The Rise of Healthy Buildings

The coronavirus pandemic brought an increased awareness of how the places we live, work, and socialize can impact our health and well-being, and it is no surprise that this societal shift has impacted the commercial property sector. While indoor air quality was an immediate concern, several years after the start of the pandemic real estate owners are now putting increased, broader focus on integrating the human experience and buildings based on the growing demand from consumers for buildings that prioritize health outcomes. 

And while it’s easy to pay lip service to concepts like “sustainable buildings,” many property owners and managers know that discerning tenants want more — and even that they’re willing to pay for it. In fact, according to the Center for Active Design, commercial properties with healthy building certifications garnered rental premiums of four to seven percent per square foot over non-certified peers, demonstrating a clear financial value for owners. Because of this, owners are looking to receive healthy building certifications for their properties for both the financial upside and as indicators of their commitment to maintaining ESG principles that create long-lasting positive impacts for their tenants and the broader commercial real estate space. 

A Science-Backed Solution

With the recent launch of our Housing Impact Fund, RET is dedicated to pursuing technologies that enhance building health and sustainability, and it was this priority that led to our most recent investment in Fitwel.

As an evidence-based building certification developed with the CDC, the Fitwel Platform leverages the most relevant data to give owners science-backed insights into the health of their building or portfolio. Fitwel grades a project’s holistic health based on seven “Health Impact Categories,” which are weighted and scaled depending on the type of building. On the comprehensive platform, customers can register, benchmark, and submit either a single project or an entire real estate portfolio for Fitwel Certification. From there, Fitwel’s portal offers customers an interactive, digital interface where they have direct access to details on a project’s health impact – increasing transparency and giving owners actionable insights on how to improve overall building performance. 

For example, the Fitwel Platform helps owner-operators identify which among a range of potential amenities (green space, onsite childcare, etc.) will have a greater positive impact on resident wellness, and then helps them implement the more beneficial choice.

Operated by Active Design Advisors, Inc. (Adai), an affiliate of the Center for Active Design (CfAD) created solely to help grow and promote the implementation of Fitwel, the platform has a world-class team of professionals driving it forward. Fitwel’s proven ability to improve the resident and tenant experience while positively benefiting operators’ bottom lines across the global real estate sector makes it an extremely valuable tool for the CRE industry. 

Fitwel’s Incredible Potential

While RET typically invests in technologies that specifically service the multi- and single-family rental space, we see incredible market opportunity in the prospect of a data-centric certification platform that has the potential to bridge the gap between building design and operational performance across real estate verticals. Equally important, we have tremendous confidence in Adai’s leadership team, which is led by industry veteran Joanna Frank.

The company has already gained significant traction. In 2021 alone, there was a 325% year-over-year increase in the total number of Fitwel certifications and a 288% increase in certified square feet, and the company expects further growth in the years to come. 

The Future of Building Certification

Our investment in Fitwel comes at a time when the “S” of ESG — the social aspect — is a rising priority for consumers who view health as not just a building amenity but perhaps the most important one. With proven benefits for our LPs – and many of them already signed up for certification – Fitwel is a natural addition to our portfolio of companies targeting health and sustainability in the CRE industry. 

As demand for healthy buildings continues to grow, we are confident that Fitwel will be a major solution across the industry for years to come, and we look forward to supporting the team at Adai as they grow and enhance the Fitwel Platform’s certification and reporting capabilities.