Social Value in Real Estate: Bridging the Gap in ESG ‘S’ Metrics.
“Fitwel Partners, including Utopi, are applying Fitwel’s social solutions that connect social criteria with asset value. And through our platform, users can access insights and leverage trusted data to drive market transformation and ensure a healthier, more equitable future.”
[Joanna Frank, President & CEO Center for Active Design]
In the evolving landscape of Environmental, Social, and Governance (ESG) considerations, it will come as no surprise to know there has been a prevalent focus on the 'E' (Environmental) aspect, overshadowing the equally critical 'S' (Social) factor. While environmental sustainability is undoubtedly crucial, it's important we shed light on the social implications of real estate, questioning whether we are truly ‘socialising’ those realities in the pursuit of creating sustainable communities.
Understanding the Social Value Paradigm.
Social value in real estate encompasses a broad spectrum of factors, from community well-being and inclusivity to tenant satisfaction and overall quality of life. This includes not only the physical health of residents but also their mental and social well-being. However, the challenge lies in quantifying and measuring these often intangible aspects, and knowing when to focus on these social areas for maximum impact.
In recent years there has been an onslaught of new smart technologies aiding investors, operators and asset managers in this very area. Things like resident apps to drive community and relationship building, sensors to enhance operational efficiencies; but when it comes to the ‘S’ in ESG it should be part of the conversation as early as deciding where an asset should be built.
Health Drives Value in Real Estate, a publication created by the Center for Active Design (operator of Fitwel) and QuadReal Property Group, serves as a valuable resource in unveiling the nuanced dynamics of social value in real estate. The report analyses over 60 QuadReal properties, delving into resident behaviours and shedding light on the impact of the built environment on their daily lives – emphasising that while environmental sustainability is a pivotal aspect of ESG, we must not overlook the social dimension. Socially responsible real estate practices, and in particular, evidence-based health-promoting strategies, have proven to not only positively impact the health and well-being of individuals and the surrounding community, but also add value and mitigate risk.
One key finding from the study showed a direct correlation between healthy buildings and higher Net Promoter Scores (NPS). Residents who perceive their living spaces as conducive to physical and mental health are more likely to recommend these spaces to others, thus creating a positive cycle of community growth. Get in touch to discuss how we support healthy buildings.
Quantifying the ‘S’.
Discussing the importance of ‘S’ in ESG is all very well, but to identify success, there first must be a means through which to collect, quantify and assess data. Health Drives Value in Real Estate provides us with rich data on resident behaviours and outcomes, offering a nuanced understanding of how individuals interact with their living spaces, and how the impacts the bottom-line.
Key insights include:
Community Engagement: Residents in socially vibrant communities exhibit higher satisfaction levels, fostering a sense of belonging and social connectedness.
Green Spaces and Well-being: Proximity to green spaces directly influences mental health, with residents in close proximity reporting lower stress levels and higher overall well-being.
Inclusivity Matters: Communities that embrace diversity and inclusivity witness higher tenant satisfaction and a more positive perception of their living environment.
The report identifies strengths and opportunities within QuadReal’s portfolio using Fitwel’s healthy building strategies, to assess their current performance. With the most effective areas for opportunity including indoor air quality and effective operations management, among others. Improving these areas can not only improve Fitwel scores, but ultimately tenant satisfaction and therefore bottom-line asset performance. NPS and Fitwel building operations strategies show a positive correlation, evidencing the need for a look beyond amenities to drive occupant satisfaction.
Transforming the Real Estate Industry Through Healthy Buildings.
Through this original study comparing residents' perceptions with financial data and benchmarking using Fitwel Certification, findings showcase the impact that healthy building strategies have on real estate value. The study also uncovered the effectiveness of these strategies even if they go unpublicised. Through this comparison between benchmarking and results, the Fitwel Standard has demonstrated that its healthy building strategies yield tangible benefits. This evidence underscores the positive impact of prioritising sustainability and tenant health for all stakeholders involved.
Moving forward, Fitwel encourages users to engage in benchmarking efforts across a range of assets, to share and build knowledge on creating social value within asset investment. Fitwel believes that building health for all and prioritising people within the built environment are key priorities for the real estate market, offering the greatest opportunity for value and risk mitigation in the coming years. And of course, we’re with them!
“The demand for healthy buildings is here to stay. Fitwel’s certified data and research elevates the critical connection between health, the environment, and economic value in real estate. It serves as a timely reminder of the risks associated with neglecting health and wellness considerations within the broader framework of ESG metrics,” said Joanna Frank, President and CEO of the Center for Active Design, operator of Fitwel.
“Failure to prioritize these aspects not only presents missed opportunities but also poses potential drawbacks - overlooking the 'S' in ESG metrics can compromise the sustainability and resilience of real estate investments. Fitwel Partners, including Utopi, are applying Fitwel’s social solutions that connect social criteria with asset value. And through our platform, users can access insights and leverage trusted data to drive market transformation and ensure a healthier, more equitable future.”
How to Prioritise ‘S’ in Existing Assets.
Aside from its exciting evidence of the power of healthy building strategies, the report establishes a framework for a benchmarking gap analysis which is extremely useful to investors looking to create improvements within existing assets. The ability to identify areas with the least implementation and highest impact on success metrics give investors a strategic route towards success. As previously mentioned, operations strategies gave impressive results in NPS, even though residents are rarely aware they are in place, as with improved air quality.
Investing in IoT technology like air quality sensors and building utilities metering, with the insights that we can generate here at Utopi, gives asset owners and building operators greater control of the health of their buildings, and tenants the safe and healthy living spaces they deserve. Prioritising social well-being is not just for new assets, and with simple retrofit, Utopi can supply the tools to elevate your existing assets and your portfolio ahead of the curve and achieve Fitwel Certification.
Bridging the Gap: A Call for Collaborative Measurement.
As we navigate the landscape of ESG considerations, it's evident that the 'S' has been somewhat overlooked. It's time for stakeholders in the real estate sector to collaborate in filling this gap by developing robust metrics to measure and quantify social value. Data collection will become a core pillar of effective asset management and improvement, and through combining IoT technology, data management and insight software, and Fitwel benchmarking capabilities we can bridge the gap between acknowledging social wellbeing and improving it.
By understanding the data presented in the Health Drives Value in Real Estate Report, we can work together to establish standardised metrics that assess the social impact of real estate developments. This collaborative effort will not only benefit residents but will also contribute to the long-term sustainability and desirability of real estate investments.
Building Communities, Not Just Structures.
In the quest for sustainable real estate practices, it's imperative to recognize that buildings are not just structures; they are the foundations of communities. The social dimension of ESG should take centre stage, and the insights gleaned from studies like Health Drives Value in Real Estate should guide us in creating spaces that prioritize the well-being of individuals and the vibrancy of communities.
By acknowledging the importance of social value, we can forge a path toward holistic and sustainable real estate development, where healthy buildings not only drive higher Net Promoter Scores but also foster thriving, interconnected communities. It's time to reshape the narrative, placing the 'S' firmly at the forefront of the ESG agenda. Whether you are planning a new development or looking to elevate your existing portfolio, here at Utopi we can help you implement these findings on the power of building health and social wellbeing, future-proof your assets and reap the rewards on the bottom line.
About Fitwel.
Fitwel is the world's leading certification system committed to building health for all. Generated by expert analysis of 7,000+ academic research studies, Fitwel is implementing a vision for a healthier future where all buildings and communities are enhanced to strengthen health and well-being. Fitwel was originally created by the U.S. Centers for Disease Control (CDC) and Prevention and U.S. General Services Administration. The CDC remains the research and evaluation partner for Fitwel. The Center for Active Design (CfAD), a global not-for-profit organisation, maintains the Fitwel standard and conducts objective third-party assessments that lead to certified projects. CfAD's new business unit, Adai (pronounced "a-DAY"), is charged with expanding Fitwel to the global market, administering the program while providing best-in-class customer service and technical support. To learn more about Fitwel, please visit: fitwel.org.[1]
Speak to our expert team today on how Utopi can help you leverage the benefits of PropTech solutions for ESG Benchmarking. Click here, or email Marketing@utopi.co.uk.