New global study finds Covid-19 accelerating investments in “healthy buildings”

A new survey of many of the world’s leading real estate investors finds that 92 per cent of respondents expect demand for healthy buildings to grow in the next three years, a compelling signal of the direction the real estate sector is heading. 

This finding, among others, is captured in a report titled “A New Investor Consensus: The Rising Demand for Healthy Buildings” – a comprehensive health and wellness study of global real estate investment managers and stakeholders representing aggregate AUM of USD5.75 trillion and portfolio investments in real estate totaling approximately USD1.03 trillion – which can be downloaded here.
 
Coordinated by the United Nations Environment Programme Finance Initiative (UNEP FI), the Center for Active Design (CfAD), and BentallGreenOak (BGO), the study defines healthy buildings as those optimised for occupant health and safety through a mix of siting, design and operational strategies that measurably improve physical, social and mental health indicators.
 
The report reveals that Covid-19 has elevated the importance of health in investment decision-making, with 89.5 per cent of respondents signalling their intent to enhance their wellness-related asset management strategies in the coming year. The need for healthy buildings has been steadily rising over the last decade, with nearly 70 per cent of respondents indicating that they were seeing increased demand prior to the pandemic.
 
The report highlights an increasing investor awareness of the importance of health and well-being to their environmental, social and governance (ESG) strategies and the link between building design and function, and personal and societal health and wellness. This has given rise to a more concerted focus on the “S,” or social component of ESG, which has traditionally lagged behind the more well-defined environmental and governance pillars. Currently, only 53 percent of respondents report that they incorporate health and wellness into their ESG strategies to a great extent and 42 per cent note that they have begun to do so, leaving significant room for growth.
 
“Responsible real estate investors have awakened to the notion that the buildings we manage for our clients are part of the critical infrastructure that cities will rely on for the resilience, health and well-being of their citizens,” says Amy Price, president of BGO. “Where excellence in environmental performance has rightly become a more common pursuit for our industry, our fiduciary responsibilities are increasingly taking us into new territory that requires attention to the multitude of social factors that impact asset value. Our collective experience with the first modern pandemic in our lifetimes is teaching us how closely tied investment performance is to operational excellence, tenant engagement and community relationships.”
 
Joanna Frank, president and CEO of CfAD and its Fitwel certification system, adds: “This study quantifies for the first time the extent to which the industry is focusing on health and wellness in ESG investment strategies. We expected the findings to demonstrate strong demand for healthy buildings, especially given the pandemic, but it also points out the lack of consistency around measuring and reporting the impacts of these initiatives. There’s a clear case for standardising benchmarks to track performance. Certifications like Fitwel can provide a framework, but we need to keep pushing for broad adoption so that we can track the measurable impacts.”
 
Eric Usher, Head of UNEP FI, says: “We know from our members that there is broad consensus for finance actors to think holistically about the impacts they are creating through their capital allocation decisions, and that attention to societal goods is part of the value creation process for enterprises and real assets. This study confirms that health and wellness is now firmly part of that social agenda and must affect how real estate is designed and managed.”