Why healthy buildings matter

Healthy buildings are now a vital part of investors’ ESG and value-creation strategies, and demand is here to stay, says Joanna Frank, president and chief executive of the Center for Active Design.

health investing

We know from a century of public health research that there is a profound connection between the physical realities of our communities and public health outcomes. The Center for Active Design (CfAD) stands at the nexus of this critical movement. Our work translates an ever-growing database of more than 5,600 academic studies into resources that promote healthy, engaged communities at scale.

Our flagship is Fitwel®, the world’s leading healthy building certification, developed by the US Centers for Disease Control and Prevention and the US General Services Administration, and is now in use in more than 50 countries. Fitwel provides the real estate community with a platform to evaluate health impacts within assets, generating measurable and quantifiable results.

Demand is rising

The business case for healthy buildings is growing. Global capital flowing into ESG investments offers an important leading indicator, and certified healthy buildings have already been shown to garner rental premiums.

A recent study by the Massachusetts Institute of Technology found that commercial properties with healthy building certifications from 2016 and 2020 boast rents that are by 4-7 percent greater per square foot than uncertified buildings. Another study by the Canada Green Building Council revealed that 46 percent of respondents reported leasing their healthy buildings more quickly than their spaces that did not have certifications.
Covid-19 has dramatically accelerated the healthy building movement.

The pandemic has amplified tenant, owner and investor interest, ensuring health will remain a major theme – in real state and in our daily lives – for years to come. When comparing 2020 with 2021, Fitwel’s certified projects grew by 248 percent. This increase shows the real estate industry is being proactive to meet the current demand.

“Certified healthy buildings have already been shown to garner rental premiums”

A report titled A New Investor Consensus: The Rising Demand for Healthy Buildings, which was funded and researched by CfAD, BentallGreenOak, and the UN Environment Programme Finance Initiative, found that 92 percent of investors that participated in the survey expect the demand for healthy buildings to rise within the next three years.

How to meet demand

The real estate sector can meet the increased demand by deploying a variety of evidence-based strategies designed to positively impact health outcomes. The industry can broadcast its work using widely adopted ESG frameworks, documenting contributions to those issues largely ignored by traditional bottom-line analysis.

Global real estate industry leaders were already beginning to track some health and wellness outcomes prior to covid-19. The pandemic has accelerated this tracking in response to the rising demand for consistent health and wellness metrics across the industry. The New Investor Consensus report found that 53 percent of respondents are applying health and wellness strategies to their ESG plans and 74 percent stated that the ability to track data is crucial.

The healthy building movement is picking up momentum, with leading investors now viewing health-promoting assets as lower risk and a more stable investment, a trend that is only expected to accelerate in the coming years.