For the second consecutive year, NASCA and McKinsey & Company partnered to produce The Business of Running State Government Operations survey on key issues affecting CAOs today. 

The survey results on facilities and real estate depicted top state government leaders want to design buildings and spaces to improve the citizen experience and customer expectations but are stymied by a median deferred maintenance backlog of almost $200 million and shortage of technical skills required for large portfolio management.

Solving deferred maintenance in most states will require states to evolve their practices to forward-looking sustainable portfolio strategy. An integrated approach can also reduce footprint cost, increase sustainability, adapt to global trends such as automation and AI and address workforce needs

Key Findings:  

• The average state is responsible for 2,200 state-owned and leased buildings (15 million total square feet)
• 1/3 of the buildings are more than 50 years old
• The average state dedicates $360 million annually to facilities  budget
• States use outdated use of performance metrics that don’t prioritize workforce productivity or citizen experience 

Key Recommendations:

The report is intended to provide a robust set of data and insights governors, legislators, and business leaders can use to compare state practices and inform forward-looking strategic decisions. 

• CAOs can eliminate the maintenance backlog by prioritizing specific assets on a portfolio-wide level, investing in the productivity of those key assets, and monetizing or disposing of underused properties.
• CAOs should optimize the portfolio of real estate assets to help capture synergies across tenants and allow for the best use of the space.
• CAOs should adopt more diverse metrics, set targets for those metrics, and evaluate them on a regular basis.
• The CAO mandate is to use real estate as a lever to enable productive and successful workspaces, but too often customer service fails to get the attention it requires; CAOs should pursue more customer-centric strategies and create more dynamic workspaces.