By Jessica Rosenberg, Brailsford & Dunlavey
In the last couple months, four projects in the higher education sector have reached big milestones (e.g., financial close)—milestones the industry hasn’t seen much of since Covid began.
Like bright green poking through the dark soil at the beginning of spring, these projects symbolize the dawning of a new season. They have been impacted by Covid, they have in some ways been changed by Covid, but they have still happened despite Covid. They have simply been so critical to the schools that each project really needed to happen regardless of the changes caused by the pandemic. And more broadly, these projects needed to happen to the schools served not just their short-term needs, but also their long-term interests, ensuring actions taken now keep the big picture in mind.
It is also worth noting that all four projects have happened differently—from traditional delivery methods to P3s, from a campus edge development to graduate student housing, from private schools to publics, etc. So these four projects, taking place on four very different campuses, show the range of what is possible in the sector at this moment, and all that may come. And they show, without a doubt, that Covid will impact the sector, but schools will continue to build, renovate, and grow strategically.
This 4-part article series will detail each project.
Palmer shifts its strategy to leverage low interest rates for a new campus edge development
Prior to Covid, Palmer College of Chiropractic in Davenport, Iowa, had already moved to redevelop an underutilized campus edge site to create student housing and a large athletic field. Enrollment had been consistent, and the school felt confident about its financial situation. This $25M project began in early 2018, with Brailsford & Dunlavey conducting a Housing Master Plan. Quickly, the project moved into P3 explorations, including a market sounding and a property management and development RFP. But in March 2020, the P3 development was canceled due to financial feasibility and Covid concerns.
Come fall 2020, enrollment was holding steady and the school was still in a good financial position. Now, though, there were both new challenges and opportunities to pursuing the project. A challenge: How the market’s uncertainty might affect the ability to attract investors in a P3. An opportunity: Interest rates were very low. The team worked to refine the project concept and come up with alternative solutions to financing. One stood out as most desirable: Palmer would borrow about two-thirds of the construction costs (utilizing a bank loan with an interest rate swap), and contribute the remaining amount from reserves and donor contributions.
With the decision to not pursue a P3, and to instead pursue the new approach, with the team issued a bank RFP to find the best deal terms for the College. Ultimately, Palmer was enthusiastic about working with a local bank that was very committed to the institution.
Construction on the project begins within the month, with a targeted completion date of summer 2022. In addition to providing housing and amenities, the project will help create a new gateway to campus with a turf athletic field and will aid in recruitment efforts.
Part 2 of this four-part article series will feature the New Jersey Institute of Technology.
JESSICA ROSENBERG plays a lead role in Brailsford & Dunlavey’s communications initiatives as Content Marketing Manager. She oversees the development of the firm’s content such as newsletters, feature articles, and social media. She has been writing about the building, construction, and related industries for more than 14 years, and is especially interested in opportunities and challenges related to higher ed campus development (e.g., Opportunity Zones, TIFs, innovation districts, P3s, hotels / conference centers, energy).