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2016 State of Facilities in Higher EducationDecember 15, 2016

Presenters:

Peter ReevesAssociate Director, Member Services

Sightlines

Pete ZurawVice President, Market

Strategy & DevelopmentSightlines

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2016 State of Facilities ReportDownload your copy now!

www.sightlines.com/insight/2016-state-of-facilities

Agenda

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Introduction to Sightlines and our database

Review of 2016 State of Facilities trends – Space, Capital, & Operations

Summary of trends & strategies for success

Questions and discussion

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Join the Conversation

Presentation slides and webinar recording will be sent

to each attendee following today’s session

Enter questions here at any point during the webinar

Resource HandoutsInstant access to complimentary content

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Resources Available:

From Boiler Room to Boardroom – Creating Alignment with Non-Facilities Professionals

Focusing a Campus Investment Strategy

Data & Sustainability – How the Right Data Creates Success

Plan More, React Less – Building and Expanding Your Planned Maintenance Program

Speaker Bios

Data & Sustainability.pptx Out with the Old.pptx Plan More, React Less.pptx Show all downloads…

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Introduction to Sightlines

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Proud to be a Gordian CompanySolutions for the Construction Lifecycle

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Insights and Analysis to Shape Facilities StrategyFrom boiler room to boardroom

What We Do

Sightlines provide tools for strategic planning, analyzing, and benchmarking that generate an independent, reliable comparison of campus performance against peer institutions.

Our facilities intelligence tools give you the power to:

Use data and benchmarking to align strategies from the boiler room to the boardroom

Conduct facilities assessments and capital plans

Empower your sustainability officer

Forecast and plan for upcoming facilities needs

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The State of Facilities DatabaseRobust membership includes colleges, universities, consortiums and state systems

* U.S. News 2016 Rankings

Serving the Nation’s Leading Institutions:

• 70% of the Top 20 Colleges*

• 75% of the Top 20 Universities*

• 34 Flagship State Universities

• 14 of the 14 Big 10 Institutions

• 9 of the 12 Ivy Plus Institutions

The 2016 State of Facilities in Higher Education draws from the largest verified database of college and university facilities metrics in the country.

• The database features 377 institutions with over 400 campuses in 43 U.S. states and four Canadian provinces containing over 1.5 billion gross square feet of space and 40,000+ buildings

• All data is collected and verified by Sightlines professionals

• The database includes 60% public and 40% private institutions with an even mix of comprehensive/doctoral, research, and small institutions serving over 3 million students

• The database is supplemented by our 2014 analysis of 51 Canadian universities with over 200 million gross square feet of space.

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2016 State of Facilities in Higher Education

Introduction to Key FindingsWhat are the latest facilities challenges in higher education?

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Deferred maintenance backlogs are significant across all types of institutions and conditions exist for continued growth.

The three main areas that are contributing to the growth of deferred maintenance are:

A significant amount of existing space was constructed during a period of rapid, poor quality construction

Most buildings have received insufficient capital funding to slow down the backlog as they have aged

The recent emphasis on constructing new space is directly competing for capital investment that could have been used for updating existing facilities.

These conditions are being impacted by a slowing of enrollment growth at many campuses and by flat budgets for facilities operations.

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Aligning Finance and Facilities in Higher EducationLooking at space, capital, and operations together leads to successful facilities strategies

Average Campus Renovation Age 35

Total database CRV $288B

Total database capital investment $4B

Total database operating expenditures $5.4B

Space Profile

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Space Growing Faster Than Enrollment in 2014 and 2015

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rce

nt

Ch

ange

Space and Enrollment TrendsNational Average

Space Enrollment

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Space and Enrollment Growth – Public vs. Private

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rce

nt

Ch

ange

Space and EnrollmentPublic Institutions

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rce

nt

Ch

ange

Space and EnrollmentPrivate Institutions

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Space and Enrollment Growth by Constituent Group

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Pe

rce

nt

Ch

ange

Space and Enrollment

Comprehensive Institutions Research Institutions Small Institutions

De

nsi

ty: U

sers

pe

r 1

00

,00

0/G

SF

Liberal Arts Comprehensive University Small Institutions & Community College

Urban/City

Public Institution Average

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Campuses Becoming Less Dense with Low Utilization Rates

Density Factor Across the Sightlines Database

Mea

n

The database average for Density has decreased by 5% over the past 5 years.

The average classroom utilization rate is 50%-60%

*Density Factor measures the number of faculty, staff and students FTEs on campus per hundred thousand square feet.

Private Institution Average

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Putting Campus Building Age in Context

Pre

-Wa

r Built before 1951

Durable construction

Older but typically lasts longer

Po

st-

Wa

r

Built between 1951 and 1975

Lower-quality construction

Already needing more repairs and renovations M

od

ern Built between 1975 and 1990

Quick-flash construction

Low-quality building components

Co

mp

lex Built in 1991 and newer

Technically complex spaces

Higher-quality, more expensive to maintain & repair

Pre-War Post-War Modern Complex

0%

2%

4%

6%

8%

10%

12%

% o

f G

SF

Sightlines Database- Construction Age Sightlines Database- Renovation Age

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Square Footage by Age CategoryProgress in balancing campus age profile

13% 19%

18%

26%

31%

30%

38%25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Construction Age Renovation Age

% o

f Sp

ace

Construction Age vs. Renovation Age

Under 10 10 to 25 25 to 50 Over 50

Buildings Under 10

Little work. “Honeymoon” period.

Low Risk

Buildings 10 to 25

Short life-cycle needs; primarily space renewal.

Medium Risk

Buildings 25 to 50

Major envelope and mechanical life cycles come due.

Higher Risk

Buildings over 50

Life cycles of major building components are past due. Failures are possible.

Highest risk

Square Footage by Renovation Age CategoryPublic vs. Private – both groups seeing increases in space over 25 years old

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%%

of

Spac

e

Under 10 10 to 25 25 to 50 Over 50

Private AverageNational Average Public Average

Capital Profile

Capital Investment in Existing SpaceSteady investment levels with continued improvement in annual capital funding

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$1.12 $1.19 $1.28 $1.21$1.60 $1.67 $1.71 $1.59 $1.73

$3.10

$3.83 $3.88$3.63 $3.09

$3.37 $3.35$2.99

$3.32

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Capital Investment into Existing Space

Annual Capital One-Time Capital Average

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Capital Investment in Existing SpaceReliance on annual institutional capital growing for both public and private institutions

$0.77 $0.93 $1.11 $1.00$1.39 $1.47 $1.49 $1.30 $1.48

$2.51

$3.37

$3.66 $4.06 $3.28$3.56 $3.43

$2.95

$3.39

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Public Institutions

$1.55 $1.53 $1.51 $1.51$1.88 $1.96 $2.01 $1.97 $2.06

$3.83

$4.43$4.19

$3.04

$2.84$3.12

$3.23$3.05

$3.22

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Private Institutions

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Capital Investment by Constituent GroupAnnual capital growth trend continues for all institution types

1.01 1.08 1.20 1.031.23

1.43 1.41 1.42 1.441.18 1.23 1.30 1.31 1.39 1.56 1.67 1.59 1.67

1.40 1.37 1.39 1.31

1.95 1.97 2.111.74

2.16

3.04

3.82

4.19

3.603.43

3.533.73

3.33 3.153.24

3.88 3.903.46

3.59 3.26

3.694.12

4.28

3.30

4.08

3.473.29

2.30

3.10 2.89

1.86

2.96

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$/G

SF

Annual Capital One-Time Capital National Average

Comprehensive Institution

Research Institution

Small Institution

Facilities Backlogs Continue to Rise

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$81.72 $83.42 $87.19 $88.52 $90.73 $93.27 $95.31 $97.56 $100.07

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Backlog $/GSF

The Sightlines backlog total includes maintenance/repair, modernization and infrastructure

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Facilities Backlogs Continue to Rise

$0

$20

$40

$60

$80

$100

$120

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Public Institutions

The Sightlines backlog total includes maintenance/repair, modernization and infrastructure

$0

$20

$40

$60

$80

$100

$120

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Private Institutions

Operations Profile

$3.98$4.26 $4.33 $4.37 $4.41 $4.44 $4.54 $4.65 $4.74

$0.25$0.26 $0.26 $0.26 $0.27 $0.29 $0.29

$0.31 $0.33

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Facilities Operating Budget $/GSF

Daily Service Planned Maintenance

Facilities Operating BudgetSmall increases in campus operating budgets from 2007-2015

28

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Facilities Operating BudgetPublic vs. Private

$3.89$4.22 $4.29 $4.35 $4.40 $4.40 $4.50 $4.59 $4.67

$0.22

$0.23 $0.23 $0.23 $0.24 $0.26$0.27

$0.28$0.31

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SFPublic Institutions

$4.10$4.31 $4.41 $4.38 $4.41 $4.50 $4.61 $4.72 $4.84

$0.29$0.30

$0.31 $0.30 $0.32$0.33

$0.33$0.35

$0.36

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

2007 2008 2009 2010 2011 2012 2013 2014 2015

$/G

SF

Private Institutions

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000To

tal G

SF/F

TEPrivate Average

Custodial Coverage Rates Flatten in 2015

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National Average Public Average

Custodial CoverageGSF per FTE

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Maintenance Coverage Rates Start to Level Off

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000To

tal G

SF/F

TE

Maintenance CoverageGSF per FTE

Private AverageNational Average Public Average

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Modest Energy Reductions Since 2007

82,251 83,320 78,403 75,875 77,505 69,317 73,993 76,834 72,740

51,196 52,788 53,124

52,471 53,031

52,010 51,230

51,553 50,487

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rce

nt

Ch

ange

BTU

/GSF

Energy Consumption

Fossil Electric Percent Change

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Fuel Switching Driving Down Energy Costs

$10.87 $11.62 $11.57 $9.95$9.22 $8.88 $8.37 $8.88 $8.45

$27.71$29.56

$29.88$29.36

$29.51$28.16

$27.67 $27.80$28.21

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

$0

$5

$10

$15

$20

$25

$30

$35

$40

2007 2008 2009 2010 2011 2012 2013 2014 2015

Pe

rce

nt

Ch

ange

$/M

MB

TU

Energy Unit Cost

Fossil Electric Percent Change

Summary of Trends & Strategies

Summary of Trends

The aging campus is driven by the need to renovate or replace 1960s and 70s buildings, many of which were poorly constructed

To add to the problem, campuses have added new, more complex square footage to address increasing enrollment that has now leveled off or is even in decline

The combined demand for both “catch up” on aging buildings and “keep up” of newer buildings is much higher than the availability of capital funding

Summary of Trends cont.

Therefore, backlogs continue to grow even though capital funding is back to pre-recession levels, not adjusted for inflation

Flat operating budgets have not provided relief to the backlog problem, although there are signs of improvement

Modest improvements in energy consumption. Fossil fuel costs have declined primarily driven by shift to natural gas.

What are Campuses Doing to Manage Backlog and Reduce Risk?By aligning space, capital, and operations strategies

Lower Capital and Operational DemandsImprove space management; eliminate buildings in poor condition; create a more balanced age profile; improve classroom utilization if enrollment is flat or declining.

Make the Problem “Smaller” for Campus Decision-MakersUnderstand that campuses are a collection of assets that can be managed as an investment portfolio; funding is finite, but all buildings are not equal.

Make a Greater Impact with Capital FundingCreate multi-year capital plan for steady annual investment; target capital to safety, reliability and critical program needs; track data that show improvements to make the case for more funding.

Manage Operational ResourcesAllocate daily service and planned maintenance time depending on condition and importance of building. Communicate standards for new service levels to campus community.

Make the Case for Additional Resources

The old approach of defining needs in a way that makes the DM problem bigger and then requesting money will not work.

Not all buildings are created equal, therefore they should not be treated that way. Subdivide capital projects by issues of reliability, safety/code, program, transitional, and asset preservation to create “balance” and “diversity” in all facility investments to lower risk.

Time can be an asset if you manage space, capital and operational resources properly. You can target critical renovations and postpone work without increasing risks of systems failure.

Use data and metrics to show the capital and operational costs of adding new space without eliminating existing space in poor condition.

Demonstrate success from managing space, capital and operations in an integrated way. Use the data and actions to make the case for additional funding.

Thank you for attending!

Questions/Comments?

Connect with Sightlines

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203.682.4950

insights@sightlines.com

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Questions/Comments?

Connect with Sightlines

www.sightlines.com/insights/blog

www.twitter.com/SightlinesLLC

www.linkedin.com/companies/Sightlines

www.sightlines.com

203.682.4950

insights@sightlines.com