Construction crews installed the final frame on the 19th story of Simmons University’s $311 million Living and Learning Center in July. Photo courtesy of Skanska
Higher education is a backbone of Greater Boston’s construction market, accounting for an average of $3.4 billion worth of activity in each of the past five years.
Amid the downturn in office, lab and multifamily construction, projects such as Simmons University’s $311 million Living and Learning Center and Boston University’s $550 million renovation of its Warren Towers dorms have kept local construction managers and subcontractors busy.
But cracks are starting to show as project costs rise and higher education comes under more financial pressure.
Boston University is indefinitely delaying groundbreaking of its new Pardee School of Global Studies, a 12-story tower estimated at $94.6 million that had been scheduled to start construction next May.
Replacing a parking lot at 250 Bay State Road, the project would have consolidated offices and classrooms for a part of BU that’s currently scattered among various buildings.
“Adjusting the timeline for a project with momentum and meaning is never easy, but this pause allows the University to advance its long-term vision and mission, prioritize students and academics, and remain fiscally strong and adaptable in a changing environment,” BU spokesperson Colin Riley said in an email.
Less than a year after receiving approval for three campus building projects, Wentworth Institute of Technology announced it would need to partner with a private student housing developer to make the numbers work.
Wentworth’s cost pressures are by no means unique. Across building sectors, project budgets are facing macroeconomic and political headwinds.
“There’s a lot of uncertainty with skilled labor shortages, global trade policies, interest rates and investor confidence,” said Michael O’Reilly, a vice president at construction consultants Rider Levett Bucknall. Construction costs in North America have risen 5.4 percent over the previous 12 months, according to a midyear report by Rider Levett Bucknall. In Greater Boston, costs are up 4.6 percent.
New Construction Takes a Backseat
There’s been a noticeable recent shift in colleges’ real estate plans, according to Ryan Lynch, vice president education projects for the New England region at Boston-based Shawmut Design and Construction.
Instead of new building projects, many colleges are focusing on renovations, deferred maintenance and building system upgrades tied to sustainability, with an eye toward reducing long-term operating costs.
The net effect has kept the flow of college project business steady so far, Lynch said in an email. The desire to upgrade STEM and research facilities by building new labs, classrooms and interdisciplinary learning spaces remains strong.
With the adoption of new regulations on decarbonization at the local and state levels, sustainability projects such as HVAC system replacements are making up an increasingly large share of the campus construction market, Lynch said.
Typically, education projects account for 40 percent of Shawmut’s business. College projects currently under construction include the Warren Towers renovations, a 170,000 square-foot student center and dining commons at Amherst College, and Harvard University’s new American Repertory Theater and its 276-unit graduate housing at 100 South Campus Drive in Allston, which were estimated at $370 million in 2023.
Boston-based construction giant Suffolk is managing comprehensive renovations of Chase and McCulloch Halls at Harvard Business School, after completing Northeastern University’s Interdisciplinary Science and Engineering Complex late last year.
A three-phase renovation project will temporarily close each of the Warren Towers at Boston University for a comprehensive renovation project including installation of air conditioning, new plumbing, IT infrastructure and energy efficiency upgrades. Image courtesy of Shawmut Design and Construction
Private Developer to Ground-Lease Dorm
The Wentworth campus makeover includes a new partnership with student housing specialist Balfour Beatty Campus Solutions.
After asking real estate advisors for an analysis of its plans approved last October, Wentworth concluded that partnering with a private developer was the best option, Wentworth Senior Vice President of Finance and Administration Matt Gruber said.
“When we went to the marketplace to identify financing etc., we came to understand the [institutional master plan] as approved and constructed was creating some substantial challenges around financing,” Gruber said at a Boston Planning Department meeting introducing the changes in late August. “We recognized and came to understand quickly we were going to have to look at a building of a different scale for our first project to achieve our goals.”
Balfour will ground-lease the new Pike Residence Hall parcel from the school, providing a new source of revenue as soon as construction begins.
Steve Adams
“We have determined that partnering with an experienced developer of student housing communities was the most efficient way to build this new dorm, and will enable Wentworth to utilize our tax-exempt bond backed by revenues from construction of the dorm,” he said.
Wentworth’s partnership with a private student housing specialist follows similar projects under way at Tufts University and Merrimack College.
Tufts is using a $173 million tax-exempt bond from MassDevelopment to finance a 664-bed dorm under construction in Medford in a partnership with Capstone Development Partners. In North Andover, housing developer Greystar is building a pair of dorms totaling 540 beds for Merrimack, with a completion date in 2026.
Higher education building projects accounted for an average of nearly $3.4 billion annually in project costs from 2020 through 2025, according to data provided to Banker & Tradesman by Dodge Construction Network.
“There’s uncertainty that lingers, and a lot of it is talk about tariffs and trade policies and disruption to the supply chain, and skilled labor shortages,” Rider Levett Bucknall’s O’Reilly said. “As long as that continues, there’s going to be some back and forth with these projects: whether they go ahead, whether they get shelved or whether they get downsized.”
