Healthy Returns: Study finds a positive correlation between occupant well-being and building value.

HEALTH VALUES

Analysis Links Occupant Well-being to Investment Returns

A NEW REPORT from the Center for Active Design (CfAD), in collaboration with QuadReal Property Group, points to the positive ways healthy building strategies can drive value in real estate. Released in June 2022, the report’s findings support the notion that investing in the health of a building leads to higher tenant satisfaction ratings and better financial outcomes.

“Demand for healthy buildings has never been higher, and now the case for investing in them is even stronger,” maintains Joanna Frank, President and Chief Executive Officer of CfAD, the operator of the Fitwel standard. “This research makes clear the value of benchmarking to transform the information about a portfolio into a pathway that owners and investors can act on to plan future investments.”

“For our industry, benchmarking and certification helps create a standard set of health and wellness indicators that redefines best-in-class buildings,” concurs Meirav Even-Har, National Manager, Wellness & Healthy Buildings, with QuadReal Property Group.

That’s become particularly in demand since the onset of the COVID-19 pandemic. Commercial building owners are under greater pressure to provide data that shows exactly how their properties are impacting the health and well-being of those who live and work there.

The report’s findings point to the following correlations:

• properties located in walkable districts with plenty of amenities and access to nearby services command higher rents;

• properties that conduct regular maintenance and implement operational strategies to clean, monitor and improve building systems have higher occupant satisfaction ratings;

• properties with healthy food access via food courts, farmers markets or grocery stores in close proximity to the building are more attractive to residents and represent a great opportunity for developers.

Fitwel has also recently introduced a portfolio benchmarking tool designed to help building owners and investors assess how either a single asset or an entire portfolio influence occupant health. It provides calculations to draw linkages between operating decisions and mental, social and physical health outcomes.

The Fitwel standard has seven components: • Promotes Occupant Safety through strategies that decrease risk of crime and injury, protect cyclists and pedestrians from vehicular traffic. • Instills Feelings of Wellbeing through strategies that promote inclusion, relaxation and perceptions of safety. • Increases Physical Activity through strategies that incorporate opportunities for movement into everyday life. • Impacts Surrounding Community through strategies that broaden impacts beyond the health of on-site occupants to neighboring areas.

• Reduces Morbidity and Absenteeism through strategies that promote decreased rates of chronic disease and mental health conditions, and reductions in disease transmission. • Supports Social Equity through strategies that increase healthpromoting opportunities for a range of vulnerable populations, including children, elderly, disabled or socio-economically disadvantaged persons.

• Enhances Access to Healthy Foods through strategies that expand the availability of fruits, vegetables and other nutritious food options.

QuadReal benchmarked 60 properties across Canada, capturing a mix of commercial and multi-residential occupancies. CfAD analysts then cross-referenced Fitwel scores with tenant satisfaction surveys and financial information supplied by QuadReal to derive further insights on the paybacks of health attributes. That was translated into a net promoter score (NPS), which is a measure of the likelihood building occupants will recommend it to their peers, and was also used to identify areas where investment in health attributes might further augment returns.

For example, stair design and lactation rooms were identified as two of the least implemented attributes that could improve tenant satisfaction. Generally, both commercial and multi-residential buildings attained the highest scores for occupant safety and the lowest for access to healthy foods. However, the analysis shows that access to healthy foods is associated with a higher NPS for the building, suggesting potential untapped value.

“Improving the health of building occupants is inarguably a good thing, but unless they notice the benefit themselves it can be difficult to argue for investments in those strategies. With this analysis in hand, real estate stakeholders can now make healthy building strategies a strategic and financial priority,” the report submits.

“We have found a clear correlation between a higher Fitwel score with a greater willingness of occupants to recommend the building to their friends and colleagues. This reinvigorates our conviction to invest in healthy buildings and benchmark wellness more broadly in our portfolio,” says Jamie Grey-Donald, Senior Vice President, Sustainability & EHS, at QuadReal. zz The Health Drives Value in Real Estate report can be found at www.fitwel.org/benchmarking-report.

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