Reimagining the Future of Office Spaces: Sustainability and Wellness
Commercial real estate markets are undergoing structural shifts, with greater emphasis being placed on the role the office plays in attracting and nurturing the best talent.
Commercial real estate markets are undergoing structural shifts, with greater emphasis being placed on the role the office plays in attracting and nurturing the best talent. Historically this meant that large international corporates wanted to be located in amenity-rich office spaces that offered a variety of F&B options, gyms, and even sufficient parking spaces and easy access to public transport.
Today, and considering the growing competition from flexible workplaces and changes in the way we do business (with work from home / anywhere initiatives becoming more common), occupiers are prioritizing the well-being of their staff even further, while also considering the implications to our environment (studies indicate that the built sector is responsible for more than 40% of the world’s Green House Gas emissions). In turn, landlords are finding the need to adapt to these requirements to attract and retain tenants, and ultimately ensure their building outperforms the market.
To illustrate how informed developers are paying increased attention to these factors, we provide examples from ICD Brookfield Place in the Dubai International Financial Center (DIFC), which has been designed with sustainability and wellness in mind.
Corporate and investor demand driving sustainable practices
The drive for more sustainable buildings is coming squarely from tenants, with a major change of mindset occurring over the past few years. A total of 900 global corporates have signed up to science-based targets (SBT’s) to reduce their carbon emissions in line with the terms of the Paris agreement on climate action (that aims to limit increases in global warming to less than 1.5% of pre-industrial levels). Some corporates have gone even further, announcing plans to become net-zero carbon by 2030. In simple terms, these companies are committing to remove as much carbon as they emit into the atmosphere.
From an investor perspective, and based on evidence from more mature markets such as London, Zero-carbon office buildings can achieve a value premium of up to 25% over less sustainable spaces. This is due to rental premiums, lower vacancy voids, and tighter yields. As a result, investors are now following occupier trends in attaching far greater importance to sustainability.
In our 2019 Investor Survey, only 7% of respondents identified climate change and sustainability as having a major impact on future values, with this figure increasing to almost 70% in our latest survey (conducted in January 2020). This same survey revealed that more than 65% of investors were seeking to act on this trend by increasing their exposure to sustainable assets.
While sustainable buildings still cost more to build, the additional costs are reducing and will continue to fall as sustainability becomes more mainstream. Based on research in the London market (where there are 370 BREAM rated office buildings) we estimate the additional costs associated with achieving an outstanding or excellent rating are in the order of 5%. This is already below the additional uplift in potential values (up to 25%) that can be expected from more sustainable buildings. Sustainable buildings can also achieve savings in finance costs, with several UK investment funds offering revolving credit facilities on preferential interest rates for more sustainable buildings as part of their own CSR strategy.
Increased focus on wellness
The global war for talent has driven corporates to increasingly consider the human experience and staff wellbeing as major factors in their selection of office space. The global WELL Building Standard™, launched back in 2014, is the first global rating system focused exclusively on the ways that buildings can improve our comfort, drive better choices, and generally enhance health and wellness.
While the uptake of the WELL building standard in the Middle East has been limited to date, this number is expected to increase rapidly in future years as owners seek to establish a means of demonstrating the competitive advantage of their projects to more health-conscious occupiers. ICD Brookfield is currently at the forefront of this, with several measures adopted to ensure the wellness of their space.
Air Quality. ICD Brookfield Place has increased fresh air by more than 30% above the ASHRAE requirements and significantly above local standards, with UV light technology incorporated in the HVAC system to prevent the transmission of bacterial and viral infections. Smart building sensors have been installed throughout the tower to monitor air quality. The use of high-quality non-toxic paints, materials, and adhesives and the green cleaning policy also contributes to a healthy indoor environment.
Water. Bathrooms within ICD Brookfield Place use 48% less water than the industry baseline and the water requirement for irrigation has been reduced by 60% due to the selection of low water demand plant species. In addition, the irrigation across the project utilizes recycled condensate water from the air conditioning system, therefore the building does not draw water from the municipal water supplies for the extensive landscaping across the project.
Community, movement and mind. A total of four acres of amenity spaces have been incorporated into the project to encourage people to meet, share, and collaborate. This includes a total of 140,000 sq ft of green space, promoting better mental health and reducing the risk of cardiovascular disease. The project includes a 31-meter-high civic space that will be used to host an award-winning arts and events program. The project also includes a community hub space that will host a vibrant and exciting calendar of workshops and classes designed for those who work and live in the DIFC, with a specific commitment to promoting mental health education.
Innovations. The innovative features of the project include a touch-free entry system allowing tenants to enter the building and travel to their office floor without once touching any surfaces. The project also includes a BIM-based facilities management platform that provides a common data environment for all relevant types of assets information, achieved by real-time integration of the Asset Information Model and the CAFM system.
As commercial spaces are reimagined, greater focus will be placed on the health and wellbeing of tenants. Buildings that can demonstrate how they contribute to (rather than detract from) the wellbeing of their tenants, will emerge as the winners in what is likely to remain an extremely competitive environment.