The True Value of Healthy Buildings

What is the true value of a healthy building? Why should owners and developers invest in smart tech to create a healthy building for both the environment and occupants?

We will explore these questions throughout this blog.

It is now widely acknowledged that 80% of the buildings in use in 2050 have already been built; therefore, it is realistic that these will need to be refurbished over that 30-year period. What we consider smart and healthy today might not be in 2050; it is essential that buildings adapt and be flexible in their connected architecture. Today, many tenants view buildings as more than just bricks and mortar; they expect strong connectivity, added benefits, and tech-enabled solutions that create a desirable environment and lead to improved productivity and wellbeing. 

Governments around the world are also introducing new policies and legislation around carbon reduction. Since buildings and their construction account for 39% of energy-related carbon dioxide emissions annually (United Nations Environment Program), it is important that current and new building stock is environmentally friendly and that efforts are made to reduce carbon emissions. Therefore, building owners who do not comply will be driving down the value of their property and may eventually be liable to fines and penalties. It is in the best interest of everyone involved to invest in smart technology and energy management strategies to maintain and increase the value of their property. 

Improved Desirability 

The commercial building market is competitive; therefore, owners and landlords need to ensure they have an advantage over others to successfully attract tenants and retain them. As discussed above, environmentally friendly buildings are often part of businesses CSR policy, and it will be a question employees will increasingly ask. They will only want to work for companies that have good morals and values; hence a forward-thinking carbon-neutral workplace would be viewed as very desirable. 

In addition, in a world where many employees can work from anywhere, commercial office space is increasingly about creating an experience. Employers want to attract employees into the office by providing benefits and a positive culture that unites the team, leading to increased productivity, happiness and job satisfaction. 

"Increased [building] intelligence drives operational efficiency, health and safety, comfort and productivity, as well as many other benefits for building owners, tenants, and occupants" (Memoori 2021). 

There is a lot to be said for an environment that is viewed positively and where people actively want to spend time. 

Increased Monetary Value 

Currently, there is an opportunity for landlords/developers/owners to capitalise on healthy buildings. By investing in tech and creating a sustainable, comfortable environment, they can charge a higher premium. Tenants will be willing to pay more because of the reasons stated above. In general, as the building value increases, it will also increase the potential sale price in the future too. 

"Property consultants Cluttons have reported that 78% of landlords have been able to achieve rent increases due to improved connectivity and that 72% have been able to reduce voids in occupancy rates" (PBC Today 2020).

Certification can also help to increase value, awarding bodies such as WiredScore, rate buildings based on connectivity assurance. Others, such as WELL, rate how effective a building is for occupant wellbeing, and standards such as BREEAM measure sustainable value in a series of categories, ranging from energy to ecology. WiredScore state that buildings in London have been able to charge a 5% 'digital premium' on their space as a result of the certification (PBC Today 2020). In addition, JLL state in a new report that green certifications such as LEED and BREEAM result in a rent premium of 6% and sales premium of 8% (BISNOW 2022).

It is estimated that 72% of digitally unconnected spaces could become obsolete in the not so distant future. Therefore, it's clear that investment in digital infrastructure and technology is a key component of future-proofing assets and securing value. 

Research shows that tenants like tech amenities as well as building managers. "In fact, 1 in 4 [tenants] said they were willing to pay an additional $30 or more per month" (HeckHome N/A). 

Improved Occupant Wellbeing 

The connection between a quality working environment and employee productivity has been widely explored. Technology solutions and personalised services in buildings such as sophisticated lighting control, air quality sensors, HVAC sensors, intuitive room booking systems, cleaning schedules based on live data, contactless entry and pattern recognition all help to create a quality, comfortable environment, which has been linked to increased wellbeing, mood and productivity. 

"The World Green Building Council says, "productivity improvements of 8%-11% are not uncommon as a result of better air quality" (Building 2019)

Employee attitudes are changing; Gartner predicts the healthy building mantra will continue to evolve as employees demand more services and benefits to allow them to feel safe in the workplace. This is partly due to covid, but also because many have become accustomed to working from home in their own personalised environment which can be optimised to suit their needs, e.g. temperature, lighting, ventilation. "A survey undertaken by Aon found that 97% of businesses felt workers were expecting more of their employers in areas such as mental health support, diversity and inclusion, flexible working and environmental control" (Building 2019). In many ways, the workplace now has to offer an experience that is better than what they can achieve at home; otherwise, they may not wish to return to the physical office. 

Improved Environmental Performance 

The Government have released new standards in the UK to mandate the decarbonisation of buildings. Many other governments worldwide have also implemented similar targets; therefore, people do not have a choice, but landlords, owners, and facility managers should understand the benefits of an energy management strategy for their own personal gain too. There should be limited resistance to this new policy if the advantages are fully understood. 

Data is the key. Connected systems and devices within a building reveal insights that were not previously available. Building operators can make informed decisions to create improved energy outcomes. The first stage is being able to understand an accurate picture of how the building currently performs and then being able to create a plan to improve, stop wastage and optimise environments. 

Efficiency is also improved; the data allows decisions to be made quicker, even automatically, in some instances. Maintenance is also improved; checks no longer need to be carried out "just in case"; this is a waste of resources. IoT connected sensors provide analytics and alerts when a component is reaching the end of life or maintenance is required. This helps to keep buildings in operation, minimises wastage and prevents unnecessary energy from being used due to a faulty device. 

SSE state that "28% of UK carbon emissions are from operational energy use in buildings. Starting tomorrow, this could be reduced by 20-30% [with the right strategy in place and with a limited impact on occupants]" (SSE 2021).

It is clear there is more value in smart, healthy buildings than just the ability to increase rent payments. Let's discuss how our SmartCore software can enhance your building projects and refurbishments, taking them to a new level of sophistication.