We’re going through an unprecedented type of crisis that has completely altered the ways in which we interact and engage with the built environment; and the premium that investors, owners, and operators of commercial real estate (CRE) and mission-critical buildings increasingly place upon health and wellness is well-warranted. A growing body of evidence substantiates what many of these stakeholders’ tenants and occupants already know –– indoor facilities present a much greater risk of airborne disease transmission than outdoor spaces.
Despite the pandemic’s hit to cashflow and asset values, CRE and mission-critical facility investors and owners need to invest in adapting their buildings adequately to meet the higher expectations of tenants and occupants.
While past crises may have been largely about saving money, this time around, property investors and owners will need to spend money in order to move forward. Consider for a moment the contrast between the real estate market landscape of the Great Recession and today. Investing in equipment upgrades and digital technologies to mitigate the transmission of COVID-19 isn’t just about abiding official guidelines or assuaging the fears of tenants and occupants. This is too short-sighted of an outlook.
These investments must be seen for what they are: long-term, value-add solutions that create long-term value.
Looking beyond the corporate jargon, there has never been a stronger case to be made for investing in healthy building solutions, integrating them into your existing building assets and your future developments. This simple truth is that there are no viable short-term fixes for what’s proving to be an enduring challenge. Even if a vaccine is developed and made widely available, the next pandemic is inevitable – it will happen.
The real question is how best to use these improvements to sustain practices over the long-term (beyond checking off boxes in the short term). The commercial and mission-critical real estate sectors have a genuine opportunity to set a new benchmark and start reforming industry practices for the better. People have become all too aware of their buildings’ operations and now expect a greater guarantee of health and safety every time they enter an office space, apartment building, hospital, or other indoor space.
Utilizing better filtration systems and other technologies to enhance indoor air quality adds long-term value to our nation’s building infrastructure. It’s encouraging to see decision-makers taking a lead on tackling these issues. In just the past few months, demand for HVAC equipment, air filters, and other building systems has risen dramatically. The global HVAC insulation market is expected to grow from $4.5 billion to $7.1 billion by 2027. Nonetheless, we must take care not to mistake a handful of quick fixes for a long-term solution. A crucial differentiator for commercial and mission-critical real estate executives is the right communication strategy.
It is only through clear, open, respectful, and forthcoming communication that our industry’s leaders can capture the full value of their COVID-necessitated building upgrades and investments. These pillars of communication are the fundamentals of trust – the foundations upon which a healthy building should be formed.
In fact, property owners and operators who effectively communicate with their tenants and occupants will directly fill a need for exceptional leadership at a time when it’s needed most. The recent redaction/replacement of COVID-19’s indoor airborne transmission risk from the CDC’s website is telling of the slow and often perplexing scientific communications.
We are at a unique moment in history where health and socioeconomic issues have pushed to the forefront of our everyday lives. We can’t enter a building without thinking about the air and the people surrounding us. Instead of simply rushing to address the problems at hand, businesses should be thinking about the ways that these protection measures are adding value for the long term. When done correctly, costs should actually be driven down and cashflow driven up.
2020 is the year where climate and investing have truly come together. We’ve seen key trends emerge, including increased focus on ESG and the ability to drive costs down. We’ve also seen people truly awaken to the serious impacts their environments have on them personally. Our current situation demands a unique response in which we truly focus on energy and integrating technology. We can simultaneously address multiple goals as well as COVID concerns while positively impacting asset values.
This is the way forward.
Chief Executive Officer, Green Generation
ULI Full Member
Member, ULI Center for Sustainability Advisory Board
Member, ULI National Redevelopment & Reuse Product Council
In ULI Washington’s new Leadership Insights column, ULI Washington will regularly feature member leader’s thoughts and insights as we adjust personally and professional to a “new normal.”