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Dive brief:
- The backlog of university facility renovations has reached its highest point in years as institutions struggle with budget pressures, according to the Annual Report 2026 published Wednesday by construction intelligence firm Gordian.
- Deferred capital renovation (for major upgrades such as new roofs and mechanical components or cosmetic renovations) reached $156 per gross square foot in 2025, up 8% year-on-year and nearly double 2007 levels, the report said.
- At the same time, spending on existing buildings is only 73.5% of what is needed to prevent the backlog from growing further. The data “tell a story of structural underinvestment colliding with an accelerating pace of institutional change,” Gordian said in a press release.
Diving knowledge:
Facility delays can become a negative self-feeding cycle. While financial pressures on universities may lead officials to postpone maintenance and renovations, waiting to do the work creates its own risks.
By 2024, Moody’s Ratings was aiming for a nearly $1 trillion in “hidden liability” in physical capital needs at universities over the next decade, and that was just for the roughly 500 institutions it rated. This could lead to future debt as universities take out new loans to work on their deferred maintenance.
Gordian’s The report framed the capital backlog in similar terms. “Sustained low investment continues to increase the embedded debt obligation of higher education facilities,” wrote report author Pete Zuraw, vice president of strategy and market development at Gordian.
The backlog is growing as many universities face a difficult financial landscape with “extraordinary stressors,” according to the report.
Gordian also highlighted a years-long slowdown in the construction of new university buildings, with overall campus growth reaching the lowest levels seen in four decades. While Zuraw acknowledged that some might see this as a “stagnant” pace of construction, he described it as a positive change in the way officials approach campus spaces.
“Schools appear to recognize the real threat of being overbuilt for the likely population of the community moving forward,” Zuraw wrote, noting the projections. decline in the traditional age university student population starting this year. “This ‘right size’ is bold and brave in the face of a history that has firmly stated that not to grow is to die.”
But if universities don’t improve existing structures or build new ones, outdated campus facilities can exacerbate tuition and other problems in a tight market.
Moody’s analysts noted in their 2024 report that “colleges and universities that cannot provide up-to-date facilities, advanced technology and an attractive physical environment risk losing competitive position.”
Gordian President Arul Elumalai noted similar risks.
“Without sustained and strategic reinvestment, institutions risk deeper operational challenges,” he said in a statement Wednesday.
