WELL building standard set to storm the property world

The WELL Building Standard looks set to shake up the top end of the property industry as much as Green Star did when it burst onto the scene in 2002.

It’s certainly the impression you get looking at the caravanserai of US-based and local devotees setting up in Sydney this week in preparation for a full-scale incursion on the Australian property market with a standard that shines a light onto tenants and their practices, rather than the building itself.

And it’s the impression you get from the companies lining up to register their buildings for WELL – including Grocon, Macquarie Bank, Mirvac, DEXUS, Lendlease and Frasers Property.

In the past few days The Fifth Estate has learnt that Grocon is building to WELL standards at its new 11-story project in Victoria’s biggest provincial city of Geelong, at 20 Brougham Street.

DEXUS has also emerged as formally registering for a WELL standard at 480 Queen Street Brisbane (which it’s buying from Grocon).

This means that premium tenants signed for the building will now be able to line up for their own WELL tenancy rating: BHP, PWC, Herbert Smith Freehills; Allens; HWL Ebsworth.

In Sydney, Mirvac has put up its hands for the standard at its new 200 George Street headquarters nearing completion, industry sources say, and Frasers Property has registered for WELL for its new headquarters at Rhodes in Sydney.

Lendlease also said it will use the standard (announced in November), and the Green Building Council of Australia is partnering with WELL to deliver training for certifiers in the standard.

Macquarie Bank, which beat everyone to the punch with the first WELL regsistration, is preparing for a ceremony in March to receive a Platinum certification for its swish 50 Martin Place building in Sydney.

• See our story that first flagged the standard in April last year, Who will be first with a WELL Building certificate in Oz?

In Sydney this week WELL team members were preparing to deliver the first training courses for certifiers on an invitation-only basis in Sydney and Melbourne in coming weeks, with more widely offered courses to be offered mid-year, in association with GBCA.

And, to add to momentum, founder Paul Scialla, chief executive of US-based Delos Properties, is expected to attend Green Cities in Sydney in March.

Globally, interest is also strong, with a global bank believed to be ready to roll it out to all retail, office and distribution facilities.

A look at who’s on the advisory board of Delos which pioneered WELL (now separately administered by the International WELL Building Institute) will testify that this is a movement designed for the A team. It includes  includes Dr Deepak Chopra, Leonardo DiCaprio and Rick Fedrizzi, founding chair of the US Green Building Council.

In addition, Jason McLennan, founder of the Living Building Challenge, was involved in developing the standard and the The Mayo Clinic in September opened the Well Living Lab in collaboration with Delos. He now sits on the advisory board for IWBI.

How powerful this movement is likely to be is best exemplified by the words of founder Paul Scallia who spent 20 years on Wall Street, 10 years as a partner with Goldman Sachs. On the Delos website he says he left Wall Street to “merge the world’s largest asset class – real estate – with the world’s fastest growing industry – wellness”.

A long time coming

Just nine months is a short gestation for such a radical new movement in sustainability to take hold in Australia. But in many ways it’s been a long time coming.

For years the top owners have struggled in the uncomfortable knowledge that no matter how sustainable their base buildings are, some of the nation’s biggest corporates have blithely ignored these efforts and moved in with subpar tenancies, The Fifth Estate has frequently heard.

That could all be set to change. The very existence of WELL will put pressure on corporates who are “not with the program” in the same way that Green Star subtly but powerfully pressured the leaders to get aboard with sustainability.

The movement taps into growing concerns of unhealthy, mostly indoor and sedentary lifestyles. But instead of focusing only on physical health, WELL looks at the policies that encourage a genuine work-life balance.

Hassell principal Steve Coster, who is a specialist in workplace strategy and led design for Grocon’s Geelong building, said WELL addressed staff issues around flexibility and mental health.

“The point of the whole thing is that it doesn’t matter how sustainable your building is if your operating policy is not aligned,” he says.

This is about internal policies and practices. Would staff have more flexible sustainable work hours? How would they support wellness? This was pretty much “the hardest things” to do for tenant organisation. But important.

“There is a real epidemic of mental health issues. There is as much absenteeism from stress and anxiety as all other physical sicknesses combined.”

And the cost from that could be huge, he said, pointing to recent research revealing the scale of the problem.

Yet a PricewaterhouseCoopers report in 2014 for BeyondBlue found that for every dollar spent on better work practices there was a positive return on investment of 2.3.

“That is, for every dollar spent on successfully implementing an appropriate action, there is on average $2.30 in benefits to be gained by the organisation,” the report says.

In recent times also been a growing focus on the impact of social networks on health, a work-life balance issue.

“The influence of social relationships on risk for mortality is comparable with well-established risk factors for mortality,” research from Brigham Young University in Utah and the University of North Carolina concluded.

Working 12 hours a day isn’t going to cut it.

So getting a WELL accreditation might mean a direct hit on work habits that over recent years have ramped up visible office time, but not necessarily long-term sustainable productivity, if you look at the data.

The most extreme examples of this phenomenon is in Japan, which has coined a term for people who literally work themselves to death, not because they do something dangerous, but because they work way too hard. It’s called “karoshi” and it kills about 200 people a year from heart attacks or cerebral haemorrhaging after working long hours.

What’s next?

Grocon’s head of culture and innovation David Waldren says after you get the “bricks and mortar” as sustainable as possible, it’s been a question of “what next?”.

“In our view wellness and the WELL building tool is coming to be part of what everyone does in offices as it is indeed in residential and NABERS and Green Star,” he says.

For his company it is “about how can I create an environment in which a person or visitor who uses the building comes out of that experience feeling better or being better energised”.

“It’s about innovation and safety together, and WELL goes a long way to framing how to put metrics around that; how to put design parameters in place.

“Psychologically and physically the the air you breath, the water  you drink, the food you eat and the buildings you inhabit have an impact. Let’s look at how that can impact in a positive way.

“Sustainable building has become par for the course and if everything is not five star, it’s six star, and the benchmark keeps lifting.”

In Geelong, the building Grocon has announced will have just over 22,000 square metres of space, and it just happens that WorkSafe needs almost exactly that space in Geelong.

Waldren denies strong market suggestions that a pre-lease has been signed. It’s a speculative building, Waldren insists, meaning it’s going ahead without or without tenants.

Interest from another two government clients, the Department of Human Services and the National Disability Insurance Scheme, which together need another 22,000 sq m – all part of the state government revitalisation program for the city – will soften the risk. Any of these tenants would probably want a WELL rating, the company reasons.

Differences with Green Star

But if a 6 Star Green Star building is already world’s best practice and is, on that score, already as healthy as it can be, what can the WELL standard add to such a benchmark?

Key, says Waldren, are the air filtering and lighting systems.

And these could be quite challenging.

It’s about adjusting the lighting to our circadian rhythms for a start, he says.

“It’s not rocket science but it can make a difference.”

Then there is the quality of the filters for air inside the building. They need to be “way better than outside the building”. Which brings into question the whole notion of openable windows always being better. “It depends on where you live.” Breathing outside air in Bangkok, for instance, might not be as appealing as if your office backs onto a national park in Victoria.

Would a WELL standard cost more than 6 Star Green Star?

“You’ll have to ask after we’ve done it,” Waldren says. “It might well cost no more than a 6 Star or 5 Star, but we’ll have to work very hard to get there.”

You might be tempted to simply add in an extra $2.5 million or $3 million, he says, but the reality might be that you needed to work harder to do it for the same price.

That and a bit of extra pressure on the sub-contractors to deliver on innovation and quality beyond the norm perhaps.

The biggest challenges would be probably be the air filtration system, which needed to create “outstanding” air quality. And that could create some pressure with energy consumption.

“As a consequence you might use more energy because the pumps have to work harder but to get better NABERS and Green Star ratings you’ve got to use less energy.”

It’s a matter of keeping all of these objectives in mind.

“It has to be a matrix of rating systems and to maintain all of them at the level required we have to be very careful of considerations of the impact it will have.”

According to Tony Armstrong, who left CBRE last year to take up the role of business development for the International WELL Building Institute (and is part of the team in Sydney this week), the drive to push the boundaries is strong and no more so than in Australia and New Zealand.

• See our article Tony Armstrong leaves CBRE for International WELL Building Institute

You only have to look at the outperformance of Australia and New Zealand in the Global Real Estate Sustainability Benchmark, “ranked number one five years in a row, so they’re head over heels for sustainability here”, he says.

“This is the next evolution because it builds on aspects of Green Star.”

How does WELL work?

There are two parts to the standard  – one for the base building and another for the tenancy but both are closely connected but a tenant does not necessarily need the base building to be WELL compliant before they can aspire to the standard.

Partly it is about the fitout, but more importantly it’s about how companies treat their staff,  “what they do inside their own tenancies, right down to the policies on maternity and stress leave and how well they educate people on nutrition and what kind of food they provide for people in boardroom lunches, etcetera”.

There are 102 items that cover both ends of the standard. Each has an “intention” that’s been developed under scrutiny with organisations such as the Mayo Clinic . Tenants need to report each year on progress, staff are asked for their views on how their employers comply with the standard and then every three years the tenancy needs to be re-certified.

Macquarie Bank thought the effort worthwhile. Michael Silman, global head of corporate real estate for Macquarie Group, said the WELL accreditation was a “robust measure of health and wellbeing, and complements building sustainability ratings such as Green Star and NABERS”.

“Health and wellbeing has a powerful and positive impact on employee performance and their overall levels of satisfaction at work.”