The booming business of education
Atlanta Business Chronicle - by Lee Hall Contributing writer
When Georgia State University begins construction of a new science and laboratory building downtown, it will be one of the largest capital improvement projects ever by a Georgia college, according to representatives from Heery International Inc., the Atlanta-based engineering and architectural group working on the project.
Total estimated cost for the building is $105 million.
But GSU is not the only university undertaking costly construction projects; construction on college campuses throughout the Southeast is booming.
Georgia and surrounding states will complete nearly $1 billion worth of higher education facilities this year, according to College Planning & Management, an industry publication.
Moreover, the region that encompasses Georgia, Florida, Alabama and Mississippi will initiate another $1.1 billion new projects this year.
"We are going through this 'echo boom' that won't peak until 2010 or 2012. While it represents a smaller percentage than the 'baby boom' generation, it is bigger in sheer numbers," said Tom Woodward, director of Facilities Planning & Management at Heery International.
Enrollment at University System of Georgia institutions surged 23 percent between 1999 and 2004 to more than 250,000, Board of Regents data show.
Some schools far exceeded that rate.
"We have just completed a student recreation and wellness center and have a new 161,000-square-foot social sciences classroom under construction, due to be completed in November 2006," said John Anderson, facilities director at KSU.
In all, more than $30 million of building is under way at KSU, he said.
Enrollment growth is a strong driver, but there are other reasons college construction is on the rise.
"Colleges and universities are becoming more sophisticated. They are competing against one another for students and sometimes those new buildings do help," Woodward said.
Many schools also are playing catch-up.
Several institutions have to recover from years of neglected maintenance.
"A lot of these facilities are overdue for renovation or rebuilding and that drives a lot of our business," said Gary Paetau, a senior vice president with the Atlanta commercial real estate firm Carter.
Like other institutional segments, the education construction market is cyclical and tends to lag the general economy by about 24 months, Paetau said.
"We are on the upswing of this cycle," he said. "The revenues generated through taxes are up and we think that's a good sign that additional construction funding will come available."
Although government's share is growing, many projects also are driven by private donations.
For example, about half of the roughly $3 billion in new construction at Georgia Tech over the last 10 years has come from individual and corporate donors, Woodward said.
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