California has the largest number of higher education institutions in the United States and a diverse student population that has continued to grow exponentially over the past several years. Real estate developers have taken a significant role in helping colleges and universities prepare for this growing student base.

Our “Higher Education – A Facilities Arms Race?” panel took place on September 25, 2018 at City Club LA and comprised of an esteemed group of individuals from the higher education sector. Moderated by Warren S. Jacobs, Associate Vice President at California State University Los Angeles, panel speakers included leaders from a diverse collection of private universities: Lance Bridgesmith, Associate Vice President of Public Safety and Planning at Pepperdine University; Rollin Homer, Vice President of Facilities and Campus Planning at ArtCenter College of Design; Anne Eisele, Director of Projects and Energy Management at Pomona College and William Marsh, Director of Capital Construction Development at University of Southern California.

Panelists shared insights about how private higher education intuitions are financing renovation and construction projects, commented on sustainable practices and provided a glimpse of what projects are to come.

Building for Future Generations

Among all panel speakers, a common topic of discussion was how universities are effectively designing for future generations. In addition to the building of new structures, there is an added challenge of renovating older campus structures. Bridgesmith acknowledged the need for new facilities as enrollment has significantly increased at Pepperdine University.

“Most of the construction was completed in the early 1970’s, but there is still a need for capital improvements,” said Bridgesmith. “Throughout all the costs incurred, our students are at the heart of our work,” he continued.

Bridgesmith also discussed the new recreation center that is planned for the Pepperdine campus in Malibu. The new recreation center, like all other Pepperdine capital improvement projects is financed through the utilization of smart capital building strategies, corporate funds and private donors. All panelists discussed the need for capital improvements to stand the test of time.

“Every decision we make takes future students into consideration,” said Homer. “We have to make ’50-year decisions’ when mapping out what metrics to anticipate.”

 “We really look at the holistic cost of existing at a higher education environment for several years,” said Homer. “We look at costs beyond just tuition.”

Oftentimes there is a popular misconception, particularly among students and parents, that tuition dollars are being used to fund campus renovations. Reasons for rising tuition cost are often due to a variety of factors from inflation to supply and demand.

Despite the heightened concerns among the student population and their families, Homer debunked the popular myth that tuition dollars are allocated to fund campus construction.

“We do not use tuition dollars to fund projects,” he said.

Student Housing

As developers design higher education facilities that cater to current and future generations, availability of student housing is often a primary concern for much of the higher education community. As student populations continue to rise, the panel discussed the importance of developing student housing projects to meet the needs of the growing student base and how their institutions are suppling to this demand.

Marsh commented on how USC, traditionally a commuter school, is undergoing an increase in its on-campus student housing. Marsh mentioned the mixed-use aspects of the new housing complex at University Village, which includes retail on the first floor with units located above. Marsh also shared insights on additional housing projects that are in the works, such as a new on-campus hotel and additional student housing for the university’s science program.

Homer added to the conversation by commenting on ArtCenter College of Design’s recent groundbreaking for the college’s first-ever on-campus housing complex to cater to their growing student population.

Bridgesmith also expressed excitement about Pepperdine’s new Seaside Residence Hall, which opened this fall, just in time for the new school year.

Sustainability Practices

Similar to Pepperdine, Pomona College is undergoing construction for a new athletic center. Eisele mentioned how her team is being mindful about building the center for the future and planning for changes. She expressed the exciting challenges of efficiently and effectively designing a new facility with sustainable practices in mind.

Eisele’s main goal has been implementing Pomona College’s path to carbon neutrality, which she hopes the college will reach by 2030. Rather than looking at sustainability from a cost perspective, Eisele states the payback comes from what exactly is being tracked.

“Some of this is just minor, new ways of thinking, and how resources are used,” she said. “It’s amazing what you can do when you look at how you’re using the resources you’re given how you use energy.”

Pomona College is a great example of a college that has been growing in student population while effectively shrinking their carbon footprint. Eisele cites the creative uses of the favorable climate in Southern California, which has aided engineers greatly.

Rollin Homer of ArtCenter agrees that sustainability, like affordability, is at the forefront of the conversations surrounding capital improvements.

Financing Strategies

The panel also discussed the ways in which smart capital is being used to find higher education projects. Smart capital has a value-add when working with a sophisticated network of investors that have experience, knowledge of the industry and contacts. Normally, smart capital investors are not involved in the daily business but can help with insights that will make a difference in key areas. To put it simply, these are donors with experience, not just money. Utilizing their experience is pertinent when planning for a university’s capital improvements. However, as with all donors, university officials must tread carefully. All panelists commented on the fine line between maintaining relations with donors while also ensuring the design doesn’t reflect too much of the donor’s influence.

“Most donors respect this process,” said Marsh. “They will usually just request their name to be on something.”