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Sunday, 07 June 2015 22:00

Modernizing, maintaining facilities drives building activity for West Michigan universities

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Participating in MiBiz’s higher education real estate roundtable were (l-r) Chris Beckering of Pioneer Construction, Vennie Gore of Michigan State University, Ryan Archer of TowerPinkster, Michelle Wregglesworth of Miller-Davis Co., MiBiz reporter Nick Manes, James Moyer of Grand Valley State University and MiBiz Managing Editor Joe Boomgaard. Participating in MiBiz’s higher education real estate roundtable were (l-r) Chris Beckering of Pioneer Construction, Vennie Gore of Michigan State University, Ryan Archer of TowerPinkster, Michelle Wregglesworth of Miller-Davis Co., MiBiz reporter Nick Manes, James Moyer of Grand Valley State University and MiBiz Managing Editor Joe Boomgaard. PHOTO: KATY BATDORFF

Students hold the overall aesthetic experience of a college campus on par with the quality of the education it offers, and that is leading to new construction and development projects at higher educational institutions in West Michigan.

Facilities managers, general contractors and architects say that colleges are working at breakneck speeds to stay modern and relevant at a time where competition for students is increasing, particularly as public dollars to support these projects dwindle.

MiBiz convened stakeholders from universities, contractors and architecture firms for a roundtable discussion on real estate and development topics in higher education. Participating in the discussion were:

  • Ryan Archer, senior design architect at TowerPinkster
  • Chris Beckering, vice president of strategic business operations at Pioneer Construction
  • Vennie Gore, vice president for auxiliary enterprises with Michigan State University
  • James Moyer, vice president for facilities planning at Grand Valley State University
  • Michelle Wregglesworth, senior project manager with Miller-Davis Co.

Here are some highlights of the discussion.

What are the key growth drivers in higher education construction and development?

Moyer: I think the principal one is trying to avoid obsolescence. Some universities are saddled with legacy projects and legacy buildings which are in need of repair or renewal just to meet some of today’s requirements. That drives some of it. In the case of GVSU, we are trying to principally retire (aging buildings). They’ve outlived their usefulness, they are difficult to maintain. They must come down.

Beckering: There is a lot of updating of outdated facilities. A lot of the work we have been doing is just updating facilities, bringing them into the 21st century. Some of our clients cite competition for students as a reason for improving the built environment. Incorporation of technology and non-traditional learning formats — in regards to the physical space and vocational training — is another area where we have seen a burst of activity over the last couple of years.

Moyer: The other thing that drives our growth is growth in specialty spaces. These spaces have a laboratory feel to them. It could be a science lab or it could be a theatrical lab. Those are, for the most part, single spaces. The requirements of those are quite different than normal classrooms.

How does competition for students play into facilities decisions?

Archer: (Competition for students) is quite significant. We were just interviewed for a project (where) the professor who was representing the academic unit in the interview said ‘I’ve got students we are trying to recruit who will walk in the front doorway with their parents, take a look around and pick another program.’ So there’s a legacy of deferred maintenance that you have to wrestle with. Beyond that, there’s the recruitment side and a brand management and image side. You’re trying to come in and have that while representing the university with visitors and students.

Moyer: The appearance of deferred maintenance at some institutions has a significant impact upon that first impression. If a parent shows up and the lawns are not kept, at that point in time, they have a different view of the university that the brochures didn’t bring to the table. Then you walk into the recruitment building for the orientation and you see leaky ceilings or (any of a long list of things). Even the lunch experience has an impact. In a state where the school-age population has dropped the past five years, (competition) will be that way for some time yet.

Wregglesworth: (With Sangren Hall at Western Michigan University) students are coming in and saying … ‘This is where I want to go to school if they are focusing so much resources on educational programs like this and to build a building like this.’ But resident halls are another thing we are seeing as really a selling point for new students. That’s a challenge that a lot of the universities have. Their residence hall inventory is significantly aged. We are seeing a lot of renew, redo or brand new residence halls coming out of the ground.

New technologies are certainly driving change in education. How is that impacting facilities?

Moyer: The growth in technology has created another odd conundrum: How do you bring the faculty along? Because they grew up with a computer in their hand, our students can pick up the technology a lot quicker than some of our faculty. How do you invest in technology and try to make sure that technology is put to its greatest use by the faculty themselves? We’ve had situations where you do the investment in technology and then the room basically does not get the type of use that warrants the cost that you invested in the project itself.

Beckering: Outside of the specialty equipment systems, just the basics, the presentation systems: We’ve seen a direct (connection) between ease of use and frequency of use. I think sometimes we see people falling into the latest, greatest gadget that people may not be familiar or comfortable with and they tend to let it collect dust. … Now we’ve seen kind of a back-to-basics trend in terms of office spaces and higher ed spaces where it’s not as much a focus to have every single bell and whistle that everyone may ever want, but can I use it quickly and easily and effectively. Those rooms … have amazing technology, but if the professor for that particular class isn’t familiar or comfortable with the particular technology, they won’t use it.

All these projects and initiatives require significant capital investments, and universities have a few options to pay for them. How are the financing markets looking for these projects?

Gore: I think it varies. Typically, residence halls and dining and auxiliary are lumped in as a way of generating your own revenue. We’ve been fortunate through the last seven years with interest rates being historically low. The cost of capital has made things affordable to do. Now, as that changes, it will be interesting to see what happens. I think with academic buildings, it’s a part of what the state has available, if you’re a state institution. Do you have people who are willing to commit and put private money to it, and then it’s a combination of some level of indirect cost recovery. It just sort of depends. But it’s going to get tighter, because all of us, at least in this state, (have infrastructure that needs to be updated). The demand is going to be great. It’s about trying to balance it all.

Archer: The short answer is there is not enough (capital). With private institutions, we are seeing them (raising money) exclusively through capital campaigns. They rely just on going out to alumni and supporters. One of the interesting pieces of feedback one of our clients had was they went out and the donor community said, ‘What are you doing to develop graduates that will come back to the business community and make an immediate contribution?’ That’s where they are interested in making investments, certainly on the academic side and then you can make an argument on the housing, auxiliary and athletics that support recruitment on the academic side.

As the public funding gets squeezed, how important are private-sector partnerships?

Gore: That is one of the mechanisms you see nationally. We look to the private community to help develop projects. [MSU has worked with the nonprofit National Development Council to help fund projects.] As a nonprofit, they hold the bond. They work with a state entity or a university and they work with the developer and the construction company to build it. At the end, it gets reverted back to the institution.

How are broader trends in the general contracting space affecting higher education construction?

Beckering: I think there will need to be a bit of shift in expectations. Additional lead time in planning for projects and when they start is going to become valuable. The idea that ‘we have a project, let’s bid it and we’ll start in a month’ — you’ll be paying a premium if you can get bids on projects like that. The owners who are more thoughtful and engaged … work with a subcontractor team early on and work together. … There’s always this pendulum in construction delivery, design-build versus pure general contracting. The concept of picking a team and who you’ll be working with and communicating to those people that they’ll have work in their pipeline so they can plan around that, there is merit to that approach. There are higher education institutions whose typical delivery method is general contracting bids.

How are private, landlocked colleges dealing with the need for new facilities?

Wregglesworth: Our experience is on Kalamazoo College’s campus — and talk about a tight site. Everything is just right there. Every building you build, you have the footprint of the new building and maybe 10 feet outside that building is your building space. It’s right in the middle of an urban neighborhood.

How do you go about doing that?

Wregglesworth: You have to meet with neighborhood associations and have them understand what the impact of the project is going to be and what the importance of the project will be. We are seeing (Kalamazoo College) doing very unique projects. Our most recent one was the Arcus Center for Social Justice Leadership. That was very challenging in a lot of ways, but it’s also a place for local neighbors and the local community to come in and meet with some of the student population. They are using it as a nice meeting place for all aspects of the community. I think that is important — that community-institution relationship. And I don’t think that is simply for small colleges. I think that is larger universities, small colleges and everybody in the whole spectrum.

What’s the strategy for MSU and GVSU with both universities’ recent land acquisitions?

Moyer: Since I’ve been at the university, I’ve led a charge that somehow used up a lot of land. So now we have adopted a strategy of infill development on our existing campus, even though we have purchased land to the south of the Allendale campus. We are trying to make sure that the successors will have access to the land to do what they need to do. Our recent purchase in Grand Rapids was basically the same challenge. How do we account for the first five years and think about the following 15, and then make sure the successors have something 50 years from now. It means we prepare ourselves to get to where Kalamazoo College is. It’s tight but we can still do it. When you were in a corn field, as GVSU once was, you didn’t think about it.

Gore: For our presence here in Grand Rapids, we have thoughts about what it may be 10 or 15 years from now, but we have no idea. The land (adjacent to MSU’s future Center for Biomedical Research) is there today and available for development. 

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