Planning now for an excess of underutilized facilities is critical to shoring up future institutional finances

College enrollment may be at its high point. As lower birth rates combine with a decreasing interest in higher education and less support from state governments, many institutions are already facing half-empty halls in outdated buildings and less capital to pay for their renewal. And it’s clear that this is just the beginning.

The characteristics of students interested in degrees is also likely to shift. “Schools are not well-positioned to take on a new mix of students,” says Pete Zuraw, Vice President of Market Strategy and Development for Gordian, a Building Intelligence Solutions provider. “They will have new needs with new expectations both in terms of programs and spaces, and we will find ourselves in a situation where schools have the wrong kind of spaces to serve them.”

Existing backlog of capital needs

To be sure, not all universities are experiencing a glut of excess space. In fact, Gordian’s 10th State of Facilities in Higher Education report published earlier this year finds a clear distinction between Research universities, Master’s Colleges and Universities and Baccalaureate institutions. Elite universities that provide a combination of value and prestige continue to see enrollment growth that follows a similar curve as their growth in square footage. The opposite is true for other institutions, where space ballooned even as enrollment declined.

Yet, even for those universities that enjoy growing student enrollment, operating costs continue to outpace budgets and receive an average of 80 percent of what’s needed. Across the board, deferred asset renewal costs have increased from $105 per gross square foot in 2020 to $133/GSF this year, a 27 percent increase. And while Gordian’s preliminary data from 2022 show a 10-percent increase in year-over-year capital investment, rising inflation has placed growing pressure on existing space, creating a 36 percent shortfall.

Facing the enrollment cliff

For most sectors, downsizing may be enough to manage budgetary shortfalls. But in higher education, the declining birthrate that began with the recession of 2008 will mean a decreasing number of high school graduates until 2039.

Colleges and universities must grapple with a more skeptical customer base, as students and their parents question the value of college degrees in the wake of skyrocketing costs and anxiety about the long-term prospects of student debt. These compounding trends suggest that traditional approaches to combating enrollment-related financial challenges will not be enough to weather the projected 13-year downturn.

Not built for future needs

“Universities have historically relied on traditional college-going populations to drive their numbers,” Zuraw notes. “But as the country changes and the demographic characteristics of the people going to college and interested in going to college shift, schools are not well-positioned to attract a new mix of students. They have new needs, new expectations and programmatic interests, and schools have the wrong kind of spaces.”

In some cases, the structures built at the turn of the 20th century are no longer relevant today. “A botany building constructed in 1915 isn’t hosting botany classes anymore,” Zuraw says. Science halls built in the 1960s–the peak of the campus construction boom–no longer suit the needs of students or research faculty today, their lab space outdated and obsolete. Even those residence halls from the late 90s and early 2000s don’t typically feature the kind of sophisticated electrical systems required for high-speed wifi.

Beyond the technological and structural aspects, buildings developed to adhere to a gothic aesthetic may feel off-putting or intimidating to students unfamiliar with that style of architecture, Zuraw says.

A time for frank assessment

Universities should use this moment to listen to and work with their facilities professionals, who are in a position to educate the leadership to understand that reactive and lagging behaviors don’t serve their best interest, Zuraw says.

“It’s no longer possible to dream up a future and ask someone to accommodate or fund it, “ Zuraw explains. “We could do that for the last 50-60 years when we had even more money and more students coming in. But whether you’re one of those institutions that expects to see growth or you're facing challenges finding students over the next 15 years, successful future planning happens when senior leadership is informed by both institutional facilities and finance teams.”

Informing future planning

Gordian’s research underscores the idea that all universities should make decisions informed by current conditions, realistic enrollment projections and cost considerations. Leadership should evaluate their student population to better understand their needs. For example, if commuters make up a large part of the student body, institutions should examine whether they have adequate parking and available wifi and study spaces. Likewise, more residential-based universities should consider walkability as well as cultural and dietary needs.

For struggling institutions, consolidation could be part of the solution, but isn’t always possible. Urban institutions could sell valuable real estate easily, but those in suburban and rural areas may struggle offloading libraries far from town. “Empty buildings and empty sidewalks make for a terrible student experience,” Zuraw says. In some cases, demolishing existing structures to reimagine something new may be the best path forward.

Even larger, top-200 institutions in regions like Texas that continue to experience rapid growth need to take a cautious approach. “The temptation is to build,” Zuraw says. “But they need to be smart about it.” Spaces that can be flexible will have more longevity than those designed for custom purposes, he notes.

Universities that are thriving today should look to those that are forced to reimagine their campuses due to changing enrollment patterns, because their fortunes could change in the coming decade, Zuraw says.

“Any institution has a real reason to believe it will struggle to find students one day, and they all need to have the willingness to be thoughtful about the future,” Zuraw says. “They have to have the foresight to act on information, not aspiration. Don’t believe what you dream up can be fixed by wrenches and checkbooks.”

This custom content is sponsored by Gordian and developed by Inside Higher Ed's sponsored content team. The editorial staff of Inside Higher Ed had no role in its creation.