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Educational construction turns the corner

After years of decline, the educational construction market is finally earning a passing grade from economists and professionals. What's in store for the years ahead?

By Jeffrey Lee

University of Illinois Chicago's College of Medicine at Rockford, Illinois, designed by Larson & Darby Group
The University of Illinois Chicago's College of Medicine at Rockford, Illinois, designed by Larson & Darby Group.

Stephen M. Nelson, AIA, has seen firsthand why spending on educational construction has been so sluggish in recent years.

The director of educational architecture for Larson & Darby Group, a full-service architectural and engineering firm in Rockford, Ill., also happens to serve as vice president of his local school board, where he's seen issues such as proration of money owed to the school district by law, delayed or skipped payments, and unfunded mandates keep K-12 schools and universities from planning and budgeting properly.

"This, of course, affects what the school dollars are spent on, and new construction is rarely the highest priority," Nelson explains. "Schools were only spending the minimum that they had to in order to keep the doors open."

But in the past year, Nelson has seen a substantial pickup in RFQs for education buildings. "Some are still just for studies or master plans, but they will lead to tangible projects," Nelson says. "This is a good sign, as it has been a fairly consistent increase, not just an anomaly for a month or two."

Nelson's experience is representative of the national education construction market. After seeing lower activity for five straight years after a peak in 2008, the market showed signs of stabilizing in 2013. In 2014, the market should begin to turn the corner, says Robert Murray, chief economist for McGraw Hill Construction.

Benjamin Elementary School in Normal, Illinois, designed by Larson & Darby Group
Benjamin Elementary School in Normal, Illinois, designed by Larson & Darby Group.

Based on the firm's construction start data, Murray is forecasting educational building to increase 4 percent in 2014, from 110 million square feet in 2013 to 114 million square feet. The forecast improves further in 2015, bouncing up 9 percent to 125 million square feet. If that seems optimistic, however, consider that the category reached 224 million square feet at its most recent peak in 2008.

"A lot of the factors affecting education construction are turning more positive, which should allow an upturn to take place, although it's going to take some time to get even remotely close to what had been previous peaks," Murray says.

Like other publicly funded buildings, school construction receives funding support from bond measures, which tend to follow the fiscal health of states and local governments. Governments, in turn, are dependent on tax receipts, which lag improvement in the overall economy. So with the economy improving in recent years, Murray has seen several major school construction bond measures passed across the country -- $1.9 billion in Houston and $1.2 billion in Miami-Dade in 2012; $810 million in North Carolina in 2013 -- all of which should help spur the upturn.

"K-12 schools want to be green but are looking to do it with minimal cost impact."

By region, the South Atlantic and West improved the most in 2013, with educational building starts growing by 11 percent and 12 percent respectively. The Midwest lagged the most, with starts declining by 16 percent from 2012 to 2013.

Studying efficiency

As the economy floundered in recent years, many school districts and universities conducted facility audits, master plans, or strategic plans with an eye toward operational efficiency. The schools are now starting to act on those findings, Nelson says, which could create additional work for engineers, designers, and facilities managers. Nelson is also seeing an increased emphasis on efficiency in new construction, both in terms of building layout and systems such as HVAC, electrical, and plumbing. "K-12 schools want to be green but are looking to do it with minimal cost impact," Nelson says. "They are really less interested in getting LEED certified, and they place a higher priority on long-term operational savings."

For plumbing systems in particular, schools are focusing on controlling water usage and on-site water runoff. Schools see durable but "reasonably stylish" fixtures as important, he adds.

With only moderate improvements projected in 2014 and 2015, will the level of educational construction return to the peak levels seen in 2008? The National Center for Education Statistics projects total enrollment in public elementary and secondary schools to increase every year through 2023, with a total 5.2 percent increase in enrollment between 2011 and 2023. Between renovations, replacements, and the need to add capacity to meet our growing population, it's likely that education will remain a reliable source of work for engineers and designers.

"Any solid firm is likely diversified so that they can make it through lean times in a given market, but the educational market has long been a reasonably steady and stable design and construction market," Nelson says. "Hopefully it will continue to do so. But signs continue to point to change -- so be prepared."