7 Reasons Why IAQ is Changing the Commercial Real Estate Market
Indoor Air Quality (IAQ) has rapidly become part of the discussion focusing on the built environment. You can’t escape it. COVID may have brought the issue to the forefront for many of us but air quality has always been crucial. Service providers recognize the growing interest and necessity of IAQ and are repositioning their roadmaps to deliver IAQ-focused service offerings.
A walk through any major city center and it's obvious that office buildings are not back to their normal occupancy levels yet. Building owners want their tenants back into their buildings. Employers want their employees back into their offices. But, we are not quite there yet! A recent study released on February 16, 2022 by Pew Research found that 42% of employees cited fear of exposure to COVID-19 in the workplace as the reason why they do not want to return to the office. Real-time air quality data helps alleviate this concern. Imagine providing employees with a live dashboard that shows the air quality and environmental conditions in their office. They'll regain a sense of comfort and you'll start to get your employees back to the office. A win-win for everyone.
Let's explore the major underlying market forces that are driving the rising interest in IAQ, aside from the obvious COVID-19. The following basic reasons will provide most of the context you’ll need to understand the current market shift. These simple motivations should color your perspective not only as a consumer, but also as a participant in IAQ-related services.
1. Indoor Air Pollution Matters to Building Occupants
Indoor air pollution carries a health risk. This is becoming common knowledge. There is an increased awareness of the correlation between IAQ and health. Multiple scientific studies have published research that confirms that poor IAQ can greatly affect individuals. That a condition such as a Sick Building Syndrome has entered into the consumer consciousness tells you the magnitude of the problem. Pioneers like Joseph Allen are sharing this message daily on major media outlets.
At this moment in time, it would be impossible to convince the general public that IAQ isn’t a legitimate issue in buildings. The amount of time people spend within those buildings only magnifies the issue. The issue isn’t going away. Employers or building owners/operators will lose the high ground in an instant if occupants perceive that you are trading off their health with ROI. This issue isn’t confined to vulnerable groups such as babies, children and the elderly in buildings like schools and hotels. All buildings will receive the same scrutiny. Download our case study on a biotech company and IAQ.
2. Indoor Air Pollution Matters to Employers
Because indoor air pollution matters to building occupants, employers also care. Employers have taken great pains to present themselves as employee-friendly to attract the best and the brightest. Add IAQ assurance to the list. Only a few years ago, modern IAQ measures such as Particulate Matter (PM), Volatile Organic Compounds (VOCs), Formaldehyde, Ozone, Carbon Monoxide, and more, were not considered an essential part of the building ecosystem.
Employers would face an unwinnable scenario trying to convince employees that they care about employee well-being if they cannot provide any measure of assurance regarding IAQ in their buildings. While benefits such as worker productivity will certainly accrue, the basic motivation that is driving employers to act is the wellness of their employees.
3. Increasing Health Regulations Will Force Compliance
There are enough reasons for proactive organizations to add IAQ assurance. Reactive organizations will be compelled to follow. A study published in Environmental Health Perspectives found cognitive functions suffered when exposed to elevated CO2 levels and VOC. Government regulations will increasingly descend upon the built environment.
For example, the New Jersey IAQ Standard governs existing buildings occupied by public employees during their regular working hours. As specified in their compliance program, an employer shall designate a person to assure compliance to actions including, “[w]hen the carbon dioxide level exceeds 1,000 parts per million (ppm), the employer shall check to make sure the HVAC system is operating as it should.”
In another example, California’s Division of Occupational Safety and Health Policy and Procedure Manual specifies in P&P No. C-48 that workplace IAQ can be injurious to the health of building occupant-employees. These policies and procedures mandate that carbon dioxide concentration should be measured “in areas of the indoor air environment, as appropriate, if such areas have been identified through occupant-employee interviews as ‘stuffy,’ ‘close,’ or ‘stifling.’”
Health regulations will continue to spread. It's inevitable.
4. Indoor Air Pollution Matters to Building Owners/Operators
Building owners/operators are often one step removed from the employer-employee relationship. They cannot ignore the issue, however. If IAQ is important to tenants, then building owners/operators care. The market is moving in that direction in a big way as evident by our recent announcements with CRE players Boston Properties and Carr Properties.
Buildings impact health and wellness of occupants. Proactive building owners/operators recognize the value of health and wellness certifications with respect to IAQ. In that regard, a building IAQ certification will not look much different from a certification of a product that the consuming public can purchase. The base motivation remains the same, protecting members of the public that purchase or utilize those products or services.
5. Cost is NOT a Limiting Factor
As noted, the responsible party (e.g., employer, building owner, building operator, etc.) will fail miserably justifying a position of effectively trading off occupant health with ROI. Thankfully, the cost of providing real-time visibility is not exorbitant. For less than the price of a health-club membership, an IoT-based wireless IAQ node can deliver real-time IAQ measurements that assure occupants of levels of carbon dioxide, PM, VOCs, Formaldehyde, Ozone, Carbon Monoxide, and more.
Ignorance is a thing of the past. IAQ monitoring will provide objective data to ensure that HVAC systems within the built environment provide healthy conditions for building occupants.
6. Digitized Real Estate Assets Will Include IAQ Certifications
Digitization has arrived and will continue to transform industry after industry. The CRE industry is undergoing such a transformation. Digitized real estate assets will increasingly incorporate IAQ certifications because of its impact on the valuation of the building. There is an ROI, of course, but the significance will matter more to reactive building owners/operators as compared to proactive building owners/operators.
Due to the impact on occupant health, IAQ certifications will become increasingly desirable. These include the UL Healthy Building Program and WELL Building Standard. Watch our webinar with UL to learn more about the new IAQ initiative.
7. Tenants Will Compare Leasable Space Based on IAQ
The natural corollary to the inclusion of IAQ certifications on digitized real estate assets is that tenants will use such a digital marker to make leasing decisions. Of course, everything else being equal, the existence of IAQ certification on Property A will tilt the decision away from Property B, which lacks such an IAQ certification.
Do not dismiss the impact that IAQ certification and compliance will have on leasing decisions. If you were making the decision, you would value it highly. You wouldn’t dare risk all of your health-conscious personal decisions (e.g., diet, exercise, etc.) by leasing space that could be damaging your health hour-by-hour, day-by-day, and year-by-year. That’s too big of a sacrifice for anyone.
Conclusion
IAQ cannot be ignored. The basic drivers behind its rise are obvious to any individual that cares about their personal well being. These underlying factors will continue to push IAQ into the forefront of the consciousness of all decision makers in the real estate market