green building

Understanding the Financial Benefits of Health and Wellness Strategies

A new report shows health and wellness strategies result in higher rents, improved occupant satisfaction, and greater property recommendation scores, among other benefits.

By Sara Karerat, contributing writer  

The positive impact healthy buildings have on human health has long been established – and awareness of this connection continues to expand, as evidenced by the growth of third-party healthy building certifications. But a persistent question often posed to justify taking these health-promoting strategies remains: Do the occupants themselves experience a difference on a day-to-day basis? 

Data now indicates the answer is a resounding yes. But building occupants themselves might not even realize that they are responding positively to these changes. This is a good thing for building occupants – and also for building owners and investors. A new report developed by The Center for Active Design (CfAD) and QuadReal Property Group titled "Health Drives Value in Real Estate,” shows a positive correlation between buildings that prioritize occupant health and occupant satisfaction, and financial outcomes for owners and investors. The Center for Active Design (CfAD) oversees Fitwel certification, a healthy building certification created by the U.S. Centers for Disease Control and General Services Administration.  

This new report is a game-changer for the industry. For the first time, there is data to substantiate what we’ve always believed: When the built world is optimized for the health of people, tenant satisfaction tends to increase, resulting in financial returns for property stakeholders. Nowadays, occupants look for measurable data showing how buildings are prioritizing human health; this has made the healthy building movement a real estate imperative, no longer an added luxury. The report shows that, even when buildings don’t advertise the health-promoting strategies they’ve taken, occupants still notice that the spaces they live and work in are more enjoyable. Creating physical environments that are conducive to well-being can bolster tenant longevity as well as the willingness of occupants to recommend the building to their friends and colleagues. 

There are marked, data-backed financial returns for these investments: According to research from MIT Real Estate Innovation Lab, healthy buildings have an effective rent of 4.4 to 7.7 percent more per square foot than their non-certified peers. Investors are paying attention, and reacting accordingly. 

A survey of real estate investors, conducted by CfAD in collaboration with BentallGreenOak and the UN Environment Program Finance Initiative, 92 percent of investors plan to enhance health and wellbeing over the next three years and 95 percent of investors identify tenants as leading the demand for healthy buildings 

Defining Healthy Buildings 

What exactly are healthy buildings? Every building affects the health of occupants, whether or not we realize it. The quality of air, levels of lighting, exposure to nature, and building accessibility all play a role in the health – physical, mental, and emotional – of building occupants. So does a building’s exterior maintenance, bike parking, walkability, communicating protocols for hygiene, and outdoor lighting. Beyond the amenities a building offers, the function of these operational components carry unique importance in driving the Net Promoter Score (NPS) – the likelihood building occupants will recommend the property to peers.  

Key findings from "Health Drives Value in Real Estate" suggest that health-promoting strategies drive NPS and financial outcomes (for instance, rent per square foot).

The report found the following factors to be most significant:

  • Walkable locations with multiple amenities and public transit in close proximity command higher rent. 
  • Projects focused on operations strategies tend to have higher property recommendation median scores, emphasizing the impact of crucial, baseline strategies like maintenance. In fact, building operations and maintenance contribute more to occupant satisfaction than tenant amenities.  
  • Projects that implement Fitwel healthy food access strategies – proximity to farmer’s markets or healthy food markets – are associated with a higher median property recommendation. However, these are one of the least implemented strategies.  
  • Increased Fitwel scores correlate with increased median score for property recommendation, demonstrating the importance of broad investments in health. 

By analyzing data from Fitwel scorecards, select property financial metrics from across asset types in QuadReal’s portfolio, and tenant and resident survey results, the report found that Fitwel’s health-promoting strategies were associated with positive occupant experience – even if those strategies weren’t explicitly publicized.  

The analysis was launched in tandem with communications around how to benchmark on Fitwel’s  platform, which is accessible to owners and investors to assess how a single asset or an entire portfolio is impacting occupant health. This service enables real estate stakeholders to determine how their properties are promoting occupant health and can help support ESG reporting efforts. 

Ultimately, aligning a portfolio with health-promoting strategies benefits the lived human experience within these spaces, no matter the asset class. These investments lead to increased returns for property owners and investors. Demand for healthy buildings has never been higher, and now the case for investing in them is even stronger. 

Sara Karerat is Director of Applied Research at the Center for Active Design (CfAD), where she leads the organization’s translation of public health research into actionable solutions that optimize the built environment for health, both domestically and internationally.  

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  posted on 7/26/2022   Article Use Policy

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