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LMS Gives 20/20 Vision into Higher Ed Market

By Tasha Anderson for AZBEX

As 2020 settles in, BEX Events kicked off the first Leading Market Series of the New Year with a close look into the Higher Education market, specifically toward Arizona State University.

More than 80 registered attendees gathered at ASU Skysong 3 on Thursday, February 6th, for the event to gain insight into any upcoming projects as well as how to do business with Higher Education owners.

BEX Founder and President, Rebekah Morris began the presentation by giving the attendees a brief overview of the market, including top players, with analytics taken from the BEX Database.

“Higher Education accounts for only about three percent of the total construction market, or $468M” Morris stated before listing the top owners by project valuation, which unsurprisingly were Arizona State University at 42 percent, Northern Arizona University at 18 percent and University of Arizona also at 18 percent. Creighton University and Northern Pioneer College were fourth and fifth on the list at five and three percent respectively.

Morris also noted that 14 percent of projects have not yet selected a design firm and 23 percent have not yet selected a general contractor, meaning lots of opportunity.

Key insights about the market show a very small presence of private universities, a decrease in State funding for Higher Education Capital Projects and key contacts changing.

“The people that hire design and construction firms are changing,” said Morris. “I think there’s opportunity there. I think any time people change around, move roles, get promoted, retire, whatever that looks like, makes it a chance to reestablish connections or make new ones.”

After the quick rundown of the market, an impressive panel consisting of Ben Baumes, development associate for Catellus, Pedro Chavarriaga, assistant director, FDM Capital Program Management Group for Arizona State University, and Diane Reicher Jacobs, principal for Holly Street Studio, with moderator Cassie Robertson, design manager for DPR Construction, took the stage to talk more about the Higher Education market.

Projects Coming Up

Baumes began by showing attendees what’s currently being done within the Novus Innovation Corridor, as well as highlighting a few new projects that are in the works, including:

  • 700 Novus Place – Class A mid-rise building with approximately 154KSF of office space and approximately 11.5KSF of retail space. According to Baumes, Catellus is working with SmithGroup on the design and the project has gone through the first round of city approvals. Construction is expected to begin in the first quarter of 2021 with occupancy in the third quarter of 2023. Catellus is not yet confirmed as the vertical developer for this parcel. The University will select the development deal that is the most beneficial to them, which may or may not be Catellus.
  • Parcel 3A – Mixed-Use Block – a mixed-use development integrated with residential and hotel uses. Discussions are currently underway with hotel and residential developers. There is currently no timeline for construction.
  • Parcel 4F – Creative Office Campus 1 – three Class A office buildings with a minimum of 150KSF each. Escrow is expected to close in the second quarter of 2020, with construction starting in the third quarter and finishing in the fourth quarter of 2021.

Speaking to the new projects, “We are in some sort of negotiation or design,” explained Baumes.

As for ASU’s Capital Program Management Group, Chavarriaga noted the bond issues.

“We don’t have large capital projects on the books right now. What we do have is three bond issues. One is infrastructure for the Tempe and Polytechnic campuses, very sorely needed… the other is classrooms and laboratories mainly for the Tempe campus. The third is for deferred maintenance for all campuses.”

Chavarriaga went on to say that the future of ASU is heading more toward residential and Public-private partnerships and urged interested parties to look at ASU’s bid board for new projects.

Bringing Teams in Earlier

Looking ahead, Chavarriaga noted that ASU is becoming more focused on strategic partnerships and bringing teams in earlier.

“Up front, we get the best people to do our work, and also to partner with us from day one.” He also discussed what it takes to win a job with ASU.

“We put a lot of thought into the questions that we ask you to answer. For us, it does make a difference the team you present to us. The people that come in and represent their company, you can see it in the interview process, where their heart is. If you’re not putting value into what we’re asking, it sort of comes through.”

Baumes agreed that having the right team is extremely important, and believes that getting contractors and architects together early is essential because, “the biggest challenge these days is construction costs. We wanted to have a thoughtful, intentional design but there’s no sense in doing that if you can’t afford it.” He went on to say that architects and contractors should work together to help come up with solutions to those types of problems.

From an architectural standpoint, Diane Reicher Jacobs said that a trend that should be happening is to “help define a problem early on with real information, so that later on we can focus on making the building and not value engineering and sort of back tracking and second guessing.”

She also noted that a winning solution is to have a multi-lingual team, a team from all backgrounds with many different cultures and levels of experience.

Excitement and Fear for the Future

Toward the end of the presentation, Robertson asked the panel what their biggest fear was moving forward and what they were most excited about. Both Chavarriaga and Baumes agreed that cost increases and materials acquisition were the biggest fears moving forward, yet were excited about the momentum left in the market despite the rising costs.

Reicher Jacobs discussed skill as her fear. “We need to teach young architects to do more than what they’re doing,” she said explaining that while they do need to pay their dues, they don’t need to wait ten years to change the world.

Her excitement for the future comes from the growing trend to do more with less, or taking a more minimalistic approach to development.

The next Leading Market Series on April 2nd will discuss Healthcare. To check out dates and topics or to register for the next event, visit: http://bex-events.com/lms/.

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