High-performing buildings – where design, construction and buildings operators have the opportunity to work together to enhance the well-being of occupants – have held out the promise of better productivity and greater returns for developers and landlords for some time.
So why aren’t they happening in larger numbers?
I think partly because the investor and development community is still struggling to reshape its mindset beyond two critical misconceptions – 1) that such buildings will cost too much to design, construct and run, and so, without a certain and swift increased return on investment, they are too risky, and 2) the benefits are too hard to prove.
First, I don’t believe either of those assumptions is correct. Second, we should be thinking more broadly about the potential of these buildings and what they have to offer the construction and FM industries while also seeing this as their opportunity to influence the ongoing debate around productivity and how UK businesses can maximise the potential of their workforce.
In the white paper we’ve been working on at Capita Real Estate & Infrastructure (see below) we’ve explored some of the realities around high-performing buildings, tackled a few of the myths, and outlined unequivocally the value they have for developers, investors and asset managers.
For example, for me the productivity argument is not about whether high performance buildings can squeeze out another ten per cent from the people who work in them. It’s that they knock out the minus 10 or 20% that comes from putting people in a poor air quality environment, with bad humidity, or where the noise is so high they can’t concentrate.
I’m not saying that running a better building is going to save the world, but surely, as a responsible employer, you’re going to at least want to measure these factors – if nothing else to avoid employee grievances should they claim an adverse affect on their health . Additionally, by removing all the reasons that people might not be able to perform managers can focus on developing their teams and increasing productivity. Over time with greater transparency, and social media influence, occupiers will look to developers and builders to enable that.
Higher value, better rents, faster leasing
And in our research we’ve seen that just as high-performing buildings help their occupiers recruit and retain the best talent, they also help developers and landlords attract the highest quality occupiers, prepared to sign the longest leases. In a study of 200 Canadian building owners, they believe that adopting healthy building practices boosted the ability to lease space more quickly (46% agreed), increased building value (38%) and enabled premium rents (28%).
Meanwhile a number of studies on LEED buildings in the US have shown that high performing green buildings have higher asset values than their conventional counterparts, better occupancy rates and a enjoy a lift in sales prices of up to 30%.
A helping hand from science
Why haven’t the advantages of such buildings percolated more vigorously into mainstream thought? Firstly, it can be a challenge for developers to grasp how a CO2 measurement could be linked to a productivity gain figure and then render that as a cash sum on a balance sheet. Secondly, both industry and academia need to need to work in close partnership to evolve the science and benchmarks which businesses can rely on.
More accessible science would help, as perhaps might legislation, including at least a revisit of the 1974 Work Act to add air quality and noise to the current limited guidance around temperature.
So here are three questions the building community could ask itself that could help change that mindset and nudge along adoption.
1. How will you react when your organisation receives its first grievance from an employee or customer based on wearable/ sensor technology?
2. How do you currently define customer experience within your spaces?
3. Do your current procurement processes allow for flexibility to deliver progressively healthier environments?
A final message? Just start measuring. This is not the next wave of high tech and high cost IoT sensors that will require a huge Capex expenditure upfront. In fact, the Capex is not scary, nor the Opex costs, and it’s possible to get an ROI within 12 months on much of this, within existing budgets.
With UK productivity at an all-time low, why would you not at least want to measure your building’s ability to make a difference – and sell that benefit?
“If there was true transparency and everybody knew how your building was behaving from a health perspective, how would you feel about that?”
Capita Real Estate and Infrastructure work with public and private sector organisations to design, build and optimise their real estate and infrastructure assets. From thought to finish, we apply our combined expertise to achieve more from the entire built environment.
We build competitive advantage through intelligently applied real estate and infrastructure solutions and enhance our clients’ standing in a forever-changing world.