Another revenue-related reason is that many large donors want their money put towards construction. A lot of donations >$10m are specifically earmarked towards construction of a building named after the donor.
You especially see this phenomenon at state universities. The university gets a new building, and the politician gets a photoshoot. Renovating an existing building, on the other hand, would save the taxpayer money but doesn't offer opportunities for photo-ops.
Depending on what donors do, what I was arguing is that building the expensive new building is what might actually save taxpayers money, despite costing more overall— because donors are much more generous in funding shiny new buildings than in funding renovations or ongoing operations. An $100m new building where donors cough up $90m of the cost is cheaper to the university (and, for public institutions, to taxpayers) than a $20m renovation that has to be funded internally. When many donated funds are attached to earmarked construction projects and not allowed to be used for anything else, the economics of what's most cost-effective to build change significantly.
