Commercial Real Estate (CRE) has been slow to adapt to the current digitization trend. Many imagine themselves impervious to such change. Indoor Air Quality (IAQ) exposes the flaws of such archaic thinking.
We work and live in a digital economy. Technology has become a necessary tool, not an optional extra. Clearly, our everyday experience revolves around access to real-time data. We continually rely on digital assets to stay abreast of the latest events, to navigate our daily schedules, and to optimize our strategic decision-making. We would not hesitate to leverage any and every tool that can provide us meaningful digital data in the palm of our hand. Very few would tolerate manually sifting through paper assets.
IoT enables digitization of CRE assets. New applications appear everyday due to the value of real-time data. Significantly, no one argues against the utility of real-time data. It's assumed. Real-time data presents a more difficult problem, however, the disruption of the status quo. The status quo has largely reigned supreme in CRE. The introduction of real-time data shatters old CRE models and methods. On those being left behind by the CRE revolution, a Wharton research article has noted that:
"This industry has always believed that location, location, location rules. But in the mobile world, where ‘location’ is mainly virtual — many things can be done through smartphones — assets are losing ground to access, whether the assets are hotels, homes or apartments."
Increasing Access to Modern CRE Assets - IAQ
Traditional CRE views consider property alone as assets. These traditional categories of hard assets did not consider other intangible assets such as data about tenants and their businesses. The Wharton research article highlighted a new type of leverage emerging based on intangible assets such as "tenants’ wants and needs, access to Big Data and virtual networks."
IAQ has become entrenched at or near the top of modern tenants' list of concerns. Occupants’ health and productivity concerns invariably link buildings and IAQ closely. According to the US Environmental Protection Agency, people spend approximately 90% of their time indoors, breathing indoor air more polluted than outdoor air. Recent scientific evidence proves the adverse affect IAQ has on people’s health.
Multiple, complex factors impact IAQ. Poor ventilation, improper control of heating and cooling, and recent remodeling can affect the building's fresh air intake. Sometimes, contaminants like dust, mold, cleaning supplies, pesticides, or other airborne chemicals cause hazardous IAQ.
Most building certification programs like LEED look into the design and systems of the building from the perspective of energy efficiency. Little focus has been placed on the health and wellbeing of the occupants of the building. The recent IAQ concerns have led to different types of certification such as WELL and Fitwel.
The WELL Certification
The WELL Building Standard, from the International Well Buildings Institute (IWBI), aims to measure, certify, and monitor the features of a building that impact the health and overall wellbeing of building occupants. The standard encompasses seven health and wellness concepts: Air, Water, Nourishment, Light, Fitness, Comfort, and Mind.
WELL strategies to improve air quality in a built environment include limiting pollutant and contaminant concentrations using evidence based guidelines. Users must submit a range of documents that include annotated project documents, drawings, and letters of assurance from the project team. Performance Verification relies on a site visit by the WELL Assessor to verify that the air meets the required standards (e.g., temperature, humidity, CO2, Particulate Matter (PM), and Volatile Organic Compound (VOC)).
The Fitwel Certification
Fitwel certification operates differently from other certifications like WELL and LEED, focusing instead on fully data-driven, evidence-based models. It can drive strategies for both residential and commercial building types, but predominantly delivers results in commercial buildings.
Fitwel typically rewards points to commercial buildings that adopt and implement an IAQ policy. The certification also ensures the maintenance of IAQ standards on an ongoing basis. Fitwel ensures that buildings enhance human health and prevent chronic diseases associated with poor IAQ. A Fitwel recommended approach for maintaining high IAQ includes controlling the source of the air both during the construction of the building as well as during the life of the building. For example, an interior designer can select products, furnishings that do not produce pollutants, odors or VOC.
Recently, Fitwel has collaborated with RESET to promote IAQ globally. Using this alignment, buildings can use RESET Air certification credits towards Fitwel certification. RESET Air provides a performance-based building standard that continuously measures IAQ, tracks the health level of materials and serves as a reference for other green building programs and international organizations alike.
WELL and Fitwel Certifications Represent an Intangible CRE Asset
WELL and Fitwel certifications represent intangible assets that immediately signal alignment with tenants' wants and needs. Significantly, the existence of the certification helps distinguish between hard CRE assets. Tenants considering two different CRE properties would rely on the existence or non-existence of IAQ certifications to make their choice.
Would this factor be more or less important than the amount of square feet in the space? Because IAQ represents a health issue, IAQ certifications will likely become standard parts of any future digital CRE asset.
Informed decision making becomes easier with digitized assets. Tenants will consider IAQ certifications in a manner similar to the number of square feet being leased. Thus, platforms that enable the communication of digital assets will become indispensable in the future transactions involving hard CRE assets.