Research shows building expansions are not magic bullets for long-term attendance increases, but considering these three things can aid in a project’s success.
Despite the fact that the same people are going to cultural organizations more often, museums are experiencing a shrinking visitor base as they struggle to engage more diverse audiences. Attendance is not keeping pace with population growth and it is impacting many institutions. In the face of these new struggles in a more connected and diverse world in which the lure of the couch is stronger than ever before, board members may be looking to an old hopeful “solution”: building expansions.
The topic of building expansions is in the air. The Museum of Modern Art in New York opened a $450 million expansion in October, and the American Museum of Natural History just broke ground on a 230,000 square foot expansion designed by celebrated architect Jeanne Gang (a personal favorite of mine). The conversation is strong on the West Coast as well. Funding to build the $650 million expansion for the Los Angeles County Museum of Art has hit a rough patch while expansions are also being discussed at several other Los Angeles institutions – from the La Brea Tar Pits to LA’s Natural History Museum. Many more entities are in the news hiring architects, in stages of construction, and hoping to raise funds for such projects in the United States and beyond.
But do building expansions “work?”
It depends on your goal.
IMPACTS has worked with several organizations contemplating major projects since 2005, with costs ranging from $1.8 million (for a medium-sized special exhibit) to upwards of $500 million (for a new building). Some of these organizations include the California Academy of Sciences, the Monterey Bay Aquarium, the Exploratorium, the Carnegie Museums, the Tennessee Aquarium, and the Naples Botanical Garden, among others. Sometimes our greatest value in market testing these projects isn’t in “green-lighting” them, but also in grounding the reality that these expansions often aren’t reliably the one-stop, “build it and all will come” magic bullet some leaders hope they will be. But this doesn’t mean that a building expansion is necessarily doomed to be without payoff.
If you’re considering a building expansion, here are three things to keep in mind to help make sure it is a success.
1) Understand your goals beyond a temporary attendance bump
We’ve been tracking attendance outcomes for entities that have opened major expansion projects for many years. A study of eleven organizations found that attendance increases 19.6% on average during the first full year of a major building expansion, but attendance returns to pre-expansion baseline only five years later on average. A study of five cultural organizations that were in business less than ten years prior to a major expansion experienced the same five-year fate, but with a first-year attendance bump of only 7.2%. Here’s the data.
The study above shines a light on an opportunity. In the duration of the study, the US population grew 11.7%, meaning that returning to the pre-expansion baseline is a dramatic underperformance of the opportunity. In other words, not only did these expansions not permanently increase attendance (if leaders supposed they would), but they didn’t even reliably aid organizations in keeping pace with population growth.
There are also commonly overlooked additional “costs” to carrying out an expansion beyond the building and promoting of the project. Examples include a decrease in attendance in the years prior to the opening as people defer their visits, and a permanent increase in expenses as new spaces must now be permanently staffed, delivered power and resources, and maintained with proper facility upkeep.
It is not common that a building carries out a major expansion project and has increased attendance forever. But does this mean that expansions shouldn’t ever be carried out? Certainly not.
Sometimes expansions are a necessary refresh when older buildings are in need of repair. Maintaining an organization’s reputation as relevant and providing satisfying experiences may require ongoing projects related to updating the space.
In our research, we’ve seen that the most successful expansions contributing to an organization’s long-term attendance are those that served a meaningful purpose beyond… simply having a sexy expansion.
They are expansions driven by institutional goals. They are the expansions that aid in overcoming actual barriers to attendance. They are less “more of the same kind of content, but in more space,” and instead aim to provide a unique space to reach new audiences, engage people in a different way, facilitate wayfinding, or better welcome members through a more fitting entrance that cultivates a stronger feeling of belonging, for instance. They aim to resolve the root causes of attendance declines or plateaus.
2) Invest at least 1% of the total project cost on research
“There was no way that we could’ve known,” some leaders invariably say when an expansion project has a less dramatic short or long-term attendance advantage. Of course, that is untrue.
The goal of a feasibility study is to obtain a realistic idea of whether a project will succeed or fail in achieving its stated goals. Not everything we hope will appeal to people will necessarily do so. Before investing millions of dollars on projects, it is the responsibility of executive leaders and board members alike to ensure funds aren’t being raised or allocated in vain.
Our experience reveals an interesting finding: The line item for a project’s successful due diligence (including market research) generally equates to approximately one percent of the total cost.
One percent! And yet, many organizations seem to prefer spending millions and just hoping for the best. If a 1% investment can save an organization from an additional 99% investment on something that may not pan out, isn’t it worth it? And if it will pan out, isn’t it worth best understanding expectations and potential? This guideline suggests that an organization planning a $5 million special exhibit should invest a minimum of $50,000 dollars at the project’s inception to evaluate its potential outcomes.
Market research can help inform if a project will be successful in reaching desired goals, identify the segments of the market that the project is most likely to engage, and provide realistic expectations concerning return on the project’s required investment. Too often, we overlook or undervalue the investments necessary to maximize these project’s successful conclusions.
3) Keep your feasibility study separate to avoid a common moral hazard
Beware of tasking architects and other partners similarly incentivized in a project’s actualization to manage the feasibility process. Often times, these entities have a vested interest in a project proceeding – regardless of the market’s response.
The feasibility process should be managed thoughtfully and independently – with true interest and curiosity in regard to how the market will respond. This is very hard to do when the entity carrying out the research is on a team with architects and planners who need the project to continue in order to get their paycheck… and when the entity is reporting to a Board of Directors that has already decided – without evidence – that the project is a great idea that will yield fantastic results.
If an organization has already decided that it “needs” a thing and moves forward with RFPs for designers and architects – without information beyond the Board’s want for a flashy new project and a sense that it’s a good idea – then this doesn’t comprise requisite due diligence. It’s also far too common.
Sure, a new or redesigned space might sound alluring, but maybe what’s keeping people away is parking – and attendance is unlikely to improve unless that barrier is alleviated first. Maybe it’s safety perceptions in the area and the investment is better made in a public safety initiative or partnership.
Consider this: Sometimes the greatest benefit of a feasibility study may not be to maximize gains, but to minimize losses. At times, data will suggest not to proceed with an expensive project. Or it may suggest that perhaps a different kind of project would be better for reaching long-term goals.
There can be compelling reasons to carry out a building expansion – and they can be successful in ways relating to providing more satisfying experiences, providing space for programs to maintain ongoing relevance, and aiding in overcoming data-informed barriers to attendance.
But building expansions are not magic bullets.
What matters for an expansion’s success is the problem that the building expansion aims to resolve, and how it does so.
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