It is one of the fastest growing, most important trends in real estate.
But unless companies are actually measuring the impact of what they are doing, can they really claim to be providing it - at least to any benefit?
That’s what we’re discussing in this episode of JLL’s perspectives podcast. I’m chatting to Raefer Wallis, founder and CEO of the RESET certification for healthy buildings; Andrew Cole, General Manager of sustainability at Lendlease Funds Management Australia; and Matthew Clifford, JLL’s head of energy and sustainability services across Asia Pacific.
I’m Rebecca Kent
Rebecca Kent
Raefer, first things first: if I'm in the office feeling lethargic, and my concentration is lapsing, can I blame the air quality or the condition of the building for that?
Raefer Wallis
There's always so much that can be blamed. Not the least maybe the drink from the night before, or the type of work that's being worked on. But what we're always saying is that without any data, it's just somebody else's opinion. So before blaming the air quality, which is all too often at the top of list, I'd lean over to the data and have a check first, see if it is the reason I'm feeling lethargic before I blame it.
Rebecca Kent
So what am I looking for in the data, then? And by the way, of course, it's never what I had to drink the night before.
Raefer Wallis
You're obviously looking for very high co2 levels. But there's other factors that can create that feeling. VOC concentrations surely don't help. And high particulate matter concentrations will affect the immune system, affect the ability for the body to function. So, three key parameters there. And of course, if it's too hot, or too cold, or too humid, those are definitely not going to help either. So you’re wanting to check that all those parameters are in the sweet spot for human comfort, productivity and health.
Rebecca Kent
What makes you an expert then, Raefer? Tell us about your background.
Raefer Wallis
I'm a recovering architect, who used to specialise in healthy buildings and sustainability. And back in the early 2000s, I just got incredibly frustrated by specifying a whole wealth of low certified low-VOC materials and still failing our projects. And then, in 2005, getting into air quality monitoring to look for cause and effect, I was trying to figure out why we were failing. In the process, I stumbled across PM10s (PM2.5 did not exist as a measure at the time) and stumbled across VOCs, and the temperature/humidity effects. And a very long story short, that took us into creating RESET, which is the world's first standard for measuring the health performance of buildings in real time using commercial IoT devices.
Rebecca Kent
For the uninitiated, could you explain those acronyms, you just used, please? So, VOC?
Raefer Wallis
volatile organic compounds. So chemical gases that typically come from the building materials that we use - most often formaldehyde, the one people would be most familiar with. But there's a whole bunch of other fun ones: xylene toluene, benzene. That last one being particularly nasty. I’m also on the lookout for those from cleaning products, clothes that you wear, building samples that make it into spaces, magazines, you name it.
Rebecca Kent
And PM10s. I think you refer to?
Raefer Wallis
PM10s. Yeah, I'm sorry about that. So, particulate matter. PM dust comes in all ranges and sizes from the size that you can see, all the way down to the invisible. So PM10 is just particulate matter of 10 microns in size. That was the former rock star. Now it's PM2.5. A quarter of that. That one became the new rock star several years ago because it's the size at which the particle matter the dust enters the bloodstream. But there's a much broader and interesting range of particles out there going from PM0.1 all the way upwards.
Rebecca Kent
Excellent. If we can substitute them for Rockstar One and Rockstar Two, this could be a fun Interview!
I imagine, since COVID-19, you’ve been busier than usual talking to landlords and other businesses about the quality of air in buildings?
Raefer Wallis
It's been it's been absolutely insane. I often say that in Asia, this is our fifth health crisis. The fourth one that's national, the first one starting in 2003. So over the course of 17-18 years, you learn a lot and you figure things out along the way. And Asia has been particularly advanced on this front.
Now we're watching the rest of the world - we've been doing projects in Europe, North America, India. We're watching the rest of the world try to catch up so to squeeze 17 years of learning curve into three to six months and it’s been a bit of a brutal awakening for most people and a very steep learning curve.
Rebecca Kent
Andrew, air quality comes under the sustainability banner of real estate, which I guess you could break down into two buckets: green sustainability - so green buildings, energy efficiency, for example. And health and wellness. Is that more or less in line with how you operate?
Andrew Cole
Yeah, I think that's right. We would look at how do buildings play a critical role in delivering environmental and social value alongside good financial outcomes. And that premise that environmentally, as well as buildings that deliver social value, in greater connected communities, better indoor environment quality, and human health and wellness benefits, there is an emerging belief that that these assets themselves actually deliver long-term risk adjusted returns, and make good financial sense.
Rebecca Kent
Andrew, tell us about yourself so we can better understand your perspective.
Andrew Cole
I have the privilege of leading our sustainability strategy, and applying that strategy to portfolios of real assets here in Australia for Lendlease. We have a number of portfolios that sit across both workplace and office, plus retail and industrial.
I really work with our teams to integrate sustainability, environmental and social governance criteria into our investment processes, as well as then work with our property management and operations team to integrate those strategies into the operations of those buildings. I get to work very closely with our important customers, being our tenants, as well as our third party capital providers who invest in these fund vehicles.
What we're seeing is that environmental and social impact are key drivers for both of those customer bases: tenants and investors.
I don't believe a healthier planet, and healthier people outcomes are necessarily exclusive buckets of outcomes. Healthier outcomes for the planet were the key focus of the building certification movement, which goes back more than two decades. And there's maturity of those rating tools in North America, here locally in Australia, in Europe, and in many parts of Asia.
And I think what we've found and what we've learned as an industry, and as a sector, is that the attributes of a building that drive really good energy efficiency, like good access to natural light, great air handling, and HVAC or air conditioning systems in buildings, also are delivering positive impacts to the occupants that occupy those spaces.
I think what's important, as you transition the attributes of the delivery of a building, is we have a lot more maturity in measuring our ongoing energy efficiency, because that supports a lower cost of operating any building. But we can't manage what we don't measure around the indoor environment qualities that we have.
And I think one of the things that we've noticed is that there's really strong partnerships that are required across the real estate value chain, to better measure the spaces that we provide.
Rebecca Kent
Matt, you work with companies all around the world - corporations, developers, investors, and the government to help them optimise their sustainability performance as well as achieve a greater return on their investments. Are businesses approaching sustainability, including wellness, the right way?
Matthew Clifford
I kind of zoom back out and look at the sustainability story for buildings in a similar way to how we're now talking about healthy buildings and wellness in that a lot of what organisations have done is started with a strategy of, 'let's do less bad'.
So when we're talking about that from a sustainability perspective, that might be 'I'll reduce my energy consumption, I'll reduce my waste production, I'll reduce those negative impacts'. And then gradually over time those strategies mature, and they become less about doing less bad, to becoming gradually do more good or hopefully do only good as in having a positive environmental impact on the real estate form and whatnot.
And you can track that same trajectory from a healthy buildings perspective, where through some of the elements that Raefer's been talking about earlier around dealing with pollution - obviously COVID is a massive topic on everybody's radar right now - is let's protect people let's make sure that we take away as many of those negative impacts. But I think the industry is also really ready for a conversation around what role can buildings play in improving health outcomes and improving those places that we want to live and play and work. So that ‘do less bad, do more good, do only good’, storyline, follows through the both sides there.
Rebecca Kent
Thank you, Matt. Raefer, in terms of tracking sustainability and efficiency and wellness, there’s so much personal tech we have access to now. You can monitor air quality on your phone, or your stress level on your wrist. If organisations aren’t tracking, then people will be, right?
Raefer Wallis
Yes. And we've seen that for years in Asia, where it's put a lot of pressure on ... it's been both a sort of a positive and negative pressure piece. Especially in places like schools where in the early years - the 2013s and so on, where parents were putting air quality monitors in their kids' backpack, and following the data remotely, to ensure that the teachers were actually doing their job, and the schools were actually doing their jobs. And as you can imagine that created a lot of tension between the building operators and the stakeholders.
Matthew Clifford
I was just going to share a quick story on that. A client, which will remain nameless, came to us and said, 'hey, our staff in our Beijing office have been to coming into work with these little hundred-dollar air quality monitors that they bought online and they're telling us that the air quality is bad in the office, what should we do?'
And my immediate reaction was, 'well, what do your monitors say? Hopefully you've installed some appropriate monitors that are installed correctly and have been calibrated correctly'. And they said, 'oh no, we didn't do that, because it was going to cost us X-thousand dollars to install monitors correctly'. I said, 'well, you've already lost control of the narrative. And you've possibly lost control of the of the air quality problem'. What risk do you run if that employee says, 'well, I'm investing in this tech. Whether it's accurate or not remains to be seen in that respect, but my employer does not care. Maybe I'll go and take my team, and walk down the road and go work for another organization'?
A better strategy there is for that organisation to have been on the front foot to say, 'we know that these issues are occurring. We can make these investments in our operational data tracking, in our management, so that when those questions come, we say don't rely on your little desk-side monitor. That's inaccurate. Here's the proper stuff that we've been looking at day in day out, and all the management practices that we put in place to help protect your health.' That would have been a far more positive conversation to be had than the way that it unfolded, because they were they were not prepared.
Raefer Wallis
Correct. You nailed it. And as more data comes into real estate, and we get to see a lot of the underbelly of pieces, those examples go further, such as lawsuits for stakeholders, where people, occupants, within the buildings have more data than the building owner. That's not a position that anyone wants to find themselves.
Actually the RESET core and shell standard was set up in response to that. To a tenant case where a user had more data than the building owner and eventually figuring out that the building was actually fine in this particular case, but wanting to be able to track that in real time to ensure that those situations didn't happen again.
But where the future is going and what I'm talking about is already five or six years ago - where the future is going, we're going to be seeing the ability of people to want to plug into buildings. So have their own layer of data, but wanting to plug into the layer of data provided by the building. And I'll give it I'll give an example of that.
We've been recently working, for the past six months, on an index that allows to estimate the risk of viral transmission within buildings. And that index is based on short-term and long-term exposure to some parameters. And again, just to give a very concrete example, low humidity lowers the immune system dramatically. So it can cut the performance of your immune system in half or more, which raises the risk of getting sick by twofold. But that is only after you've been exposed to low humidity for 48 to 72 hours. And so no one's in a building for that long, at least hopefully not. They're moving between home and other places.
And so what we're starting to see next is, as you mentioned, people with wearables, who want to be able to plug into the data of a building to access historical data for the types of environmental parameters that affect their health on a more long term basis.
Rebecca Kent
So how do you measure, then the impact of say a meditation studio? How do you measure the impact of good lighting and good air quality in a building. Matt?
Matthew Clifford
Those parameters run the spectrum from very tangible to somewhat intangible when we look at them in isolation.
So you know, fresh air rates in a building are a highly tangible thing that you can measure in productivity. And there's some great research that JLL's been involved in looking at that, and what that does for overall mental alertness and whatnot, through to some of those other areas that perhaps are a little bit more subjective.
But if we think about this from a real estate perspective, and what real estate exists for, we can zoom back out and say, 'well, if we're doing those things - the combination of tangible and intangible things in unison - are we creating a place where people want to go to work, where they like being in the building, they feel productive, they feel engaged, they feel enthused? What benefits does that have in terms of how quickly you might be able to lease or sell that building? What are the returns that you get as a landlord that might own that kind of building?'
Now, some of these holistic programs using the rating schemes that have been coming out of the last five or six years have been developing buildings, which really set out to do exactly that.
It's perhaps a little too early to be able to attribute exactly those tangible benefits from a broader real estate perspective. But that's something that I think the industry is grappling with now to say, ‘well, we know that this is something that appeals to people, we know that when we do these things in buildings they tend to be the kinds of buildings that hopefully do lease up more quickly, and do attract better tenants and that sort of thing’. So the logic hopefully follows that is going to translate through to business value as much as employee health and health outcomes.
Andrew Cole
Just to add to that, if I was to steal a Matt line 'if I zoom out for a moment', I think the wellness offer from an employer's perspective is largely around the corporate culture or the culture that it's offering its people. And I think there's strong evidence to suggest that cities and employers sort of engage in a war for talent to attract and retain the very best people.
There's no question that wellness, both in terms of programs, systems, opportunities and flexibility, are a key part of that attraction and retention strategy for workplaces. And I think there's enough to suggest that that has always existed beyond just the physical workplace, because they're about the programs and the conditions of employment that are offered to people.
I think that for those early adopters of wellness programs for their employees, the COVID-19 pandemic and scenario that we find ourselves in today probably places those organisations in good stead, both from a return-to-work strategy and fixed workplace strategy, as much as the way that they have looked out for their employees over this period.
I certainly think that there will be an amplification for other sectors and for other employers to have a laser focus on wellness because it will be fundamental in their continued success and ability to employ great people.
Raefer Wallis
And the landscape around that is changing so quickly. I just noticed how since this (COVID) started, we've fielded so many questions about things like ergonomics, and just people investing in a better chair at home and things like this. And they have questions about air quality within homes. And that is a complete Pandora's box, because air quality systems within homes are really extraordinarily under par for the most part. It usually consists of opening a window being the sort of top level of management.
And now what we're seeing without question is a lot of companies who were somewhat quietly celebrating the fact that they'd be reducing their expenses by reducing their rent, who are now having to spend on mental health, mental support for the staff working from home. And that's taken a whole new turn. That’s much more grey-zone territory beyond just the physical space, and how you tap into providing remote mental health for staff.
To anyone who's listening, who hasn't started their adventure down this path, this topic, or these topics tend to be overwhelming. I think Andrew made a really good point of illustrating how blurred the lines are getting in this absolutely critical idea of shared responsibility.
There's been a lot of asks from tenants to landlords, without realising that a lot of the performance aspects of buildings and the interior spaces are as much the responsibility of the tenants as the landlords. Now, we were speaking about the deeper relationship between employers and employees in terms of home versus office, and what's the engagements and so on, those lines are getting very blurred. And in the process, that creates a lot more things to manage, many more data points to manage.
And I think at the at the end of the day, what we're seeing is that this really becomes an incredible exercise in operational management, as boring as the term as that may seem to be.
We track hundreds of buildings and spaces around the world. And it's unbelievable to see how clear the difference is between the people who have strong operational management processes in place, and those who are able to deploy solutions at the beginning. But how quickly those solutions fall apart when there is no oversight or tracking of the metrics.
Rebecca Kent
And what a note to finish on. Raefer Wallis, Andrew Cole and Matthew Clifford thank you very much for explaining why it’s so critical to measure wellness, and how important it is to achieve it as a team - if nothing else so we don’t find ourselves cramming 17 years of learning into 6 months - which does sound pretty inefficient.
All
Thank you.
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