The healthy building adoption pattern is driven by two critical market conditions: What is a healthy building? What is its financial value for tenants and owners? Although, there is some early evidence of a real estate price premium for specific indoor environment quality (IEQ) and design features. At the level of health-focused building certification systems (BCS), there is no empirical and quantitative research on healthy building’s financial performance, except theoretical models. We interviewed executives from 15 real estate corporations across the globe to examine real estate owner's perspectives and strategies for this emerging market. The interview results confirm that the scarcity of empirical evidence linking healthy building attributes to financial returns presents the mainstream adoption barrier. Heterogeneity on owners’ adoption patterns is driven by building ownership structure at the firm level, tenants, end-users, and building conditions. Firms’ strategies for pursuing healthy building range from risk mitigation to proactive pursuit of new growth opportunities. Private equity funds and real estate investment trusts (REITs) firms tend to focus on the former, while direct real estate investment firms are more likely to adopt proactive strategies to lead the adoption curve.
About speaker: Zhengzhen Tan, Executive Director of MIT Sustainable Urbanization Lab, Research Scientist and Lecturer at MIT Center for Real Estate.