CRE N Illinois

There’s no better ROI than investing in people

Essex on the Park, the first WELL-certified multifamily project in the Midwest. Essex on the Park, the first WELL-certified multifamily project in the Midwest.
Essex on the Park, the first WELL-certified multifamily project in the Midwest. Essex on the Park, the first WELL-certified multifamily project in the Midwest.
Essex on the Park, the first WELL-certified multifamily project in the Midwest. Essex on the Park, the first WELL-certified multifamily project in the Midwest.
Essex on the Park, the first WELL-certified multifamily project in the Midwest. Essex on the Park, the first WELL-certified multifamily project in the Midwest.

For owners, investors, operators, portfolio managers and enterprise users, building optimization is key to ensuring that every penny that goes into a real estate asset is put to use effectively. So how do you quantify a property’s performance for what is typically the biggest annual spend—the people that occupy the space?

Five years ago, the WELL building standard was created as a protocol to support organizations in creating healthier buildings and spaces, with an emphasis on better human health outcomes. The result isn’t just a beefier bottom line, the program enhances the one thing that every corporation is intensely focused on: talent attraction and retention.

Having established itself fairly well in the industry, WELL is now refining and broadening its approach.

Building WELL

Managed by the International WELL Building Institute (IWBI), WELL combines the design, architecture and engineering of a space with building operation procedures, corporate wellness programs and other strategies to monitor and certify the impact that a property has on health and well-being through seven categories: air, water, nourishment, light, fitness, comfort and mind.

“We launched in 2014 and here we are now with projects in about 60 countries and new ones registering every day,” said Jessica Cooper, chief commercial officer, IWBI. “We’re learning daily from those clients. That’s the most exciting thing, understanding how these strategies are translating into real practice.”

The market has grown accustomed to—and at this point expects—green building, largely through the efforts of USGBC and their LEED certification program. WELL also considers sustainability factors, but it incorporates other health and wellness metrics. Does the building offer healthful eating options? Does it have good walkability or take steps to reduce the stress of its occupants?

“There are examples of buildings with great daylighting or air quality or ergonomics, but projects are few and far between that are hitting on all cylinders,” said John Mlade, senior project manager, sustainable and healthy environment at Wight & Co. “Using WELL’s framework, we are able to bring a lot more of these considerations into play at once.”

With LEED and other metric frameworks, a building only performs as well as the organizations maintaining and occupying it. WELL provides a missing link to help those firms put the proper policies and protocols in place to support holistic, broad-reaching health and wellness of occupants.

“LEED was developed as a market transformation tool to raise the bottom rather than the top of the market,” said Mlade. “WELL has emerged on the scene in a unique position where it’s setting the floor and at the same time thinking about how to raise the ceiling.”

Because the typical corporate budget is inflated by the salaries, benefits and other components of human capital, addressing the wellness and happiness of those people has an immediate impact. What WELL has brought to the forefront is a means to encourage an organization itself to transform and support people in a way that hasn’t been done before.

One example in Chicago is Essex on the Park, a 56-story, 479-unit luxury apartment building that developers, Oxford Capital Group and Quadrum Global, along with property managers, The Bozzuto Group, sought and received WELL certification—a first among Chicago multifamily properties.

Located at 808 S. Michigan Avenue and designed by Hartshorne Plunkard Architecture, Essex on the Park achieved its WELL Certification rating based on numerous initiatives, including design solutions that regulate circadian rhythm, live greenery throughout the tower’s communal and private spaces, nutrition education, chef-led cooking classes and more.

Wider scope

Years ago, organizations and investors started bandying about a buzz phrase—triple bottom line (the three components being social, environmental and financial)—with the intent of expanding beyond simple financial return on investment. Cost of acquisition doesn’t just apply to customers; if an organization is spending time and money to attract, train and retain employees, it makes sense to take steps to improve employee contentment. Happy people not only stay longer, their productivity goes up.

That has evolved into a new, more quantifiable framework: environmental, social and governance (ESG). Integrating ESG factors into investment analysis and oversight can provide long-term performance advantages. Measuring the first component, environmental, is relatively easy with tools like LEED. Benchmarking an organization’s social or governance footprint is trickier, but possible. WELL seeks to be a tool to address all three.

ESG is being driven by a number of angles. Tenants coming into buildings are demanding it, employees in organizations are asking questions about it and corporate entities are starting to implement ESG measurement to improve long-term investments and to attract people into their organizations.

Employee productivity is top of mind for tenants, and it is a byproduct of creating an environment with better health and wellness attributes. For building owners and operators, there may be risk reduction in better air quality or water quality. On the investment side, understanding the materiality of investments is changing, and improving ESG transparency can have a major impact.

Last May, IWBI launched WELL v2 as a pilot, applying lessons learned from the industry in the first version to better focus on the critical elements that make up a healthy building and to make it easier for all projects to opt into the program. Even as they look to graduate v2 into full implementation next year, in July IWBI also introduced a WELL Portfolio tool.

Leveraging the WELL v2 framework, WELL Portfolio guides organizations looking more holistically at their internal processes and/or across their portfolio. Single-building certification is still important and will be recognized under WELL portfolio, but improving every building is even more impactful.

“If you can come into this WELL portfolio program and utilize these strategies as a toolkit to start thinking strategically about interventions you can make across all of your properties, you can do even more good, faster and for more people,” said Cooper. “That’s going to unlock a lot more social good.”

The WELL Portfolio program was designed with significant input from pilot participants to help owners, developers and tenants streamline and scale the health and wellness strategies found in WELL across multiple spaces in their real estate portfolios. Organizations can benefit from more efficient pathways to implement WELL’s design, operations and policy-based strategies across multiple properties, with the option to pursue WELL certification for individual properties within their portfolios.

The program offers portfolio-wide solutions to a variety of new and existing projects and space types. It also enables decision-making based on what an organization can implement now versus in the future, identifying specific buildings and spaces that can get certification immediately and setting goals for others.

WELL Portfolio also sets up a framework where a change to a single design or management protocol can reverberate across all of the properties in a portfolio. Make one change and then all properties are on the ball, improving their ESG metrics, improving health and wellness and smoothing the road ahead for other properties to be recognized through WELL.