Universities Put Developments On Ice As Trump Cuts Billions In Research Funding

American universities spend billions on commercial projects every year, developing technology hubs, housing and research facilities that fuel local economies and drive innovation.

But many of those projects are being paused or reconsidered amid the White House's efforts to slash federal government spending on research and root out diversity programs in the nation's elite universities.

Washington University of St. Louis this month paused construction of a 100K SF new Arts & Sciences Building and upgrades to an athletic facility. That followed the University of Houston halting all construction projects on campus in March, citing federal uncertainty.

“We regret that it’s necessary to take these actions, but in our current climate, it is simply not prudent to continue with these projects as scheduled,” Washington University Chancellor Andrew Martin said in a statement. “Given the uncertainty around federal research funding and other potential government actions, we have to take a careful look at every aspect of our operations.”

The federal government is the largest funding organization for colleges and universities when it comes to research programs, making up 51% of their budgets.

The Trump administration has aggressively targeted this spending — the National Institutes of Health cancelled in whole or in part 780 research grants between Feb. 28 and March 28 alone, KFF Health News reported, based on federal data. Across just eight major research institutions, more than $6B of U.S. government backing has been canceled or paused, Nature reported.

Federal grants are critical lifelines for not only educational institutions but the economies they support, said Brian Lewandowski, executive director for business research at the University of Colorado Boulder’s Leeds School of Business. 

“Our research portfolio, gosh, it’s about $670M or so, and that’s largely federal funding, so that does have a large impact, not only on the state’s economy, but on the local economy,” Lewandowski said. “Those researchers are living in the local community, spending money on rent and mortgages and entertainment, food, fuel and so on, so that's an impact.”

As a result of Trump turning off the spigot, universities across the country are having to rethink capital projects, said Krista Trofka, an adjunct professor at the University of Colorado and a higher education adviser with JLL.

She said many of JLL's university clients have paused their spending and facilities planning, especially those dependent on research funding. 

“The role that universities play as an economic driver is substantial,” she said, noting that's especially true for research funding. “I do think that that’s going to be challenged.”

Experts who spoke to Bisnow warn that the cuts threaten more than just higher education real estate programs. They could end up crippling America's competitive edge in science, technology and health innovation — much of it fueled by research at higher educational institutions. 

“I think those research enterprises, federal labs and the universities and private sector R&D are all feeding innovation,” Lewandowski said. “And I think there’s a risk to the strength of our long-term innovation portfolio given some of our short-term disruptions.”

President Donald Trump has also targeted a handful of Ivy League universities' finances for what he has called their “woke” agendas. His administration has frozen $2.2B in federal funding to Harvard University over its handling of campus protests against the war in Gaza. Harvard has sued to unfreeze the funding, claiming its First Amendment rights were being violated.

But amid the battle, the university has already canceled two office leases for its T.H. Chan School of Public Health to reduce costs amid the lost funding. It is also developing a 2M SF campus with Tishman Speyer, landing a $750M construction loan last year for its first phase, which will include two lab buildings, apartments and a hotel. 

That development hasn't yet been affected, but Trump’s cuts at Harvard could have a major impact on Boston and Cambridge as university employees pull back on spending, impacting a wide range of industries like biotechnology, real estate, retail and restaurants. 

“These aren’t distributed jobs — they’re concentrated, so we could see strong local effects,” Evan Horowitz, the executive director for Tufts University’s Center for State Policy Analysis, recently told The Wall Street Journal.

The White House also froze $175M in funding last month to the University of Pennsylvania over its policy on trans athlete participation. The school announced a hiring freeze and a review of its spending on capital projects.

“Federal funding freezes and cancellations jeopardize lifesaving and life-improving research, the loss of which will be felt by society and individuals far beyond our campus for years to come,” UPenn President J. Larry Jameson wrote in a letter to students and alumni on March 25. 

A university spokesperson declined to comment on its capital projects review.

The cuts come as schools reckon with waning enrollment and a need to renovate their existing facilities to stay attractive to students. Moody's estimates U.S. universities face a $950B backlog of deferred maintenance. 

Many have launched major capital projects — whether building new classrooms, campuses, stadiums, student housing or innovation centers that house the researchers — funded by federal dollars.

Innovation districts have been an increasing focus as schools look to collaborate with private sector partners to foster startups and spinoff companies, JLL Associate Director Emily Crutcher said.

“The federal funding is critical to the scientific enterprise of these universities,” Crutcher said. 

A number of other policy efforts by the Trump administration and the Republican-led Congress are creating even more worry for higher education leaders. Tariffs have been ballooning projected construction budgets, which is especially a concern when tapping endowments for capital.

“You don’t return to the capital request again. They have to assume the worst in terms of how they allocate capital,” Trofka said. “Tariffs have a unilateral impact with how universities are thinking about their entire capital program.”

Trofka also said efforts in Congress to increase the tax rate for endowments have many university officials concerned. During Trump’s first term, Congress installed a 1.4% tax rate on endowments at the wealthiest colleges in the country.

Now Republicans are looking to increase that amount — and widen the net of universities that would have to pay — with a bill from Rep. Troy Nehls proposing to push the tax rate to 21%, on par with what for-profit companies pay, Higher Ed Dive reported.

A dramatic increase in endowment taxes could wreak havoc on smaller colleges and universities' ability to fund real estate projects through endowments, where “every single dollar matters,” Shawmut Design and Construction CEO Les Hiscoe said.

“For smaller universities, the first thing you need to do is pull back on your capital spend,” Hiscoe said. 

For universities, the planning, funding and development of new campus facilities takes years and even decades. That means many will simply freeze capital projects to wait out what could be short-term shocks to the system, Trofka said. 

“The ability for them to quickly pivot out of that strategy and into a new strategy is frankly not the strength of this market segment,” Trofka said. “Universities are largely just going to pause on those spaces rather than rethink the strategy in this current moment and with hope that things shift … in the coming political landscape.”