Now that green real estate has become widespread, real estate money managers are moving to expand their horizons to healthy properties.
Investing in real estate designed with the health of its occupants in mind was the subject of intense discussion at an Urban Land Institute Conference in Los Angeles on Feb. 20-21.
The new global headquarters of Los Angeles-based real estate investment manager CBRE Group Inc., completed in November, became the first commercial office space to be certified under a new standard, dubbed the WELL Building Standard, under a pilot program.
Investing in healthy buildings “gives us a competitive advantage,” said Lewis C. Horne, executive managing director for CBRE, in an interview.
The WELL standard was developed by New York-based real estate development firm Delos Living LLC, whose advisory board includes Deepak Chopra, founder of the Chopra Foundation; Richard Gephardt, former U.S. House majority leader; and actor Leonardo DiCaprio.
Green projects that attain Leadership in Energy & Environmental Design, or LEED certification, don't have improved capitalization rates, but do offer that competitive advantage, Mr. Horne said. Any real estate manager or builder would not think of avoiding LEED certification, he added.
The new standard, its creators hope, will be used in addition to the LEED standard, set by the non-profit U.S. Green Building Council.
Mr. Horne spoke on a panel titled “What's the Next Big Idea in Building Healthy Places?” that included Angela Glover Blackwell, founder and CEO of PolicyLink, and James F. Sallis, Distinguished Professor of Family and Preventative Medicine at the University of California at San Diego.
Paul D. Scialla, founder of Delos Living and former partner at Goldman Sachs Group Inc., where he was co-head of the U.S. interest-rate cash trading business, during another panel, said creating healthy properties can be accomplished at relatively low cost and his firm already has achieved gains.
That panel, “Health and Development: Unlocking the Value,” was moderated by Lynn Thurber, chairman of LaSalle Investment Management and ULI chair. It also featured Dr. Richard J. Jackson, professor and chair of environmental health sciences at the University of California at Los Angeles Fielding School of Public Health; and Anne Warhover, president and CEO, The Colorado Health Foundation.
During the panel discussion, Mr. Scialla noted a New York City condominium project his firm had developed achieved 40% premium in rents compared to other properties in the neighborhood, because of modifications made to achieve WELL certification. He added the firm also achieved a 17% rent premium for the first WELL-certified state housing project located in Philadelphia.
During the panel discussion, Ms. Warhover noted a Robert Wood Johnson Foundation report released in January, “Build for a Healthy America,” cited creating healthy real estate as one of its top recommendations. “We're seeing an investment opportunity and benefits in creating healthy communities,” she said.
LaSalle's Ms. Thurber said in an interview that it's still the dawn for healthy real estate. ULI is committing two years to the topic, which includes bringing health professionals into the discussion. Real estate and health professionals do not typically communicate on design issues, she added.