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27 February 2017

Fit for business: property, health and wellbeing

Gone are the buckwheat smoothies, activated almonds, dry Januaries and morning jogs into the office. Exhale: the New Year health kick is subsiding and the queue for the office shower is better for it. For most of us, healthiness comes in waves. But in 2016 ‘wellness’ was obdurate as the buzziest of buzz-words in the property industry, so it’s timely to ask whether it will last longer for our built environment than for most of our post-holiday efforts.

It’s estimated that the average person in the UK spends 90% of their time indoors, so it seems likely that the built environment could have a large effect on an individual’s wellbeing and it should come as no surprise that wellbeing is a current focus in the real estate industry. Matters that can affect wellbeing can include air, light and water as well as nutrition, exercise and mental wellbeing – all of which is increasingly on the corporate radar, given the potential impact on staff productivity, retention and a better culture within a business.

Buildings and wellness

Whilst some of these aspects will be down to the way in which occupiers use the space provided to them (e.g. in their fit-out or certain HR policies), it is clear that other key aspects will be inherent in the built environment itself.  The built environment can provide high air quality, access to natural light, purified water, green roofs or walls, or the ability for individuals to control their environment locally such as by opening windows or controlling the temperature of the air conditioning. There are new standards for measuring these benefits, such as the WELL Building Standard, which has now been awarded to a first European property: engineer Cundall’s One Carter Lane in central London.

It’s not just the building itself that can have a positive or negative effect on wellbeing; the building’s surroundings as a whole can have an impact. Relevant questions to consider include: are there external public realm spaces that can be used by occupiers? Does the local retail offering provide some healthy choices of food? Do the materials used in construction enable the premises to pass the air quality test? Can a tenant who is concerned to enhance wellbeing build flexibility into its lease to allow it to carry out alterations which will assist, such as installing water filters or internal staircases between floors? Conversely, if a developer has built a product certified for its wellbeing credentials, can its leases exert enough control over its occupiers to ensure that one tenant of a multi-let building doesn’t adversely impact on the wellbeing of other occupiers of the building?

Technology, as well as design, also plays a role. The connectedness of a building’s facilities allows companies to collect ever more data about how a building is used. This has naturally surfaced as a concern to some, because information collected in the name of wellness and productivity must still be handled securely and used responsibly.

Who's on a health kick?

Given the huge amount an average business spends on its staff costs as compared to the costs of its real estate, it is perhaps surprising that developers have shown more awareness of the importance of employee wellbeing than the occupiers themselves. Before Christmas, we released figures from our research, The New Real, into how technology is impacting real estate. The study was based on interviews and surveys with parties from across the property industry. Two thirds of developers we spoke to were aware of how technology can promote wellbeing in offices. Only one developer we spoke to had no awareness of tech’s role in supporting wellbeing, and 62 per cent of landlords could see the benefits. But only 50 per cent of occupiers responded that tech-enabled buildings could add value beyond simple factors like energy efficiency.

Adding value

A lack of awareness amongst occupiers is as much of an opportunity for developers as it is a concern. More occupiers will no doubt soon start to factor wellbeing this in to their choice of premises. It’s intuitive that wellness has an inherent value to businesses through better productivity, retaining staff and attracting talent. The benefits are increasingly measurable, with the WELL Building Standard, and the broader demographic shift to employing millennials who are keen to integrate and rebalance work and play with a healthy lifestyle.

This may in turn have an impact on speed of lettings and possibly on rental values. Ultimately the value of real estate for developers and investors is in a successful occupier who is prepared to stay longer and pay a higher rent. Successful businesses may find that enhanced employee wellbeing, leading to reduced absenteeism and a greater ability to attract talent, may mean they are willing to pay more for that space, or at least select it in preference to other available options. Only time will tell, but many developers we work with are clearly starting to cater for occupiers who want to prioritise the health and wellbeing of their staff.

Inevitably, there are potential legal issues which may arise out of this drive for enhanced wellbeing in real estate. Some of these are outlined above, others may be: problems with dealing with data collected on the occupiers to better understand their use of the building; implications for landlord and tenant relationships, employment and HR issues.

So, will it last longer than our own concerted health drives in 2017? I wouldn’t bet against it as leading corporates become more ambitious about how they use their premises to attract staff and get the best out of them. Ultimately it’s an issue that cuts across property, HR and technology. These are emerging areas of collaboration.

Clarity will be critical to giving business the confidence to start adapting their facilities and rolling out new policies, so we’ll be bringing out a series of articles throughout the year to explore how property’s health drive shapes the relationship between these different groups.


This article was written by Sarah Morley, for more information please contact Sarah on +44 (0)20 7427 6428 or sarah.morley@crsblaw.com

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