ULI UK Picture of Health Report 2019: an overview

The Urban Land Institute (ULI) UK’s new report offers insight into the growing role of wellbeing in commercial real estate investment decision-making. Here, we unpick the detail… 

Context

The research was released by the ULI UK Sustainability Forum to highlight the rise of wellbeing investment in commercial buildings.  This report summarises the conclusions of research carried out by ULI UK that looks at how different parts of the real estate industry are factoring health and wellbeing into their investment decisions. It is the first time that a comprehensive survey of leading property experts has been carried out to understand how health and wellbeing is influencing investment decisions across the real estate industry.

The report focuses on survey responses and interviews with more than 100 investors, developers, fund managers, consultants, valuers and analysts.

The research also included five case studies to demonstrate many of the ideas currently being incorporated by tenants and building owners. The case studies include:

• 22 Bishopsgate, London
• Broadgate, London
• Hilson Moran Manchester
• EDGE Olympic, Amsterdam
• ARP-Astrance, Avenue Percier, Paris

Drivers For Wellbeing

The research shows that many of the drivers of health and wellbeing crossover with the wider trends affecting real estate.

• One of the overriding messages is that the customer is king, not the investor. The need for wellbeing changes has come from the bottom up. In particular, tenants of buildings are actively asking landlords what they are doing in terms of health and being.  As a result, investors need more education in terms of wellbeing.
• Recruitment is a driver for changes in wellbeing. The environment into which organisations are trying to attract and retain talent has become of crucial importance. This means providing the best environment for employees to be at their best.
• The culture and environment, including its wellbeing credentials, are now part of an employee’s benefits package. People (ie, employeers) have higher expectations about how the workplace will take greater responsibility for their wellbeing and their life at work.
• Wellbeing is important in attracting younger talent into the workplace. High profile companies such as Facebook and Google have started to address wellbeing as part of their offering to attract talent, but the trend is filtering down to mainstream offices, particularly for companies that want to attract younger talent. It’s not just about having a salary and a lease car; millennials are more interested in what the employer does to help them live their life better.
• Wellbeing is equally important for retaining staff. The workspace now has to contribute to the more holistic strategy of what makes staff happier – and therefore more productive. “There is a better understanding that productivity is not just how many tasks you can complete,” said one interviewee. “Wellness is about being engaged and creative, you’ve got to take a more human-centric view of this.

Survey Results

The survey that formed part of the ULI’s research looked at what factors were seen as important to respondents as well as what was currently driving real estate owners and managers to adapt their practices around wellness.

For those surveyed, wellbeing investment is mainly influencing decision-making in the areas of design, fit-out, and development stages.

It is important to understand what is meant by health and wellbeing. For this study, the following definition was used:

Health and wellbeing is the provision of an urban environment that minimises the occurrences of ill health or disease and supports a feeling of physical, emotional, and psychological wellness.

How survey respondents rated different factors for health and wellbeing

• 66% rated it as a very important part of corporate/company policy
• 63% ranked wellness as being very important for business competitiveness
• 53% ranked tenant demand as a very important factor for investing in wellness
• 43% ranked it as very important in having a positive impact on building values and attracting retaining new tenants
• 37% ranked investor demand as a very important factor
• 29% ranked it as a very important factor in being able to increase rents
• 22% ranked reporting wellness to investors/shareholders as a very important factor

The results reflect the growing awareness of the important contribution wellness is expected to make to company strategy going forward whilst reinforcing the view that it is those occupying the building rather than the investors that are leading the trend.

With the interest in wellbeing increasing in different parts of the real estate industry, this research also looks how this is affecting levels of investment and how players are incorporating wellbeing into their projects. The results of the ULI survey indicate that the wave of interest in wellbeing is expected to translate into significant investment over the next three years

Expected increase in investment in health and wellbeing in the next three years

• 17% increase significantly
• 69.3% increase somewhat
• 10.3% stay the same
• 3.4% decrease somewhat

A key question in the survey is as follows: Given that much of wellbeing is about changing the behaviour of those in the building, is it the responsibility of the landlords or the occupiers or both?

Levels of influence health and wellbeing is currently having in the following areas

• 51% Design
• 38% Fit Out
• 37% Marketing
• 36% Development

Levels of influence health and wellbeing will have in the next three to five years

• 58% Design
• 52% Marketing
• 52% Fit Out

Conclusion

These results indicate that the message of wellbeing is as important as delivery.

Lighting & Building Services

According to the survey, for tenants, the most popular (wellbeing) investments/ changes are around the impact of acoustics and lighting. Specifically, the use of circadian lighting or putting lighting control in the hands of users, (if natural light is not available) –  other measures include deploying biophilia across the space, and ensuring more natural materials in furnishings.

Apps that put the controls for lighting and heating in the hands of employees were also cited in the report; just having individual control is as an seen improvement to their wellbeing. With these apps also tracking meeting room space and looking for unassigned workspace, they can also input into how the building is being used, maybe weeding out less conducive spaces.

Other Notes of Interest

Certification and technology are becoming more popular in the bid to offer healthier spaces.

While incorporating wellbeing is seen as much easier in newer buildings, many interviewees were hopeful this trend could help rejuvenate older buildings. In fact, the character and structure of some older high- quality buildings were noted as playing into the hands of wellness needs.

While all the interviews indicated positive support for incorporating wellness, one challenge that needed to be overcome was the ability to measure the success of any initiatives. One approach to measurement has been the emerging field of wellness certificates. These were in general welcomed, but some felt they encouraged “teach to the test”, which could result in “reducing it to the tick box and nothing to do with operations. Others appreciated the ongoing nature of the wellness certificates such as the WELL programme. “What’s interesting with wellness [is] that unlike sustainability certificates, they require continuous updating so they are actually looking at buildings in a more dynamic way. You can’t be complacent and do an intervention and then walk away from it.”

Technology to make buildings smart – whether about the bricks and mortar or how people are using the building – looks to be an important next step, particularly for on-the-ground operations.

While initiatives for wellbeing are being rolled out, a concrete investment case for incorporating these changes does not yet exist, according to interviewees. “The hard and fast commercials aren’t there yet, but there is lots of anecdotal evidence around these places performing better over the long term,” says one interviewee from a property company.