A Budding Interest in Health & Well-being in Real Estate

October 18, 2019

Among companies with real estate portfolios, and the various green building certification systems that rate them, there is a growing interest to introduce health and well-being standards into these certifications. This recent shift is a natural evolution of a “think global, act local” mindset, where globally identified health and wellness issues are being addressed through the urban design locally. We live in a world with clear similarities in public health concerns around the world, and tackling them locally in a standardized way is needed.

Incorporating health and well-being into real estate design takes time and investment. Why, then, do companies make the effort? To find out, we spoke with Elena Cernov, Sustainability Consultant at Schneider Electric Energy & Sustainability Services, to explore the flourishing interest in health and well-being in real estate scoring, analyze the new standards such as ergonomic furniture, healthy food and visual comfort and discuss potential impacts on real estate and other related business sectors.

The evolving nature of health and well-being in existing real estate scoring systems

If you are like me, spending 8 hours a day in an office building, you have probably already gone through basic trainings intended to improve safety and sustainability in the workplace. From ergonomics to recycling to office-wide emails instructing to print double-sided and switch off lights when leaving the building, these are just the few that are actually visible to the occupants of the building.

Now, health and well-being reporting schemes and certifications (GRESB, LEED, WELL, Living Building and Petal Certification, BREEAM) are bringing new aspects of health to the attention of developers, building owners and investors. These may include but are not limited to things like offering healthy food options, encouraging involvement in the well-being of the neighborhood, providing sport options and practicing closed-loop resource use.

The various criteria assessed by certifying bodies can be grouped into 3 categories:

Physical needs: air, water, light, thermal comfort, sound, visual comfort: some or parts of these were included previously in safety or environmental clusters
Healthy lifestyle: nourishment, movement
Social well-being: mind, community, private space

Items in sub-groups 2 and 3 are receiving heightened attention reflecting the crucial role that buildings and infrastructure have in influencing healthy lifestyles and public well-being.

So why have companies started to care now about these new aspects? The benefits of real estate that reflect health and well-being values in its design are abundant: reducing an organization’s financial liability through sick employees, employee retention and productivity, more trust and interest from investors, building readiness for a potential increase in mandatory requirements for real estate and reputation.

The scope of health and well-being in real estate is expanding

Proactive companies are beginning to integrate health and well-being aspects in real estate development and restructuring. Most organizations reporting this work or applying for certification are doing so on a voluntary basis. However, for these visionary companies, the investment appears to pay off, due to the previously mentioned benefits.

The exciting part about this new approach to health and well-being is that companies are taking greater responsibility for public health and are contributing to each individual’s pursuit of a healthier lifestyle. Access to lifestyle needs, such as diverse local and healthy diet, fighting sedentarism and encouraging movement, having a good posture and work-life balance, are being partly put on the shoulders of real estate investors and builders.

As JJL, a leading professional services firm that specializes in real estate and investment management, states on their website: “These certifications assure clients that we are committed to high quality, safety and environmental efficiency as hallmarks of service and operational excellence.”

According to the World Health Organization (WHO) noncommunicable diseases, such as diabetes, cancer and heart disease, are collectively responsible for over 70% of all deaths worldwide. The rising prevalence of these diseases is driven by five major risk factors: tobacco use, physical inactivity, the harmful use of alcohol, unhealthy diets and air pollution. With their choices in design and internal policies, real estate providers can influence the lifestyle of its occupants and choices they make when it comes to these risk factors.

WELL and Living Building award better scores to buildings that provide social interaction options, biophilic design (living walls, use of natural materials such as wood, stone), inclusive design (service or environment optimized for users with specific needs), ergonomic design (workplaces and products arranged so that they fit humans that use them), etc. Similarly, things which previously where considered individual choices, such as easy access to fruits and vegetables, advertising healthy food options and smaller portions, smoking cessation and prevention, etc., are now targeted by buildings’ internal policies and incentivized by building standards.

The scope of health and well-being in buildings is also being extended from occupants to visitors and others within the vicinity. For example, it is now typical to find in scoring and certification standards that housing developments are encouraging pedestrian activity to decrease exposure to pollution for building residents and locals. In this way, real estate companies are positioned as active ambassadors of health and well-being in the life of the city.

How to overcome barriers to sustainable design and anticipate impacts on business sectors

Over the past 2 decades, the green building industry has developed various tools and case studies on the topic of health and well-being, which had a transformative impact on the real estate market. According to the World Economic Forum (WEF), “Global socio-economic forces will make the environmental impact of the real estate sector even more important in the future.” WEF projects that by 2030, the global population will exceed 8 billion and over 60% of the world’s population will be living in urban environments. This will lead to significant growth in the construction and real estate market.

Keeping pace with the rapid growth of the real estate industry, the open market is playing an active role in raising standards in sustainable buildings and creating market-driven incentives for prioritizing sustainable values in building development. Currently, 40-48% of the new commercial buildings are green, compared to 2% in 2005 according to the World Green Building Trends report.

Although certain initiatives in health and well-being can only exist on a small scale now, the concept of sustainable design is being embraced on a global scale. For example, the Petal Certification incentivizes regenerative designs, which restore a healthy relationship with nature, achieve net-positive energy and water use and incorporate elements of urban agriculture in buildings. While aspirational for many companies, regenerative design is a guiding principle for building designers to keep in mind as solutions become more accessible in the future.

One of the barriers in achieving high scores in health and well-being categories is the low availability of sustainable construction materials or highly energy efficient technologies. There is a high demand for new sustainable products on construction material business, and the growing market for sustainable real estate means construction materials retailers will have to make radical changes to accommodate the need for greener options.

Another barrier to integrating public health measures in building design and its functioning is that most engineers, designers and architects are not trained in public health. Therefore, a bigger collaboration between the building and public health sectors is to be expected and firms specialized in public health consultancy will grow in numbers to lend expertise to the building sector in its sustainable transformation.

Health and well-being in our buildings reflects social and environmental values at a smaller scale, but with a potentially profound impact. Each building is a core structure around which so many of our daily activities occur. These changes will influence our well-being as individuals (act locally) but will also affect the standards and statistics at the institutional level (think globally).

For companies looking to get ahead of this trend by integrating health and well-being into their real estate portfolios today, we have two recommendations:

Start now with small steps. Early action has a beneficial impact on the business, as taking voluntary steps can help prepare for future mandates, but also a snowball effect on your health and well-being programs. Small improvements today enable your organization to build the expertise and processes to make larger improvements down the road.
Seek out resources. Use scoring schemes to identify your organization’s weaknesses and strengths in health and well-being policies. With a good consultancy support, these hot spots can be transformed into strategic policies of change for all stakeholders of the building in question.

We see that companies that invest in their tenants’ and employees’ well-being and sustainable systems receive positive feedback on social and environmental initiatives, reap financial benefits from smart use of resources, gain trust from stakeholders and increase employee retention. These policies are an important driver in general social well-being, and an investment in your business, your employees, and your future.