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HOSTED BY
ABOUT THE NEW & NEXT SERIES
The New & Next series focuses on innovation in higher
education featuring guest speakers from ...
Top Challenges in Facilities and
Operations Facing Campus
Leadership Today
Presented by Craig Cassell
4
Cushman & Wakefield’s Education Practice Group seeks to assist
in the development and implementation of strategies throu...
5
AGENDA
1. Top Challenges in Higher Education
2. The Student Experience
3. Facility Solutions - Financing
4. Operational ...
6
Enrollment Ÿ Tuition Ÿ Student Debt Ÿ Funding Ÿ Competition
SIGNS OF STRESS IN HIGHER EDUCATION
More than half in of bac...
• Per the NCES, 20.2 million students enrolled in degree-granting postsecondary institutions during the 2014-2015
school y...
• Annual tuition increases handily outpace inflation, though annual increases have slowed in recent years.
8
Higher Tuitio...
9
Student Debt
Federal funding doubled from 2006 ($20.6 billion) to 2016
($41.7 billion), however, federal funding decreas...
10
Funding
Total Grant Aid in 2015 Dollars by Source of Grant, 1995-96 to 2015-16
TOP CHALLENGES IN HIGHER EDUCATION
11
Alternative Credentials/Competition
MOOCs Micro-credentials Nanodegrees Boot Camps
TOP CHALLENGES IN HIGHER EDUCATION
Based on surveys, blogs, forums, discussions and conversations, students have
conveyed their most important wants and need...
13
RE-focus, RE-invent, RE-finance
• At some colleges and universities, real estate represents the single largest
asset on...
14
Understand Highest and Best Use of Assets
Overview
• Prominent public research university located in College Park, MD
•...
15
Overview
• Prominent public research university in the San Francisco Bay Area
• Average annual enrollment of 37,500, in...
16
So what do we do?
1. Assess Financial Condition
• Work with finance staff (CFO, Treasurer, Tax, Finance, etc.) to under...
Between 2003-04 and 2013-14, educational expenditures per FTE student at
public four-year institutions increased by 16% in...
3. What is it worth? How long does it take?
18
OPERATIONAL EFFICIENCIES
CONSOLIDATED FM
OVERSIGHT & OPS
CONTRACT
REVIEW
FL...
19
Building Blocks of Education Facilities
ENHANCING THE STUDENT EXPERIENCE
19
Work & Study
• Incubate start-up businesses...
20
LIVE! LEARN! WORK! PLAY!
ENHANCING THE STUDENT EXPERIENCE
Central Location Updated Accommodations Social Environment
Fi...
TAKE AWAYS
21
1. Have a succinct real estate plan and be prepared to implement
2. Efficiently run your operations
3. Need ...
22
How Cushman & Wakefield Can Help
CUSHMAN & WAKEFIELD EDUCATION PLATFORM
Structured Finance
Financing Solutions
Q. How c...
Omni Rancho Las Palmas | Palm Springs, California
February 21-24, 2017
Graduate | Adult Learners | Undergraduate
REGISTER ...
Craig Cassell Olivia Sarnecki
Craig.Cassell@cushwake.com Olivia.Sarnecki@Cushwake.com
Thank you!
HOSTED BY convergeconsulting.org
THANK YOU
1. http://www.census.gov/content/dam/Census/library/publications/2016/demo/p20-578.pdf
2. http://www.cbpp.org/research/sta...
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New & Next Webinar Series | Top Facilities and Operations Challenges Facing College Leadership Today

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Cushman & Wakefield’s Education Practice Group is a full-service, integrated advisory team focused on real estate solutions for the education sector. Join the Group’s Global Leader, Craig Cassell, as he shares thoughts and ideas on recent trends in the industry regarding enhancing the student experience, driving operational savings, and funding new buildings and renovating existing ones.

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New & Next Webinar Series | Top Facilities and Operations Challenges Facing College Leadership Today

  1. 1. HOSTED BY
  2. 2. ABOUT THE NEW & NEXT SERIES The New & Next series focuses on innovation in higher education featuring guest speakers from thought leaders in our industry and beyond. Sessions are designed to spark new and next discussions around the topics outlined each semester. The Fall 2016 series zeroes in on space and people. Topics of discussion include creative use of space on college campuses, architecture and design for new buildings and executive leadership and recruitment. Fall 2016 New & Next Series Schedule: Thursday, October 20: Jay Sharman, CEO, of TeamWorks Media “The Modern Campus: Utilizing Space to Tell Your Story” Thursday, November 17: Craig Cassell, Global Leader, Education Practice Group Cushman & Wakefield “Top Challenges in Facilities and Operations” Wednesday, December 15: Korn Ferry, Managing Principal, Julie Staggs “Four Dimensions of Leadership and Talent” 2
  3. 3. Top Challenges in Facilities and Operations Facing Campus Leadership Today Presented by Craig Cassell
  4. 4. 4 Cushman & Wakefield’s Education Practice Group seeks to assist in the development and implementation of strategies throughout the lifecycle of Pre-K, K-12, and post-secondary school clients. With over 15 years of commercial real estate advisory experience, Mr. Cassell has spent most of his career building the education platform, expanding its capabilities and resources, and creating and growing client relationships. As leader, Mr. Cassell is directly responsible for team assembly around the globe, creating and implementing overall strategic planning initiatives for education entities, as well as benchmarking key performance indicators (KPIs) for institutions. Key services performed by the Education Practice Group are demographic analysis, site selection and negotiations, construction management, operational efficiencies, property appraisal, and structured finance. Acting as an operating partner to educational institutions, private equity investors, venture capitalists, financiers, and consultants, Mr. Cassell has gained an unparalleled understanding of trends within the education sector. Craig Cassell Global Leader, Education Practice Group Craig Cassell serves as the Global Leader for the Cushman & Wakefield Education Practice Group, a full service, integrated platform focused on real estate solutions for the education sector. YOUR PRESENTER TODAY
  5. 5. 5 AGENDA 1. Top Challenges in Higher Education 2. The Student Experience 3. Facility Solutions - Financing 4. Operational Efficiencies 5. Enhancing the Student Experience 6. How Cushman & Wakefield Can Help 7. Q&A Session
  6. 6. 6 Enrollment Ÿ Tuition Ÿ Student Debt Ÿ Funding Ÿ Competition SIGNS OF STRESS IN HIGHER EDUCATION More than half in of bachelor’s degree holders under the age of 25 are unemployed or underemployed, the highest share in more than a decade In 2014-15, appropriations per FTE student were 8% lower in inflation-adjusted dollars than they were a decade earlier and 11% lower than they were 30 years earlier. The price tag for a traditional four-year residential degree program averages just over $35,370 per year Between 2003-04 and 2013-14, educational expenditures per FTE student at public four-year institutions increased by 16% in inflation-adjusted dollars. …at an average rate of 3.5% per year beyond inflation.Between 2006-07 and 2016-17, published in- state tuition and fees at public four-year institutions increased… CONSUMER PRICEINDEX TUITION Published 2016-17 in-state tuition and fees at public four-year institutions range from $5,060 in Wyoming to $15,650 in New Hampshire $1.3 Trillion Americans owe nearly in student
  7. 7. • Per the NCES, 20.2 million students enrolled in degree-granting postsecondary institutions during the 2014-2015 school year (latest data available). Enrollment fell roughly 0.8% from the prior school year—the fourth consecutive year of decline and the first time that has ever happened based on NCES records. 7 Declining Enrollment TOP CHALLENGES IN HIGHER EDUCATION
  8. 8. • Annual tuition increases handily outpace inflation, though annual increases have slowed in recent years. 8 Higher Tuition TOP CHALLENGES IN HIGHER EDUCATION
  9. 9. 9 Student Debt Federal funding doubled from 2006 ($20.6 billion) to 2016 ($41.7 billion), however, federal funding decreased by $10 billion since 2010 ($51.9 billion). 24% of federal student loan borrowers who did NOT graduate defaulted on their loans. In 2015, 38% of all borrowers with outstanding student loan debt owed less than $10,000 and 16% owed $40,000 or more. Default rates are highest for borrowers who leave school owing less than $5,000. In the third quarter of 2016, the outstanding federal student loan debt was $24,100. TOP CHALLENGES IN HIGHER EDUCATION In 2015-16, students and parents borrowed $106.8 billion. The average Class of 2016 graduate has $37,172 in student loan debt, up 6% from last year.
  10. 10. 10 Funding Total Grant Aid in 2015 Dollars by Source of Grant, 1995-96 to 2015-16 TOP CHALLENGES IN HIGHER EDUCATION
  11. 11. 11 Alternative Credentials/Competition MOOCs Micro-credentials Nanodegrees Boot Camps TOP CHALLENGES IN HIGHER EDUCATION
  12. 12. Based on surveys, blogs, forums, discussions and conversations, students have conveyed their most important wants and needs. 12 THE STUDENT PERSPECTIVE 12 Tier I Tier III Tier II Experienced Professors/ Diverse Programs & Degrees Strong Civic/ Culture Aspect Extracurricular Activities Social/Living/ Lifestyle Good Associations and Staff Contacts Networking/ Connections Updated Housing Cost of Tuition Reputable Curriculum Athletic Facilities Modern Library Efficient Campus Safety & Security Technology High Quality Facilities
  13. 13. 13 RE-focus, RE-invent, RE-finance • At some colleges and universities, real estate represents the single largest asset on their balance sheet. • Universities simply cannot afford to increase costs in nonstrategic areas and take on more debt, if they want to survive long-term. So what do we do? • Assess financial condition • Evaluate strategic real estate alternatives FACILITY SOLUTIONS - FINANCING
  14. 14. 14 Understand Highest and Best Use of Assets Overview • Prominent public research university located in College Park, MD • Average annual enrollment of 37,000, including both undergraduate and graduate students • Annual operating budget of $1.75 billion Challenges • Large real estate portfolio with many stakeholders • Managing projects within debt capacity constraints • Identifying alternative sources of financing Approach • Identify ways UMD can leverage their assets and resources to address current and future needs • Provide guidance to UMD to structure/negotiate complex P3 transactions • Projects focused on re-developing publicly owned assets to enhance local community • Drive economic development and support State of Maryland’s goals for transit-oriented development Results • Structured ground lease transactions with developers to construct flex office spaces to house UMD affiliated technology companies • Built public charter school on campus property to attract more faculty and staff to live in/around campus • Negotiated agreements with private companies to invest capital into UMD owned buildings and then leasing for commercial use CASE STUDY
  15. 15. 15 Overview • Prominent public research university in the San Francisco Bay Area • Average annual enrollment of 37,500, including both undergraduate and graduate students • Annual operating budget of $2.5 billion Challenges • California’s budget problems dictated a drive within the UC Berkeley system to reduce costs and drive efficiencies • With upcoming expirations of over 50 leases for leased space in off-campus buildings, UC Berkeley desired to relocate into on campus owned assets totaling 800,000 square feet Approach • Established a detailed five-year capital plan for the newly purchased assets, outlining all capital improvements, cost reduction targets and lease revenues to tackle various challenges including: - Owned properties were almost fully leased to various commercial tenants - Each of the purchased properties employed different management and leasing vendors, each with their own proprietary data management systems - Multiple deferred capital items needed immediate attention - Green initiatives throughout UC Berkeley mandated further upgrades to the owned properties but funding was unavailable Results • An overall $55 million in savings over a five year period of time • A comprehensive scope of services integrated into the capital plan called for the centralization of management and leasing of the owned assets; all other contracts were bid to ensure cost efficiency • Created a prioritized timeline to address all deferred maintenance issues, ADA compliance, and green initiatives, all fully integrated into the cost containment plan Understand Best Real Estate Strategy (i.e. sale leaseback, portfolio optimization, etc.) CASE STUDY
  16. 16. 16 So what do we do? 1. Assess Financial Condition • Work with finance staff (CFO, Treasurer, Tax, Finance, etc.) to understand current and projected operating surplus/deficit and capitalization. o Specifically, tax-exempt bonds, review to determine maturities, call provisions and covenants. o Understand relationships with the credit rating agencies o Compare the economic impact of monetizing real estate assets with other forms of capital which may be available at the organizational level. 2. Evaluate Strategic Real Estate Alternatives • Segregate real estate footprint into three broad categories: o Mission-critical assets which must remain under absolute control o Commodity-type properties intended to remain in use, but which do not require long-term control and can be replaced, and o Surplus assets suitable for disposition immediately or within the next 24-36 months. FACILITY SOLUTIONS - FINANCING
  17. 17. Between 2003-04 and 2013-14, educational expenditures per FTE student at public four-year institutions increased by 16% in inflation-adjusted dollars. 1. Economies of scale: • Strategic sourcing and vendor management • Bundling/consolidating services for cost savings 2. Ensure cost-effective quality facility services: • Maintenance • Critical Environments • Custodial • Grounds and landscaping • Moving 17 Are you being diligent with all dollars? OPERATIONAL EFFICIENCIES
  18. 18. 3. What is it worth? How long does it take? 18 OPERATIONAL EFFICIENCIES CONSOLIDATED FM OVERSIGHT & OPS CONTRACT REVIEW FLEXIBLE STAFFING INVOICE REVIEW AND BILL PRESENTMENT LEVERAGED PROCUREMENT VALUE REENGINEERING ENERGY REDUCTION & SUSTAINABILITY Cost Saving Opportunities 10%-15% TYPICAL SAVINGS 1-2 months TIME REQUIRED 10%-15% TYPICAL SAVINGS 6 months TIME REQUIRED 8%-12% TYPICAL SAVINGS 3 months TIME REQUIRED 3%-15% TYPICAL SAVINGS 3 months TIME REQUIRED 5%-20% TYPICAL SAVINGS ongoing TIME REQUIRED 7%-18% TYPICAL SAVINGS 1-12 months TIME REQUIRED 2%-5% TYPICAL SAVINGS 3 months TIME REQUIRED
  19. 19. 19 Building Blocks of Education Facilities ENHANCING THE STUDENT EXPERIENCE 19 Work & Study • Incubate start-up businesses affiliated with school/students • Private sector mentoring/hands-on experience to help create jobs and training for students • Virtual study programs inside/outside classroom Students & Staff • Lower overhead costs associated with administrative/office space • Foster mutually beneficial relationships, environment for faculty, students and administration • Strive for the “unified environment” Safety & Security • Vertical buildings with fewer gateways • Emergency hotlines, cameras and phones installed to ensure maximum safety on campus • Emergency text alert systems Room & Board • Modern amenities meeting today’s standards • Restaurant quality food and beverage • Aids in recruitment of prospective students Community & Culture • Reflect of values and character of institution • Increased awareness of civic and social responsibility • Integrate outdoor spaces/unions as heart of each school Third-Party Partnership • Unlock capital for various projects • Private sector partners can disrupt traditional thinking • Preserve credit rating and debt capacity • Live, Learn, Work, Play Teaching & Learning • Enhanced learning areas • Transition some lecture halls to collaborative/group study work spaces • Customized tutoring areas • Interactive technology
  20. 20. 20 LIVE! LEARN! WORK! PLAY! ENHANCING THE STUDENT EXPERIENCE Central Location Updated Accommodations Social Environment Fitness Center Coffee Shop Restaurants
  21. 21. TAKE AWAYS 21 1. Have a succinct real estate plan and be prepared to implement 2. Efficiently run your operations 3. Need accountability and strive to be fiscally strong 4. Innovation leads to positive results and value creation for schools
  22. 22. 22 How Cushman & Wakefield Can Help CUSHMAN & WAKEFIELD EDUCATION PLATFORM Structured Finance Financing Solutions Q. How can college and universities leverage private capital markets to build new or improve existing facilities without impacting their balance sheet? A. Diverse and abundant 3rd party capital exists to help fund educational facilities, student housing, and athletic facilities on college campuses. University leadership is unaware or unsure of the options which exist. Project & Development Services Development and Construction Q. Significant construction projects are planned on 75% of college campuses from 2016-2019. Who is responsible to ensure all budgets, timing, and phasing milestones are completed? A. Local developers/general contractors are usually overseeing the process. With the amount of construction happening on college campuses, a 3rd party resource should be advising colleges and universities separately. Valuation & Advisory Real Estate Opportunities Q. How can an institution learn the true value of their real estate and then leverage for optimal gain? A. By appraising their real estate every few years, schools may unlock capital from previously unknown areas, allowing access to a diverse method of growth and liquidity. Integrated Facility Management Proactive Management Q. How can an institution prioritize sustainability and energy within their campus real estate? A. Immediate cost savings related to each of these initiatives can be substantial. Identify long-term, preventative solutions and management strategies to address all short/long-term concerns. Facility Services Operational Efficiencies Q. How can an institution lower overhead costs without compromising necessary resources? A. C&W Services can streamline services such as janitorial, maintenance, and landscaping under one contract, to improve efficiencies and ensure facilities reflect your client’s institutional brand. Strategic Consulting Strategic Planning Q. How important is a master plan? When, where, and how does an institution invest in their campus and facilities? A. Creating a 3, 5, or 10-year master plan is essential for the fluid growth of an institution. Identifying the highest and best use of owned/leased land and buildings is one of the first steps to consider. Communication of the plan allows transparency to current and future students and alumni.
  23. 23. Omni Rancho Las Palmas | Palm Springs, California February 21-24, 2017 Graduate | Adult Learners | Undergraduate REGISTER NOW convergeconsulting.org/converge2017
  24. 24. Craig Cassell Olivia Sarnecki Craig.Cassell@cushwake.com Olivia.Sarnecki@Cushwake.com Thank you!
  25. 25. HOSTED BY convergeconsulting.org THANK YOU
  26. 26. 1. http://www.census.gov/content/dam/Census/library/publications/2016/demo/p20-578.pdf 2. http://www.cbpp.org/research/state-budget-and-tax/funding-down-tuition-up 3. http://www2.itif.org/2016-disrupting-higher-education.pdf 4. http://evolllution.com/programming/credentials/a-primer-on-the-present-and-future-of-alternative-credentials/ 5. http://evolllution.com/managing-institution/higher_ed_business/alternative-credentials-and-the-pathway-to-an-unbundled-higher-ed-environment/ 6. https://www.timeshighereducation.com/student/news/student-experience-survey-2016-methodology-what-do-students-care-about 7. https://onlinelearninginsights.wordpress.com/2016/01/10/three-trends-that-will-influence-learning-and-teaching-in-2016/ 8. http://www.slate.com/articles/life/inside_higher_ed/2016/02/student_aid_accounts_for_rising_college_costs.html 9. https://www.bdcnetwork.com/trends-report-new-facilities-enhance-quality-campus-life 10. https://www.tradelineinc.com/reports/2016-3/consolidating-resources-a-centralized-shared-core-facility-multidisciplinary-research 11. https://trends.collegeboard.org/sites/default/files/2016-trends-college-pricing-web_0.pdf 12. http://nces.ed.gov/programs/coe/indicator_cha.asp 13. https://trends.collegeboard.org/college-pricing/figures-tables/average-rates-growth-published-charges-decade 14. http://www.pewtrusts.org/~/media/assets/2015/06/federal_state_funding_higher_education_final.pdf 15. https://trends.collegeboard.org/sites/default/files/2016-trends-student-aid.pdf 16. https://nscresearchcenter.org/currenttermenrollmentestimate-spring2016/ 17. http://www.bain.com/publications/articles/financially-sustainable-university.aspx 18. http://evolllution.com/revenue-streams/extending_lifelong_learning/strengthening-the-future-workforce-and-creating-a-model-for-innovation-through-tri-sector-partnerships/ 19. http://monitor.icef.com/2015/02/growing-questions-business-model-higher-education-us/ 20. http://monitor.icef.com/2015/11/under-pressure-changing-markets-and-the-evolution-of-the-university/ 21. http://www.heri.ucla.edu/infographics/YFCY-2016-Infographic.pdf 22. https://www.ed.gov/news/press-releases/fact-sheet-focusing-higher-education-student-success 23. http://www.edtechmagazine.com/higher/article/2014/08/technology-defines-much-higher-education%E2%80%99s-new-normal-infographic 24. http://www.acenet.edu/news-room/Documents/Evolving-Higher-Education-Business-Models.pdf 25. https://www.edsurge.com/news/2016-04-07-why-student-voice-means-more-than-choice 26 SOURCES

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