Economics + Attraction/Retention

I. Productivity and Wellness

A report done by Jonathan Laski of the World Green Building Council looked at a series of case studies that had data supporting the impact of high performance building features on employee satisfaction and retention. One case study of an office building in London, United Kingdom found that by improving the indoor air quality, acoustics, and other green building environmental qualities, the rate of employee turnover was reduced by 27% along with a 58% reduction in absenteeism. Together, these two elements saved the company approximately 200,000 GBP a year (WGBC 2018). Another case study at the Plantronics Office in the Netherlands found through a post occupancy survey that the new office had a 6.6 point improvement on employees perception in comparison to the previous space attributed to the features supporting health and productivity (WGBC 2018). A Mixed-use Residential development in Hong Kong supports the notion that green development features that promote health can improve satisfaction with 97% of the building’s residents reporting high overall satisfaction scores (WGBC 2018). A case study of an office in San Francisco also shows improved work experience in comparison to their previous space due to the new green building features with a reported 87% satisfaction (WGBC 2018).

A study conducted by Dodge Data and Analytics found that improving the health and wellbeing of the occupants was one of the top reasons to build green and the benefits on health can be used as a way to recruit and retain employees (Dodge Data & Analytics 2018). Design features that affect health and performance such as thermal comfort, indoor air quality, daylighting, and other green building elements can influence user satisfaction of the workplace. In a review of thermal comfort studies, seven out of nine studies revealed that users rated thermal comfort as the top priority to improving satisfaction in a building (Rupp 2015). Buildings that contribute to the health and wellbeing of the workers are perceived better and are a large reason why workers will choose or stay at a company (Heerwagon 2000).

II. Green Labeling

Buildings labeled as green or as high performance buildings have been linked to an increase in attraction and retention for both the employees of a company as well as the tenants of a building (O’Mara 2012). A green building can contribute to a company’s image and promote values that employees can identify with (Yudelson 2010). The ability to enhance the image of a company can be used as a strategy to attract and retain quality staff (Edwards 2006). Social responsibility has become of great importance to people choosing companies to work for, especially among young professionals. A survey found that 92% of respondents reported if a company is environmentally friendly, they are more likely to work there. (Lockwood 2008). Green features can also improve overall satisfaction and attraction of a building. A case study on the Akron Children’s Hospital in Ohio found that 76% of the staff were proud of the green features of the new building and would recommend the hospital to family and friends (WGBC 2018). A study by MacNaughton et al. also demonstrated that green labeling could also lead to better work performance by comparing high-performing office buildings (high ventilation rates and low volatile organic carbons) to LEED certified office buildings. The study found 26.4% higher performance by employees on cognitive function tests and 30% fewer sick days in the LEED certified buildings (MacNaughton 2017).

Green buildings do not always have to be new builds. Implementing green features to an existing space can have the same benefits. In a survey conducted by Deloitte, they found that by implementing a green retrofit, 93% reported an increase in the ability to attract talent and 81% reported an increase in the ability to retain talent (Lockwood 2008). One survey respondent stated, “People want to do business with us now. It’s the most amazing thing, the visibility that we’ve gotten and the opportunity that we’ve had to use this structure as a platform” (Lockwood 2008). Other survey respondents also highlighted benefits of their green renovation on attraction and retention of the business. One mentioned that the image change from the renovation helped attract talented staff. Another highlighted that they have more people trying to work for them than they can keep (Lockwood 2008). A corporation that wants an image of environmental responsibility, can use the building as a symbol in an effort to attract and maintain employees (Heerwagon 2000).

Not only does the label of green building impact the employee attraction and retention, but also building ownership attraction and retention (Heerwagon 2000, Fuerst 2009). A case study of a mixed-use residential building in Hong Kong attributes a 40% higher property value than other similar properties in the area due to it being a high performance green building (WGBC 2018). In a case study in Atlanta, Georgia, the first built LEED certified class A office building obtained the record price per square foot for office buildings sales in Atlanta at $408/ft2, attributing the sale to the green certification (Wiley 2010). In another case study in the Netherlands, the client purchased the building up front because they were impressed by the building’s green features and concept. The cost implication of this buy has an estimated savings of 624,00 Euros in financing costs for the developer (WGBC 2018). A different study by Franz Fuerst that looked at how eco-labeling can impact office occupancy found that in LEED labeled building, occupancy rates are 5-7% higher than in a non-labeled building and 1.5-3.5% higher in Energy Star labeled buildings. In addition, rental premiums could be charged for buildings with eco-labels . (Fuerst 2009). Green buildings often have a better chance of selling or renting faster because of a business’s desire to maintain an image of environmental responsibility. (Heerwagon 2000). Additional information regarding building ownership attraction and retention can be found in the Economics Asset Value Research Brief.

III. References

Review Articles

• Attema, Jeremy, Fowell, S.J., Macko, M.J., & Neilson, W.C. “The Financial Case for High Performance Buildings.” San Francisco: Stok LLC. (2018).
• Edwards, Brian. “Benefits of green offices in the UK: analysis from examples built in the 1990s.” Sustainable Development 14, no. 3 (2006): 190-204.
• Heerwagen, Judith. “Green buildings, organizational success and occupant productivity.” Building Research & Information 28, no. 5-6 (2000): 353-367.
• O’Mara, Melissa, and S. Bates. “Why invest in high-performance green buildings.” Education & Smart Campus Solutions. White paper (2012).
• Rupp, Ricardo Forgiarini, Natalia Giraldo Vásquez, and Roberto Lamberts. “A review of human thermal comfort in the built environment.” Energy and Buildings 105 (2015): 178-205.
• WGBC (World Green Building Council). The Business Case for Health and Wellbeing in Green Building. 2018.
• Wiley, Jonathan A. “Green design and the market for commercial office space.” The Journal of Real Estate Finance and Economics 41, no. 2 (2010): 228-243.

Primary Research

• Fuerst, Franz, and Patrick McAllister. “An investigation of the effect of eco-labeling on office occupancy rates.” Journal of Sustainable Real Estate 1, no. 1 (2009): 49-64.
• MacNaughton, Piers, Usha Satish, and Joseph G. Allen. “The impact of working in a green certified building on cognitive function and health.” Building and Environment 114 (2017): 178-186.

Print Media

• Lockwood, Charles. “The dollars and sense of green retrofits.” Washington DC: Deloitte (2008).
• Yudelson, Jerry. The green building revolution. Island Press, 2010.