Think beyond the rent. There are hidden costs in unhealthy spaces.
There are often limited changes that a tenant can make within their building under lease agreements. Remember green leases? The Australian Government developed Green Lease Schedules to assist negotiations between landlords and tenants to move towards more energy efficient spaces.
Green leases were attempting to address split incentives, where the landlord may have to invest in upgrades but not necessarily reap the rewards (financial savings). Without a clear return on investment, it was difficult for a landlord to justify any investment. However, it successfully up-skilled tenants to question and actively look for energy efficient spaces.
With the growing health and wellness trend in buildings, I hope we see similar activity in the future, healthy lease guidelines or social upgrade financing for healthy spaces. In the long run, it will pay off for our economy to have a healthy and happy workforce.
Whilst we know daylight access, naturally ventilated air, thermal comfort, external views, nature connection, physical movement (the list continues) all benefit staff. How much is a tenant able to actually influence, and what is the business case for landlords?
It is important to consider as many healthy parameters as possible when searching for a new space. Unhealthy, disengaged staff can cost a lot of money. Poor staff wellness estimates put this at up to 25 per cent of your payroll. Take a conservative midway point of poor space costing 10 per cent of your payroll. If you are spending $5 million on staff costs, that’s $500,000 per annum that could be lost in sick leave and low productivity/engagement. Is it worth taking the cheaper space or could you find something better?
What to look for
Health and well-being hasn’t been a priority in development until recently, and 80 per cent of our commercial buildings are over 20 years old. So if you aren’t able to develop or move into a new building with all the premium healthy trimmings, some basic things to look for when searching for a space are:
- Nature connection: external views, nearby parks, ability to house and grow indoor plants (check that the landlord is OK with this and there is sufficient space and light)
- Daylight access and glare: daylight is critical, consider if taking a basement office. If there’s no choice are there parks and outdoor areas nearby?
- Acoustic performance and layout – think about how will it perform when all staff are in. Are there spaces for private work as well as collaboration time? Will there be lots of interruptions to staff? Does it cater for different working needs?
- Can you re-organise the space if you need to? How much flexibility is there?
- Age, condition and maintenance of HVAC: is it pulling in external, fresh air? Are the vents dusty? How often is it serviced? Where is the air intake located (not in the car park hopefully!) Where are the inside vents – has the layout been changed since initial design impacting air flow?
- Kitchen and break-out areas: are there areas for staff to relax?
- Toxicity implications of internal finishes and furniture, especially if new work is being done: are paints and furnishing going to off-gas toxic chemicals?
- What cleaning products are used? Are they non-toxic?
- Lighting: are light fixtures dusty, do they look well maintained, what is the lighting management strategy?
- Easy accessibility to stairs: no locked doors, unsafe areas or unintuitive exits. Will people be able to move around? Are stairs easy? You want staff taking at least 10 staircases a day.
- Active transit options: do people need to spend an hour or more in the car or can they ride/train or bus? Are there gyms and exercise options nearby?
- Access to healthy food in surrounding area.
Use this as a checklist when looking for a new space. Don’t forget to ask about a NABERS energy rating (go for 4 Star minimum), and communicate this to staff, as a healthy, green space shows a strong corporate commitment to a bigger purpose.
The amount of property value lift for landlords for healthy spaces is really too early to show; we will see this as the next generation of buildings and retrofits go through the property cycle. The benefits for organisations will show in the bottom line through human resource savings, the benefits for landlords will be seen in attracting tenants and premiums for healthy space.
Attracting and retaining staff is challenging for organisations. A component of an employee’s decision to join a company (particularly for millennials) is the physical workspace, and as people become more aware of how different spaces impact their health, this is likely to rise. There are now smartphone apps and devices measuring steps, decibels, light levels, temperature, emotions and stress levels. People are becoming informed and organisations can use their physical workspace as one vehicle to prepare for this change.