Location, Location, Location

ESGResearch InsightsStrategies & SolutionsCertification
Written By Marcos Reynaga

A fundamental paradigm shift is happening across the real estate industry: it is no longer a portfolio of buildings, but a portfolio of places where people live, play, and work. 

Image of ideal office building to attract tenants. Image courtesy of Perkins & Will: Minneapolis Studio, Minneapolis, Minnesota

Image courtesy of Perkins & Will: Minneapolis Studio, Minneapolis, Minnesota

The Future of ESG

ESG is taking on new meaning in the post-COVID world. Environmental impacts (the "E"), like energy use and carbon emissions, are relatively easy to quantify. Yet it took about ten years for the industry to clearly define how to measure these as standards for ESG reporting. Real estate’s future, however, rests on the measurement and impact of Social (the “S”) frameworks.

We’re taking the lessons learned from the environmental movement, combined with 100 years of public research and ongoing analysis, to define and quantify the “S” in ESG across all asset classes.

Beginning today and over the next few weeks we’ll explore the 5 key areas identified to improve ESG performance, starting with Location.

Image of ideal real estate location for office building or apartment complex. Image courtesy of Kilroy Realty: The Sunset, West Hollywood, California

Image courtesy of Kilroy Realty: The Sunset, West Hollywood, California

Location, Location, Location

We all know that location serves a major role in real estate. However, at the end of the day, it’s people that ultimately determine the value of the location. And that’s not just anecdotal. It was most recently proven by the largest health and wellness study of global real estate investment managers ever conducted, New Investor Consensus: The Rising Demand for Healthy Buildings. 

Led in collaboration with Fitwel, Center for Active Design, the United Nations Environment Programme Finance Initiative (UNEP FI), and BentallGreenOak, the study analyzes the impact of COVID-19 in relation to healthy buildings and what that means for future investment decisions. It also quantifies for the first time the extent to which the industry is focusing on health and wellness in ESG investment strategies. 

Walk the Walk to Boost Health and ROI

Leveraging Fitwel strategies related to location can boost tenant happiness, positively impact the community and strengthen ESG scores. Factors that go into these strategies include access to public transit, access to green spaces, and Walkability. 

One key finding was that residential projects that satisfy Fitwel location strategies command higher rent per square foot — more evidence of the value of walkable places. Specifically, commercial rent premiums in walkable urban places are 75% higher than their suburban counterparts where driving is in the mix.

Not only does a community's walkability promote physical activity and social interaction, but it can also reduce car use and in turn, air pollution and other toxins. Combined, these impacts address the trifecta of physical, social, and mental health — all while enhancing sustainability.

Fitwel & ESG 

As part of our larger commitment to the industry in defining and quantifying the role of health in the built environment, we recently published two key resources identifying Fitwel strategies and metrics to prioritize and enhance ESG performance.

Fitwel’s Guide to Measuring “S”
This new Fitwel resource outlines 5 key areas and metrics for quantifying “S” in ESG reporting and how to use asset-level Fitwel strategies to boost entity-wide metrics. The 5 areas are Location, Operations & Performance, Amenities, Design, and Programming & Evaluation. Learn More

Fitwel-GRESB Crosswalk
The Fitwel-GRESB Crosswalk for Workplace and Multifamily Scorecards is a tool that compares Fitwel strategies to the leading ESG framework for real estate, GRESB Real Estate Assessment, with the goal of helping the sector quantify the "S" in ESG. Learn More

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Marcos Reynaga
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Health is as Core as Sustainability: Q&A with Hudson Pacific