Five real estate
questions higher
education leaders
should be asking

Hidden cost savings strategies to apply now

While colleges and universities across the U.S. are well into their fall semester, many have adopted remote learning due to COVID-19. With only a small fraction of students and faculty on campus, many of these institutions are facing a multitude of financial challenges. 

As such, many higher education administrators are left to figure out how they can reduce costs and generate much-needed revenue. One answer might be something that they have not previously considered — leverage campus facilities.

Here are five questions college and university administrators should consider asking about their real estate:

1. Are there ways I can consolidate administrative space for more effective use and identify possible savings?

First, ask yourself if you need to house all administrative activities on campus, now and in the future. A cost analysis of off-campus options you hadn’t previously considered may uncover savings opportunities and free up university space for socially-distant learning. Also, more formal adoption of remote working policies for your administrative staff could reduce your office costs by as much as 10% to 30%.

2. With many older buildings on campus and tight budgets, how do I strategically prioritize capital investments? 

Performing a facility condition assessment should be your first step so you can determine the condition of your overall facilities, including building systems, grounds and maintenance needs. This will help you understand everything about your campus facilities, from the heating and cooling to the roofing. Assess what the needs are and decide what makes the most economic sense right now. Are there facilities that need to be renovated? Are there some that need to be demolished? Are there building operations that should be paused? An assessment will allow you to make objective, data-driven decisions about which capital investments you should be making in the near term, while giving you a full picture of your real estate’s performance to help you plan for the long-term needs of your university, faculty and students.

3. How do I know if I’m running my campus buildings as efficiently as possible? 

By analyzing your portfolio’s data, you will be able to identify any inefficiencies in your university’s buildings, like operating and maintenance costs as well as facilities management. For instance, an analysis could reveal that your facilities are incurring above-average expenditures for energy consumption, help you pinpoint wasteful practices and quickly reduce costs.

It will also give you a better understanding of the buildings you have on campus and help you determine which ones should remain in use with fewer students, faculty and administration on site. Temporarily closing unoccupied buildings will help you preserve the facilities, systems, equipment and machinery while also reducing costs.

Lastly, a data driven, holistic understanding of your facilities and the changing needs for administrative space, classrooms and other areas on campus will help you make better informed decisions. Industry studies have shown that 30% to 60% of the space on the average campus is underutilized. By learning where people are or aren’t working and studying, you can create a strategy to better utilize spaces and avoid new construction that’s not really needed.

4. Without investing scarce resources, can the campus become more sustainable while also reducing energy costs?

There are a lot of misconceptions when it comes to up-front costs, payback periods and ways to show ROI when it comes to sustainable practices. But in reality, most universities have low-hanging fruit that they can target to reduce energy costs, and in some instances, even make money.

Lighting and HVAC systems shouldn’t be overlooked when trying to cut costs and improve campus sustainability. According to JLL research, lighting uses 31% of the total energy consumed in a typical college or university classroom building, while HVAC uses 28%. By switching to energy-efficient lighting, heating and cooling systems, not only will your campus be more sustainable, it will reduce costs almost instantly as well.

Another way you can achieve this is by creating a renewable energy partnership. This way, the provider funds the installation of energy technology, such as solar panels, while also providing engineering resources to distribute the power to the central plant. In exchange, your institution commits to a long-term power purchase agreement, much like the one between Pittsburgh’s Duquesne University and Clearway Energy. These kinds of partnerships can also create long-term revenue streams for your college or university while making the surrounding communities more sustainable, too — a win-win.

Finally, public-private partnerships help reduce energy costs while meeting your sustainability goals. It can help take the burden of operating aging and inefficient central plants on campus and put it in the hands of a private sector partner. In turn, they replace, operate and maintain the plant and sell the power back to your institution. You’ll benefit from better energy efficiency and lower costs over time.

5. There are several older buildings on campus, with significant repair expenses needed. Are there ways I can better leverage these facilities and even generate rental income and tax revenues while protecting the university mission?

Understanding the true age of your facility and it’s useful life versus the value of the land it sits on can help you determine which facilities might be a good candidate for a ground lease. With a ground lease underutilized land or older buildings can be redeveloped to generate rental income and tax revenues. Since a ground lease is a long-term commitment, it could generate revenue for the university for years to come, as well as meet the needs of students and the surrounding communities.

These are just a few of the strategies you can apply now to unlock savings and start recapturing revenue for your institution.