What is the financial effect of healthy buildings?

Buildings with clean air, plenty of natural sunlight and other factors that contribute to healthy premises have become even more important to companies that are currently trying to make employees return to the office as an alternative to a flexible working life with working from home and flexible workspace.

While the benefits of healthy spaces have long been understood and appreciated in terms of their qualitative value, their financial value and impact on economic decision-making have not previously been analysed.

In a new study from MIT in Boston, researchers ascertain the value of healthy spaces on the effective rent of office spaces by using public databases to operationalise a hedonic price model in ten cities in the United States.

The conclusion in the US study is that rent levels for healthy buildings are between 4.4% and 7.7% higher per m² relative to comparable non-certified buildings.

Health premium, well-being and productivity

This ‘premium’ is independent of all other factors, for example whether the building is certified in relation to sustainability, building age, renovation status, security of tenure, lease duration and the tenant’s creditworthiness. The findings indicate that healthy buildings are seen as an asset that improves employee or tenant well-being and productivity.

We are facing worrying global health trends. Even though people live longer, many live less healthily and lead more stressful lives. By 2030, 52 million people will die from chronic diseases caused by a poor lifestyle, according to the WHO. That is five times higher than the deaths caused by infectious diseases.

In view of these problems, the impacts of the building environment have become an increasingly important factor in improving our living conditions, given that, on average, citizens in the Western world spend 90% of their time indoors and a significant proportion thereof in the workplace.

“We’ve obviously been aware that there is a real value for companies that invest in employee health. We have long taken this into consideration when working with tenant representation. The US study from MIT confirms that, in addition to improved well-being and productivity, there is also a financial value. Having said that, a very large number of international companies look at the bottom line and the price per headcount rather than the price per m2,” says Helle Nielsen Ziersen from EDC International Poul Erik Bech and continues:

“But the coronavirus pandemic has put renewed focus on healthy buildings for both companies and employees, business owners and other decision-makers attach greater value to healthy buildings than previously. This is something we can feel here in our International Department, where more and more of our customers focus on good conditions for their employees, as happy and satisfied employees also perform better. International companies give great priority to making their employees as efficient as possible. As with sustainability and other megatrends in the real property industry, such a trend often first makes itself felt internationally, after which it spreads to the capital as well as other large cities, and then the rest of the country. We also clearly expect this to happen in this case.”

The health factors may concern both visible measures such as handless operation of lifts, coffee machines, taps, opening and closing of doors and windows and non-visible measures such as better cleaning and circulation of air than previously.

How are healthy premises defined?

The World Health Organization (WHO) defines healthy premises as a space that supports the physical, mental and social health and well-being of people.

The interest in a more holistic approach to properties is implemented in a wide range of different design strategies and certifications. While research has been conducted into the potential financial effects of, for example, smart and green measures, there is very little research into the effects of certified healthy properties.