Finding the Value of Healthy Buildings

Much like when the green building movement that first hit CRE at the turn of the millennia, we are currently sitting at the starting line for a new era of change. This time the target is not the building, but rather its users.

Mike Ratliff, Senior Associate Editor

Much like when the green building movement that first hit commercial real estate at the turn of the millennia, we are currently sitting at the starting line for a new era of change. This time the target is not the building, but rather its users. Specifically their health—and in turn—productivity. Tenants have just started putting a premium on spaces conducive to healthy and happy employees. Investors will eventually come around to put a price premium on these buildings as well.

Health Value_2

Harvey Berstein, McGraw Hill Construction (left) and David Pogue, CBRE (right).

But what exact value is added by a ‘healthy’ building? Harvey Berstein, vice president of industry insights and alliances at McGraw Hill Construction, and David Pogue, global director of corporate responsibility at CBRE, are two industry veterans leading the charge to find out. Both recently conducted major research projects to understand how healthy spaces are perceived. The findings were presented Thursday at Greenbuild in New Orleans.

McGraw Hill partnered with the AIA, CBRE, USGBC, United Technologies and a host of other partners on ‘The Drive Toward Healthier Buildings’. The report surveyed architects, constructors, owners and medical practitioners on the impact of design construction on the health and wellbeing of building occupants.

Key takeaways are that 47 percent of owners saw healthcare cost reductions for employees in buildings with health oriented features like daylighting and natural air circulation. Fifty-six percent of owners reported reduced absenteeism in health oriented buildings. The vast majority of owner HR executives (91 percent) reported greater worker productivity. Yet most owners admitted they don’t yet know how to measure the impact of healthy work spaces. The fact that we are in the early stages of the healthy building movement is also evident in the responses received from the medical field.

“A high percentage of doctors we interview don’t yet see a connection between buildings and the health of the people in them,” Berstein said. “What is interesting is that 74 percent of the medical practitioners do ask their patients about the environment they live in. The primary thing they are thinking about is mold, but they just aren’t making that bigger connection.”

To see how quickly healthy building practices might become the norm, Pogue started his presentation with a quick ‘then and now’ on green building. In 2000 the first LEED certification launched for new construction and there were less than 500 Energy Star buildings in existence. In 2014 there are more than 4 billion LEED certified square feet worldwide, and more than 25,000 Energy Star labels.

“There is a rapidly occurring change in what has been a very conservative industry,” Pogue said. “What happened was that initially there was a lot of pressure on buildings. There was very little focus put on the occupants.”

CBRE recently conducted a Green Building Tenant Survey on Productivity, and Pogue was able to give the audience a sneak peak at the findings, which were geared at determining just what green aspects increase worker productivity. Top factors that the 900 tenants saw impacting productivity (in order of importance) were access to natural light, individual control over thermal comfort, places for social interaction, proximity/walking distance to shops and services, and green space/garden space on the roof or adjacent to the building.

The goal is be able to provide CBRE clients, especially those who have not moved towards green building, with the most cost effective ways to boost employee productivity. Pogue says this is especially pertinent for cities like Pittsburgh, which has an older office stock that wouldn’t qualify for Energy Star of LEED certifications.

As demonstrated by its new global headquarters at 400 South Hope St. in downtown Los Angeles, CBRE is a bit ahead of the game. The office is the company’s first ‘Workplace360’ site, which features an alternative design with flex space, plenty of daylight and no permanent offices. While this might sound great to a lot of people, convincing everyone to get on board was not an easy task.

“High profile brokers had really earned the right for a corner office, and we had to convince them that we are going to get rid of that space,” Pogue added. “It took three years, and five designs. Overtime everyone got on board and we built out 400 South Hope, which is truly a remarkable space.”

The new office has been met with significant approval. More than 90 percent of employees surveyed said they wouldn’t go back to the layout of their previous office. A week and a half ago CBRE opened up a similar concept office in Chicago. Pogue believes that people will eventually demand these types of spaces, just like tenants are demanding green spaces today.

With the International WELL Building Institute launching the WELL Building Standard 1.0 this week, it will prove interesting to check back in on the space in 10 years to see how far healthy buildings have come.