[00:00:00] Aaron Benz: Why are leading universities intentionally shrinking or reshaping their physical footprint? And what does that signal about the future of campus planning? Welcome to another Bow Tie Tuesday. I am privileged to be joined by Andrew Sama from Huron to talk about the insights from our inaugural State of the of Space Analytics survey.
We heard from 31 institutions and one of the themes that really stood out that we wanna talk about today is leaders are being far more deliberate about the real estate portfolios, whether it's exiting leases, choosing not to build even demolishing buildings. Andrew, this, uh, this seems like a meaningful shift in how Higher Ed thinks about space.
I'm excited to unpack it with you. Yeah, there, there's a couple key data points I think. In here, one of them, 68% exited at least one lease since 2021. 52% decided not to build or lease space previously considered, and 48% [00:01:00] demolished at least one building. What's your reaction to these numbers?
[00:01:04] Andrew Sama: Yeah. First off, thank you for having me on Bow Tie Tuesday.
Aaron uh, excited to be here and to unpack all this with you. I think there's a lot interesting in here specific to the question that you just asked. Right. I think it's interesting to see so much movement generally right in, in the way folks are thinking about space. The demolition data really stood out to me.
Right. You know, getting out of a lease is by and large sort of a paper transaction. Right, right. Uh, you know, demolishing a building is really complex and it has to be a very intentional action. Right. There's capital planning involved in that. There's feasibility analysis you're gonna have to talk to stakeholders and donors. You know, there really has to be a willingness from the institution to retire that asset permanently. That is not the same thing as getting out of a lease. And as you alluded to at the top, the survey respondents here we had 31 great institutions participate in this.
They're heavily R1, right? It's above 70%. Right? So these are big, large, complex institutions with, you know, a lot of alumni, a lot of students, a lot of donors. [00:02:00] So when I hear a group like this. Half of them have demolished a building in the last five years. That really, to me, signals that there may be some more increased willingness across the market to confront these long-term stewardship costs that we know about.
Right. You and I have talked about there are some eye watering numbers around deferred maintenance, you know, across the industry and a lot of the campuses that we know and work with. And I just, I think we're reaching a point and this data may indicate that we're reaching a point that you can't i nvest your way out of this, right?
There's gonna have to be some tough decisions, and I think schools may be starting to reckon with this reality, right? We had one respondent that told us they either demolished or divested from 25 buildings over the last seven years. Right? Amazing. That, that feels like a lot. I can't, I can't say that should be the target for that.
That won't be a reality for every campus that, uh, that's out there. But, you know, I think that's a signal of, of the opportunity here. To really substantially reduce the deferred maintenance backlog and to impact operating costs. You know, I think the activity level overall across the whole survey, [00:03:00] uh, set was, uh, I think interesting, but really the demolition that stood out to me.
[00:03:05] Aaron Benz: Yeah, me too. I mean, it seems like it's, it's one of the areas when we talk about deferred maintenance or deferred capital renewal and that just number going up every year, that it's one of the only ways to actually start to bring that down, right? Yeah. Is you have to reduce your footprint so that doesn't continue to compound on on it.
It seems like some universities are really grabbing a hold of that idea and saying, Hey, we, a billion dollars worth of deferred capital renewal or, or that growing amount. That's just too much. What, what literally can we do and how do we get some of this, um, off our books? And so for, let's say, for institutions that haven't done this kind of portfolio review where would you suggest they begin?
[00:03:45] Andrew Sama: Great question. Um, I'm gonna say there's really three things I would be starting with, right? Uh, I think the first is understanding the condition of my assets, right? Whether that's, you know, FCI, facility condition assessment of some sort, so that you have a, a [00:04:00] good, consistent view of the health of your assets, right?
And where the risk is across your portfolio, then I think you have to, to get to some understanding of the real cost of operations, right? You probably have some of this data around, but have you really done it in a, in a comprehensive way, and are you pulling that together regularly and understanding what that looks like?
But you really need to get to a dollar per square foot type of figure on maintenance of space, custodial, you know, operation, utilities, operations, security, operations. You know, what's what am I spending to maintain the space that I have, whatever condition it's in. Mm-hmm. And then I think this is where some of the great work you do at CampusIQ comes in, you gotta get to some real verifiable utilization data, right?
We gotta get beyond anecdote, uh, and get into observed usage patterns that tell you what's going on, what's really being used and when. And I think when you can cross tab those three things, right? Condition, cost, and utilization.. You get a really grounded picture of what's being used, what's not, what's underutilized, what's, don't forget, there's [00:05:00] opportunity for things to be really overutilized right there.
There could be really busy buildings that like, you know, I wanna know what's going on there and what that's costing the institution and just have, have an honest conversation, right? Uh, about what needs to be reallocated, what needs to be invested. If there's an opportunity for something like a demolition or at lease exit, right?
But those three data points in my mind are where you need to start. So condition, cost, and then, you know, real utilization data. Not people telling you that they they come in the office.
[00:05:27] Aaron Benz: So let's say you have, let's say you actually do have some of this data, right? Or you have enough to start making a case.
If we were to look at, you know, the leaders in higher ed and, you know, you're, they're seeing this deferred maintenance go up and like, how can we bring it down? Like, how, how do you help get leaders more comfortable with this idea that less can actually be more when growth pressure still exists?
I don't wanna be the president known for reducing what we do. Right. I wanna be the president known for growing what we do.
[00:05:55] Andrew Sama: A hundred percent. And you know, look, let's be honest, growth's not going away. It's not like we're never gonna build another building, [00:06:00] right? Uh, that's, that's not even what we would recommend.
I mean, that makes sense in a lot of cases. Uh, it's a really uncomfortable position to be in. So how do you get leaders. Comfortable with that. And so, so some strategies that we think are really effective I'll kind of give you two paths here. One, one is the one that would be preferred that I think we want to guide our clients down and that we wanna see people do.
And then I'll give you the, you know, break glass you know, uh, path. So I think on the preferred path. Use pilots, right? Start small. Do something in a particular building, uh, or in a particular area of campus, right? This helps you kind of create a proof of concept. It's gonna reduce the fear and the anxiety around this whole concept of moving space and changing people's space allocation.
It gives people something tangible to react to, right? Instead of just debating. Different hypotheses of what we could do, right? Do something small, anything small, right? Adjust space allocation in, you know, on a floor in a building, right? And see what happens, right? You know,
[00:06:52] Aaron Benz: Just make a baby step, right?
[00:06:53] Andrew Sama: Yeah. Baby step. Get a win. Pilots. Pilots, right? Use pilots and then build a coalition. Don't [00:07:00] try to do it alone. Right? Involve particularly academic leaders, right? You're not gonna get a lot done on a campus successfully without the academy behind you, right? Get faculty involved, even get students involved in some inappropriate areas, right?
Don't make change to people. Try to make it with them. I think, you know, if you can, can do it with some transparency, if you can kind of create shared ownership, it really goes a long way to reducing anxiety. And I think what's really fun is if you do both these things, if you use pilots and you build a coalition, it's like a flywheel.
These two things will reinforce each other, right? If you, if you have a coalition, uh, that's involved in the pilot. It makes, you know, the pilot more credible. Right. And then when the pilot's happening and people can see change. You've got that coalition out there talking up the change and, and being champions for what they're seeing as being an improvement.
Right. Or, or giving you the feedback that the pilot's not working right. Sure. And that's also very credible. Right. So that's, that's the good path that I say we want to follow. Let's be real. That's not where every client is, right? That's not where every institution is. [00:08:00] If you find yourself in that place where this is just a financial red alert, right?
I think, there you can use that position as unfortunate as it is, and not that we want to be there, but you can use that that financial distress as sort of the burning platform to accelerate this alignment and to get people, making some change, right? That's not the preferred area, but I wanna just recognize that I think a lot there are, are certainly a number of our of institutions that we know across the, the country that may find themselves more in that kind of position.
I think you just have to take that stress and that challenge and, use that, uh, as the burning platform as it were.
[00:08:36] Aaron Benz: Yeah. I, I, I think, I think that's right, right? I, I mean, at the end of the day, if there are decisions that you have to make, even though they're unpleasant, you have to make 'em, but in, in, in general, you know, I think this, what this trend is, is really starting to show is.
You know, the emphasis here really isn't necessarily on retrenchment, right? And how do we make campus smaller or less meaningful? Instead, it's h how all of a sudden do we focus on stewardship, right? And making a better [00:09:00] campus where our buildings are full and they're lively, and we're not paying for buildings that aren't adding value to the student, staff, faculty experience.
And we can't just continue to pay for things that aren't working. And so how do we figure out what's working with our stakeholders? What do they really want? And how do we get smarter with, with spinning that, that capital, right? And that said, growth isn't gone right. All of a sudden now it's, it's intentional, right?
We gotta be more intentional about, we're actually allocating these dollars and getting better data to help make these decisions and bringing in those people. So instead of me dictating a decision, we're how do we build that coalition, right? How do we create a better vision of what do we want our campus to be?
But, but doing it maybe in a different way than, than we've had to. Well, awesome. Been a great quick Bow Tie Tuesday. Uh, we'll definitely be back next week for another key insight into the Space Analytics Survey.
[00:09:52] Andrew Sama: Thanks so much for the time Aaron, good to be with you. [00:10:00]