Last week, I joined a group of colleagues at Maastricht University in the Netherlands to talk about green and healthy homes. Our host, Dr. Piet Eichholtz, Chair of the Finance Department, opened the afternoon session with a simple, but powerful observation: health and well-being is emerging as the next “big thing” for the real estate industry.
Dr. Eicholtz has an admirable track record with these predictions. More than six years ago, he helped found the Global Real Estate Sustainability Benchmark (GRESB) and, two years ago, his team won a multi-million Euro grant to investigate the contribution of Dutch schools to student performance.
At the close of the day, Dr. Eichholtz reflected on the day’s presentations and concluded that consideration for health and well-being lags at least 4 years behind broader sustainability considerations with many signs that it will rapidly close the gap. Three takeaways stood out for me:
(1) Organizations need a strategy to promote health and well-being. Lara Muller from the Blue Buildings Institute reviewed the fundamental economic proposition of health and well-being by comparing the financial returns from investment in energy, rent, and human productivity. She concluded that investments in human health, comfort, and productivity have the potential to return 10x the value of other sustainability-related issues. She focused on the observation that organizations need comprehensive and integrated strategy to realize these benefits. She argued that too many organizations mistake tactics for strategy to the detriment of performance. For example, organizations may pursue health-related building certification without sufficient recognition that certification is a tactic to promote specific types of health and well-being among targeted populations (e.g., employees, customers). This important point is too often missed by even the most sophisticated organizations.
(2) There is a gap between policy and performance monitoring. In my remarks, I shared highlights of results from the new GRESB Health & Well-being Module. This included the key observation that the majority of participating companies and funds have established formal policies for the promotion of health and well-being. However, there is a significant gap between policies and operational performance monitoring. Less than half of participating property companies reported monitoring health and well-being outcomes, and most of the monitoring is based on surveys. I focused on this disconnect, and I shared how Aclima’s advances in environmental sensing are filling this gap for major portfolio owners, including Google and the U.S. General Services Administration. Aclima’s Environmental Intelligence (Ei™) provides information needed to monitor and manage real world performance room-by-room, building-by-building, and even block-by-block.
(3) Everyone benefits from better buildings, some more than others. Finally, Dr. Erdal Aydin of Maastricht University provided a preview of results from a long-term study of the relationship between home condition and health for a large sample of German households. The preliminary analysis of this unique dataset clearly shows that the quality and condition of housing is directly correlated with self-reported health and well-being: better homes correlate with better perceptions of health and well-being. The research goes further by relating these perceptions to the number of doctor visits. The results show an increase in doctor visits across all demographic categories with stronger relationships for women and the elderly. This implies that better housing benefits everyone and it disproportionately benefits vulnerable groups.
Looking back, the day seems like an accurate reflection of the state-of-the-industry with respect to health and well-being: Research continues to reinforce our understanding of the fundamental connections between the built environment and health and well-being. Though property companies are beginning to engage, their actions are uncoordinated and performance monitoring is minimal. Overall, there is a sense that organizations must build coherent strategies to guide their actions and realize opportunities to create value and reduce risk.