The Financial Impact of Healthy Buildings: Rental Prices and Market Dynamics in Commercial Office

Abstract

While the benefits of healthy spaces have long been qualitatively understood and appreciated, it has not been financially analyzed to derive their value and impact on economic decision-making. We use CompStak and Healthy Building public databases from Fitwel and WELL to operationalize a real estate hedonic model in order to ascertain the value of healthy spaces on the effective rent of offices spaces in ten cities within the United States: Atlanta, Boston, Chicago, Denver, Los Angeles, New York, Philadelphia, San Francisco, Seattle, and Washington DC.
We find that healthy building effective rents transact between 4.4 and 7.7% more per square foot than their nearby non-certified and non-registered peers. This premium for healthy spaces is independent of all other factors, such as LEED certification, building age, renovation, lease duration, and submarket. These results indicate that healthy buildings are seen as an asset that correlates with employee or tenant well-being and productivity.