The WELL Building Standard™, and other building related health and wellness features can generate substantial physical, mental, and social health benefits for building occupants, as well as substantial financial benefits to their employers. This December 2017 article updates and expands the methodology originally published by the Corporate Real Estate Journal in 2014 for sustainability investments to the WELL Building Standard and related healthy building investments.
The emergence of the healthy buildings movement, and innovations in building related health science, technology, and measurement, have propelled health and wellness decisions into the C-Suite. Healthy building investment can serve as a foundation to other company health and wellness investments, and be an important part of a company’s overall plan to recruit and retain employees.
Importantly, as this paper demonstrates, not only can healthy building investments create financial benefits, such benefits can be calculated and presented using traditional financial analysis techniques.
You can read the full article here.
Financial Support for Sustainability & WELL May 2017 is a 22-page document that summarizes and cites key research supporting the determination of key assumptions that drive the financial performance of healthy property investments including: productivity increase percent, absenteeism, turnover rates, etc. The document is designed to enable users to easily access, filter, and conduct their own due diligence on the conclusions of research and its applicability to their specific project or portfolio investment. This is a living document and will be supplemented with additional research over time.
Property Health and Wellness ROI Model, WELL Building Standard for New and Existing Office Buildings, Model Documentation: This is a 20-page description and explanation of the assumptions and operation of the ROI Model.
Property Health and Wellness ROI Model, Excel Spreadsheet: This Excel Spreadsheet presents an illustrative hypothetical analysis of a financial institution investment in a WELL New and Existing Building certification on a 200,000 square foot office building. The model shows a sensitivity analysis looking at financial results at 0.5% productivity increase, 1.5% productivity increase, and 2.5% productivity increase. Returns at the 0.5% productivity increase were over 250%, and at an assumed 2.5% productivity increase over 750%—showing the financial power of property investments in people. A summary pdf showing all the results and a pdf of the base case 1.5% productivity increase are available here.
Please contact Scott Muldavin at smuldavin@muldavin.com if you would like the original word documents or excel spreadsheets.
Value Beyond Cost Savings: How to Underwrite Sustainable Properties (Book)
Mr. Muldavin’s 2010 book: Value Beyond Cost Savings: How to Underwrite Sustainable Properties was the first to detail how investors and occupants can integrate value and risk into sustainable property decisions to enable companies to provide the financial support necessary to maximize the deep energy efficiency and renewable investments necessary to meet societal imperatives to reduce carbon emissions.
An Executive Summary of the book can be downloaded for free here.
The 330-page book is available for free download here.
If you would like a copy of the hard copy book please send $25.00 by check or cash to Scott Muldavin, 44 Waterside Circle, San Rafael, CA 94903 and a book will be mailed to you.
The published book is a shorter version—using the exact same headings—of a longer book that can be downloaded separately in six chapters:
Chapter I: Introduction
Chapter II: Sustainable Property Investment Decisions
Chapter III: Existing Property Sustainability
Chapter IV. Sustainable Property Performance
Chapter V. Sustainable Property Financial Analysis
Chapter VI. Sustainable Property Underwriting Guidelines
Three Principles for Applying Market Research, Excerpt from Value Beyond Cost Savings, 2010
This document is an 18-page excerpt from Value Beyond Cost Savings that specifically looks at the principles of applied market research in evaluating sustainability research—but is generally applicable to many fields. The document can be downloaded for free here.
For an educational illustration of the application of these principles to a specific early-on sustainability research see the study: “Quantifying Green Value: Assessing the Applicability of CoStar Studies” which is available for free download here.
How to Calculate and Present Deep Retrofit Value for Occupants (2014) and Investors (2015) (Practice Guides)
Mr. Muldavin completed two practice guides while working with Rocky Mountain Institute that provide significant detail on the methodology for calculating the financial performance of sustainability investment (including health and wellness benefits) and evaluating related risks.
There are two separate practice guides—one for owner occupants, and the other for investors—that are available for free download. The links and a bit of background on them are presented below. You may download the documents and use them in any way you would like.
- In “How to Calculate and Present Deep Retrofit Value for Owner-Occupants” (2014) we demonstrate how including all the benefits of a Deep Retrofit with 50% energy savings moves the Net Present Value from a negative $ 2.25 million, when only energy cost savings are evaluated, to a positive $3.4 to $16.8 million. Simple rate of return moves from 7.5% to a range of 25% to 50%, well exceeding most corporate equity hurdle rates. A free copy of the report can be downloaded here.
- In “How to Calculate and Present Deep Retrofit Value for Investors” (2015) the financial results are no less impressive, with internal rates of return moving from a negative 16% to a positive 20%—substantially exceeding most investor equity hurdle rates. A free copy of the report can be downloaded here.
The Owner Occupant practice guide is directly applicable to corporate real estate decisions and provides a clear methodology for evaluating potential health and related productivity and recruiting/retention benefits which can be helpful in evaluating WELL Building Standard decisions.
Capturing the Full Value, IPE Real Estate, November/December 2015
This article describes how investors can prosper when they treat sustainability as an integral part of real estate asset value. The article can be downloaded here.
The Missing Link: Transforming Deep Retrofits into Financial Assets, Corporate Real Estate Journal, Volume 3, Number 3, Spring 2014.
This article describes how to calculate all of the value created by deep retrofits, radically changing the value proposition of deep retrofits for corporations. Specific detail on calculating health, productivity, and recruiting and retention benefits is included. The article can be downloaded here.
The New Calculus: Technology + Energy + Real Estate, Urban Land Institute, 2013
This article summarizes ten guiding principles for underwriting and valuing the sustainability component of real estate investments. It is available for free download here.
Ten Principles for Sustainable Property Underwriting and Valuation, Royal Institute of Chartered Surveyors, Property World, Fall 2009
This article describes how to calculate all of the value created by deep retrofits, radically changing the value proposition of deep retrofits for corporations. Specific detail on calculating health, productivity, and recruiting and retention benefits is included. The article can be downloaded here.
