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The financial benefits of healthy buildings
Discover how to measure productivity and how to quantify the results of a high-performing building with these insights.
High-performing buildings are buildings that surpassed ASHRAE® Standard 62.1–2010 minimum sufficient person ventilation (15 cfm) requirement and that have little (<250 μg/m3) total volatile organic compound concentrations. This means that these are buildings that should help the building occupants perform their best.
In large organizations with many stakeholders, it can be debated whether productivity in high-performing buildings improves due to the high-performing building itself, or due to other factors. But in fact, it might be difficult to put this in a black-and-white situation, which is why we like this quote so much:
"There are variables and factors other than the workspace that can impact a revenue per employee metric. However, an environment that optimizes performance can only increase the top line, and all else equal, the bottom line."
— Attema, J.E., Fowell, S.J., Macko, M.J., & Neilson, W.C. (2018). The Financial Case For High-Performance Buildings. San Francisco: Stok, LLC.
That said, it is still important to understand the financial benefits coming from high-performing benefits and the improvement in productivity. The best part is that they can be measured! We leave you the formula to measure productivity according to Stok at the bottom of the article.
Here are the top 10 financial reasons for healthy, high-performing buildings:
- Your bottom line can improve by 11% according to Harvard. This is an accumulation of lower absenteeism, employee productivity, and energy savings.
- Create a competitive edge in attracting talent. CBRE showed in 2017 already that 69% of millennials will trade work benefits in return for better workplaces.
- Employees are more productive. A healthy building can improve productivity by up to $6,500K per FTE. The reason for the productivity increase is that healthy buildings tend to have 30% better ventilation than common buildings, with 40 cfm/person.
- Relaxation spaces are important for mental health. Relaxation spaces to disconnect from the office buzz are a top office amenity and a key element for the health and well-being of building occupants. Think of quiet areas to reflect without distraction, reclining chairs behind curtains, and nap pods can all support an enjoyable work environment. 45% of respondents to JLL’s Future of Work study pointed out that access to relaxation spaces is their biggest preference, while only 17% can use relaxation spaces. The lowering of stress levels can help to prevent employees from burning out.
- Employees feel more connected to your company. A CBRE Global Workplace Solutions study shows that 75% of job seekers mind that their potential employer is engaged in their well-being, and as a result, 57% continue to stay longer with a company if they do.
- Reduce employee separation in the company. We describe separation as the personnel who willingly give up their position in pursuit of something else. Out of 7 peer-reviewed academic papers and industry articles, a sensitivity analysis showed that the company profits increase up to 2.83% because of lower separation and better retention.
- Employee retention is higher. The business case for green building also reflects on higher retention of up to 27%, the World Green Building Council found in 2016. We describe retention as an effort by a firm to preserve a working environment that supports present staff in continuing with the company. So here the number goes up, simply because people enjoy working more in an environment which improves their physical and mental well-being.
- Increased productivity because of an enhanced indoor environment in office buildings had a benefit-to-cost ratio of 9–14x (Fisk, 2001). Fisk et al. found out that the benefits of an enhanced indoor environment outweigh the costs of installing better HVAC systems by 900–1400% percent. To illustrate it a bit better: the projected savings of a 10% reduction of respiratory infections, sick leave days, reduced performance, and health care costs for employees outweigh the investment in better HVAC systems by 14X. Also, the investment in improved air filtration exceeds the annual cost per employee by a factor of 900%.
- Healthy buildings have a cash-flow-positive business case. The Net Present Value is $1389 per square meter over 10 years at a cost premium of $215.28 per square meter. The Net Present Value comes from enhanced employee productivity ($597/m2), increased employee retention ($570/m2), improved employee health and wellness ($97/m2), utilities savings ($97/m2), and maintenance savings ($28/m2) according to researchers from Stok, LLC.
- The combined benefits of a high-performance building lead to a whopping annual profit estimation of $199,78 per square meter. ($18.56 per square foot)! According to the same research by Stok, LLC., the profit estimation for healthy buildings on the company directly result from building occupant productivity, retention, and wellness benefits enhancement.
1. Take the average revenue per person for a company, building occupants, or team;
- Multiply this by a productivity enhancement that high-performing buildings have proven to increase;
- Multiply this revenue enhancement by the company’s profit margin.
That sounds great, doesn't it? And it doesn't stop there! Check out our other articles to discover how healthy buildings benefit your health, how they boost the value of your building, and how they help prevent the spread of viruses such as COVID-19.