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Why companies want proof buildings are healthy

by • October 18, 2020 • officeComments (0)71

Official building certifications are becoming increasingly important to office workers

Measuring and ranking a building’s health is increasingly in demand as the wellbeing of office workers moves to the top of the corporate agenda.

Official building certificationsOfficial building certifications have cropped up in Singapore, Australia and India, following on from the WELL Building Standard and Fitwel that launched in the U.S. about six years ago.

Companies in recent years have started paying more attention to promoting the health of their workers, in part due to a battle to attract top talent. Such efforts have come into sharper focus during the pandemic.

“The pandemic has been a game-changer in terms of attitudes towards building wellness, health and hygiene, and as a result we are likely to see certifications across national and international programs grow significantly,” says David Barnett, JLL research manager.

The official building certifications aim to show buildings meet science-backed standards for health, like air quality, access to daylight, or opportunities for employees’ mental relief and physical movement. They are similar to green-building certifications that have also gained popularity.

New schemes to emerge over the past three years include Australia’s NABERS IAQ (indoor air quality), Singapore’s BCA-HPB (Building and Construction Authority-Health Promotion Board) Green Mark for Healthier Workplaces, and India’s IGBC (Indian Green Building Council) Health and Wellbeing rating.

“Given the severity of the pandemic, certifications will become a business imperative as employees assert their right to being well while they work,” Barnett says.

Making wellness visible
WELL Building is considered the international standard in commercial real estate for implementing, validating and measuring wellness features, which can include the materials used in construction, HVAC systems and air filtration, or tenant amenities.

Take-up is increasing. The International WELL Building Institute’s 2019 annual report shows 82 projects were certified in 2018 – an increase of 78 percent on the previous year, while certified square footage grew 203 percent.

A positive knock-on effect has been greater transparency through access to data, considered an important factor in investors’ decision-making, says Barnett, one of the contributors of JLL’s Global Transparency Index.

“Transparency forges a clear path for occupiers and owners to make decisions that bring value and safety to their organisations and employees, as well as to boost engagement and productivity when businesses have hardly needed it more,” he says.

Topping up on tenant amenities
Awareness around the role of wellness in attracting tenants and workers is gathering momentum. For over a third of workers, physical and environmental factors account for more than an hour of lost work per day, according to the 2019 study by Future Workplace and View.

As health and sustainability become some of real estate’s most coveted attributes, landlords are stepping up.

In Australia, Charter Hall last year swapped 1,000 square meters of revenue-generating offices in the lobby of one of its Sydney buildings for a wellness area with free yoga, an auditorium, arts studio and café.

“Employees are coming into to the office with new requirements and expectations,” says Andrew Ballantyne, head of research – Australia, JLL. “We’re seeing building owners respond with highly visible sanitation, contactless technology and access to fresh air to promote long-term feelings of safety.”

The International WELL Building Institute is also upping the ante with its new WELL Portfolio certification. Lendlease has become the first landlord recipient, with certification across 14 of its Australian properties.

“The groundswell of healthy building certifications point to a market that is changing irrevocably to put peoples’ physical and mental health at the heart of places,” Barnett says. “Like green buildings, health credentials will become mainstream and prove to be vital for a building to remain relevant.”

In an earlier report, JLL said that hastily enacted regulations addressing a fast-unfolding pandemic have introduced a layer of complexity around leases between tenants and landlords.

Governments worldwide have implemented a range of emergency legal and fiscal policies to help cushion the economic damage caused by COVID-19 travel restrictions and stay-home measures. Each jurisdiction has established their own rules, resulting in myriad policies around returning to work, rent relief and codes of conduct for payment forbearance, and for helping tenants or property owners get access to government grants and loans.

“Many of these relate in some way to either direct fiscal support or regulatory suspension of the standard legal requirements around the tenant-landlord relationship,” says Jeremy Kelly, a director in JLL Global Research.

In Singapore, for instance, the government has granted tax rebates and cash grants for landlords whose SME tenants have seen their gross income between April and June fall more than 35 percent. In the UK, businesses in the retail, hospitality and leisure sectors are able to obtain a cash grant of up to £25,000 ($32,000) per property. In Australia, landlords get a 25 percent reduction in land tax liability for 2019-2020, provided this is passed on to tenants. Across the developed world, moratoriums on the forfeiture of commercial leases by landlords for non-payment of rent are also common.

Many of these measures are tenant-friendly. Given the current soft market conditions, tenants are arguably in a stronger negotiating position in many markets, says Kelly.

This had led to some concerns about the position of landlords. One of the issues raised by the various measures introduced to support companies through the crisis is that they have frequently involved direct financial support to tenants, or a prohibition on landlord enforcement mechanisms for collecting rent.

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