion for FY2012. Federal assistance for states has helped, but that support largely will be gone by the end of FY2011.
Additionally, 26 states already are projecting shortfalls totaling $75 billion for FY2013. This total undoubtedly will expand as more states complete their FY2013 fiscal assessments. Among the worst fiscal shortfalls for FY2012 include Nevada (45.2 percent of its 2011 budget), New Jersey (37.4 percent) and California (29.3 percent).
Although the gradual recovery of construction volumes at private colleges and universities is expected to continue, rising construction materials prices and concerns about the size of U.S. government debt could bring the nascent recovery to a halt. The median cost per square foot for academic building construction is expected to increase $44 this year to $339 per square foot, while the median cost for science buildings is expected to soar $111 to $503 per square foot.
With state government budgets unlikely to begin recovering for two to three years, more public institutions may be forced to postpone projects. These considerations also are relevant to K–12 facilities.
Buildings on college and university campuses accounted for 15 percent of all LEED project registrations between 2002 and 2009. During this period, LEED registrations on U.S. campuses went from less than 100 to more than 3,000. By the end of 2009, 571 LEED projects on campuses had attained certification, according to
Yudelson Associates.
Through March 2010, the top 10 universities in terms of LEED projects were: University of Florida, Harvard University, University of California-Santa Barbara, University of Washington, Duke University, Syracuse University, University of Virginia, University of Colorado-Boulder, Cornell University and Emory University.