Joanna Frank 0:00
A New York City decided as a city that they would use the infrastructure of the city to actually try to address infectious disease. And that’s what led to the creation of the parks department in New York. So Central Park was specifically created and called at the time the working man’s lung. So there’s an understanding that in order for people to thrive in the city that they needed access to outdoor space. And infectious disease was really the impetus to create that the reservoir system and piping clean water down into the city, again, was done to alleviate infectious disease. The sanitation department was created because of maintenance of the streets. And, you know, literally dead horses lying in the streets of New York, you know, was not great for anyone’s physical or mental health and tenement house act. So creating a set of guidelines that defined the minimum standards for lightning there for people to be able to thrive. So we are building on that legacy. It’s actually what gave us the confidence 10 years ago, that we could look at the buildings and the infrastructure of New York City, as I said, to start with, in order to address today’s health crisis, which are much more around chronic disease, which includes diabetes that includes heart disease, it also includes mental health depression is also a chronic disease so so we were really basing our confidence and basing our approach on what had you know what that precedent coming out of New York really had shown us. And today footwell, which is a healthy building standard and certification and tech platform, research partners and the folks who first created fit well, were actually the Center for Disease Control and Prevention to the CDC.
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J Darrin Gross 2:01
Welcome to commercial real estate pro networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly, we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today’s episode is sponsored by Building Insurance and Risk. When you invest in real estate. Work with the experts at Building Insurance and Risk. You will receive multiple coverage offers with a side by side coverage comparison. To learn more, go to BuildingInsuranceRisk.com.
Today, my guest is Joanna Frank. Joanna is the CEO of Fitwel, where she advances design and development practices to foster healthy and engaged communities. And in just a minute, we’re gonna speak with Joanna about healthy building designs. But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we’d love to hear from our listeners. Also, if you want to see a track to our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest, Joanna Frank, welcome to CRE PN Radio.
Joanna Frank 3:41
J Darrin Gross 3:43
Joanna, I’m looking forward to our conversation. Before we get started, if you could take just a minute and share with our listeners a little bit about your background.
Joanna Frank 3:52
Sure. So at heart and at the beginning of my career, I was a real estate developer, like many of your guests and audience, I believe I was a real estate developer until 2010. When as we all know, the economy was not doing very well, especially for real estate when I joined the Bloomberg administration when Michael Bloomberg was mayor of New York City. And that really started the journey that I’m on today. And that is how do we take public health research and data and use it to inform development practice in order to create environments that are really thrive areas that people thrive and encouraging quality of life. At first, we were working with New York City as a portfolio, which was a great way to start. And really, it’s transformed New York. So those of you who know New York know that it’s really changed a lot over the last 15 years. And that is really because of this emphasis on how do we create places that are really prioritizing the people that are using them. So whether that’s a street or a building, you know, how do we create environments that people Dry and value. And that work has continued. So we have continued over the last 10 years to translate public health research and data sets into strategies that can be used across all real estate asset classes in order to prioritize the people within those assets and the people that are affected by those buildings. Because that is how you realize the maximum value for your for your properties.
J Darrin Gross 5:28
Now, it’s interesting, I was just listening to you and he mentioned the public health aspect. Is that been kind of the, the anchor or kind of the cornerstone for your ability to go out and, and spread the message and try and get the word out is aligning with the public health agencies?
Joanna Frank 5:51
Yeah, so public health is absolutely foundational to the work we do. That’s the aha moment. That has changed the kind of perspective of real estate. So public health is, is has always been interested in how we create a built environment optimized for people. The study of public health is more than 100 years old. It started actually looking at infectious disease. So New York City is a great precedent to look at how public health has shaped our city over the last century. So 100 plus years ago, the majority of the population was dying of infectious disease. This may sound like deja vu for folks. So waterborne illness, airborne disease and infectious disease. And New York City decided as a city that they would use the infrastructure of the city to actually try to address infectious disease. And that’s what led to the creation of the parks department in New York. So Central Park was specifically created and called at the time the working man’s lung. So there was an understanding that in order for people to thrive in the city that they needed access to outdoor space. And infectious disease was really the impetus to create that the reservoir system and piping clean water down into the city, again, was done to alleviate infectious disease, the sanitation department was created because of maintenance of the streets. And, you know, literally dead horses lying in the streets of New York, you know, obviously, not great for anyone’s physical or mental health and tenement house act. So creating a set of guidelines that defined the minimum standards for lightning there for people to be able to thrive. So we are building on that legacy. It’s actually what gave us the confidence 10 years ago, that we could look at the buildings and the infrastructure of New York City, as I said, to start with, in order to address today’s health crisis, which are much more around chronic disease, which includes diabetes, it includes heart disease, it also includes mental health, depression is also a chronic disease. So so we were really basing our confidence and basing our approach on what had you know what that precedent coming out of New York really had showed us. And today, fit well, which is a healthy building standard and certification and tech platform, research partners and the folks who first created fit well, we’re actually the Center for Disease Control and Prevention to the CDC. So yes, public health is absolutely at the core of what we do. And we translate that public health research for the real estate industry. Because none of us I’m a real estate professional, I’m not a public health professional. Not not, maybe not none of us, but I certainly wasn’t trained in how to read academic research studies and make them relevant, right. So it is our job to translate that incredible body of research, we have more than 5600 Peer Reviewed academic studies in our databases that have been translated into the standards that are within Well,
J Darrin Gross 8:55
system. I appreciate you, you kind of going through that, you know, the history of, of the public health, and kind of the way it’s morphed over time. And you know, even the parks and all that stuff. That’s that’s kind of fascinating. I was going to ask you, so, you know, we’re past the, I guess the the initial concerns of the public health agencies with RSA were passed. I mean, we’re looking right back at some infectious disease kind of stuff, but but by and by and large, I mean, the, you know, the day to day sanitation issues that were present. Back in the beginning, I would I would think, and most of you know, the the United States or more developed countries that the cities and stuff have that under control. You mentioned light and air. Is that one of the more kind of focal points that you that your your work addresses when you look at a healthy building, or a building and Trying to create healthy building? Yeah,
Joanna Frank 10:03
I mean, it’s interesting that we just spoke about what we were doing 100 years ago, because actually, all of the elements I mentioned, are really what defines a healthy place for people. So 100 years ago, folks were looking at, you know, yellow, fever color and stuff. But actually, the fundamental pieces that they were looking at, in order to support health are still what we look at today, because it is what really defines a healthy environment. So yes, having access to daylight and views, is absolutely one of the highest kind of priorities, because not only does it impact your physical and your mental health, but there is a direct correlation with productivity and financial outcomes as well. So we can make a very strong business case why, as a business, you should be really looking for space for your office that has a lot of daylight and views. Likewise, on a residential side, it will directly impact your mental health as well as your physical health. So daylight and views very high priority and affects your circadian rhythm, ie it affects how well you sleep, and how well you sleep affects all aspects of your health. So your physical health as well as your mental health, as well, and likelihood to develop your diabetes, heart disease, etc. All of those sleep as a risk factor for all of those as well as mental health issues as well. So yes, daylight and views. Very important, then, still very important, like we as humans are the same creatures, right, that we were back then, another thing that I mentioned, which was the central park system being created, again, today, we are still looking at how do you provide access to well maintained green space, whether it’s on your property itself, it could be a roof garden, it could be the outside space around your building, it could also be just having proximity to public space as well, it doesn’t matter to us as humans who owns that property, who owns that green space. But again, having access to green space is good for both our physical as well as our mental health and directly correlated to value for real estate as well. So there are very strong ties between prioritizing what people value and the value of the real estate itself, right? Why is location prized above all else, when all else when it comes to value of real estate? It is because we as people put a value on those attributes that we know to be location, right. So access to transit density access to similar buildings, like in midtown Manhattan, like why isn’t in midtown Manhattan seen as more valuable than the middle of another state? Right? It’s because of all of these factors that we as people value, there isn’t an intrinsic value to Manhattan, as far as you know, the climate or any of those other aspects are concerned. So yeah, so daylight and views, access to green space, and actually, maintenance is still a very big deal. So yes, we don’t have dead horses in the street. But maintenance is still very tied to trust. So it maintenance is actually the piece of real estate that has the biggest impact on levels of trust. So as a person, there are many aspects of how a building is run that I don’t get to see when I walk into a building, I have no idea what the indoor air quality is, I don’t know what the staff kind of HR policies are around sick leave, I don’t know all these things, I don’t know cleaning policies, when I can’t see any of that stuff. What I can see is how well maintained a property is. And if I walk into a building and see a dead for tree, specifically, actually dead greenery or poorly maintained greenery, it is going to have a big impact on my level of trust about a minus 10% impact on trust, whereas well maintained greenery is going to increase my trust by about 5%. So the delta between having a well maintained greenery and poorly maintained really, when it comes to trust is massive it is the greatest difference. And why that is so important in this post pandemic era is that we have really lost a lot of trust, we are all feeling quite insecure and anxious about our built environment. And so as a building owner, it is really benefits you to put out as many messages and communication as possible, both by the way that you present your building physically as well as obviously communication. But to understand how we’ve how we actually went to building when it comes to trust, we use what we can see to to establish that level of trust because we can’t see all of those other aspects which we know are important, but but we can’t see them. So you know, we are making that judgment. We’re not conscious of that judgment, but we are making Kenya judgment.
J Darrin Gross 15:02
Now, it’s fascinating when you when you look at, or you consider all the aspects that you take for granted. And, you know, you’re you’re observing and you can, you know, you know the difference, and then you can appreciate the difference in the feeling that it generates, like said with, you know, dead plants versus, you know, thriving plants or just that kind of connection to the green space or, or, you know, the clean cleanliness of a place. I mean, it’s definitely it’s offsetting, or off putting when when you have something that’s, you know, not inviting, as opposed to something that’s an inviting space. I’m curious, just honest, you know, topic of the past and, and where we are today. Can you identify, you know, if you go back to when the study originally started, you know, 100 years ago or so, and, and the things that were instituted, then were the spaces considered more healthy than than they are now? Or? I mean, was there a, something that happened that emerged in between? Was it profit driven motive that they created less healthy spaces? Or is there anything you can? You can, you know, as a comparison of then and now that that? Or is it just more a matter of just recognizing today? What makes a healthy space? And how to make it more inviting, and more healthy?
Joanna Frank 16:38
Yeah, I mean, I would say that there’s always been a direct correlation between prioritizing the people in whether it’s a city or a building and the value of that city or property itself, right. So New York City, certainly under the Bloomberg administration, our motivation for really prioritizing people and quality of life was so that New York City could compete on a world stage for business, right. So New York City could hold itself up against Paris and London, etc, and say, Hey, companies come to New York City, we are prioritizing the quality of life of your employees. So if you bring your business here, you will be able to attract and retain the talent that you need to be successful. And so there was absolutely a business motivation for looking at the physical environment and the buildings of New York City and prioritizing the people in the city because there is this direct connection between prioritizing people and maximizing the return on investment. And we we see that today, we actually just completed a piece of research with quadreal, who is the real estate owning arm of the British Columbia pension plan. So they use the fitwel standard to assess their portfolio of assets. And then we overlaid the data from that assessment, which is looking at the physical design and operational attributes of those assets. And we overlaid that data set with their tenant satisfaction surveys. And what we’ve established is that there is a direct correlation between the more you do to promote health as defined by footwell, the higher your net promoter score, and it is a direct correlation, the more you do, the higher net promoter score, and everyone in real estate has already made the the connection between high net promoter score and overall asset value, high levels of tenant satisfaction, I think, to go back to their maintenance piece, what is really interesting, every time you do a piece of research, right, you find something out that you perhaps had not predicted going in, what we found was from this piece of research is that it is the operational strategies within those buildings that had the strongest correlation to value, sorry, to net promoter score, with the location having the strongest correlation to direct value. And what is really interesting about that is that the strategies that are within that operational part of fitwel are exactly the strategies we’re just talking about. They’re like the indoor air quality, they’re claiming policy, how you’re mitigating, like pests in the building. So these are not strategies that people can see. And we didn’t tell people that were surveyed. Did you know this building has XY and Z health strategy in effect? Now, what is your level of satisfaction? They were done completely separately, like there was no information given to people who were surveyed about what was actually in effect in those buildings. So people are perceiving the difference. They can tell the difference between a building that has a lot of health promoting strategies in effect, compared to ones that didn’t, which is it’s actually really encouraging that people know, they know the difference, like they feel the difference. And it makes a difference to how they then perceive the building and how they value that building. So that is, that’s new news. This is something that this only just came out. We’d be happy to share it with folks. It’s Really fascinating, we would have predicted that there was a correlation, but to have such a strong correlation and for it to be really clean data, right, you don’t usually see that there’s usually a little bit of a kink somewhere in the data.
J Darrin Gross 20:13
Yeah, it’s not fuzzy anymore, it’s you get data that support that, that’s good. I’m curious on that those surveys in that have, you had the opportunity to kind of do a before and an after, in a specific building to where you have the survey, and it comes back poor, and you report to the, you know, the building owner and, and they then engage a strategy to do the things that that, you know, are valued by the footwell measuring system. And they do those, and then they take a survey a year later, and you know, everybody’s loving the building, and it’s just, you know, amazing, have you had any of those types of opportunities to study, before and after.
Joanna Frank 20:59
So this was the first time that we’ve, we’ve gotten this right, so this is this year, 2022. First time, this is this is the kind of setting the the line and the stats, and quadreal has committed to completing this every two years. So they’re intending to continue to do this. But it’s already driving their business practice, right, they’re already looking at the properties that they assessed, and then the correlation between different sets of strategies that were directly linking to those increased levels of value, or tenant satisfaction, or net promoter score, and are already using that to inform how they both invest in their existing portfolio of assets, and how they will continue to assess future investment as well. And there were there was enough variety in assets, that we actually had some that were scoring on low, and some that were scoring very high, and everything in between. So actually, as a snapshot, you can already look at the fact that if you if you only have a minimum number of these strategies in place, that you know, you’re seeing that correlating with that lower net promoter score. So there’s enough of there’s enough data that there’s actually statistical significance between those correlations. So there’s already a lot that we can look at, that gives you enough insight into how to prioritize your investment in those assets in order to increase the Net Promoter Score, or the tenant satisfaction, or value as well. So all of those things that are the ones that we looked at. So it’s it’s really fascinating. And, and others now are also seeing this, because of course, you know, I think you mentioned the word risk at the beginning. This is this is our everyday discussion. And that is, how do we quantify the risk for real estate value that is brought to the table by people. So at the moment, you know, we’ve a lot of discussions around environmental, social, and governance in our industry and the real estate industry. And really ESG is quantifying that non material risk. So at the moment, the real estate industry has really been looking at that risk in terms of bricks and mortar risk. So what is the risk to my physical balding, of flood or of climate change, etc, what we are bringing to the table are really those s metrics or social metrics, which quantify the risk that the people are bringing to your real estate portfolio. So that perception, actually, while we’re talking about it as a positive, right, we’re saying that, within this portfolio, there was a higher net promoter score when you did more to promote health, that obviously has a flip side. And that is, if you have assets that don’t have a lot of strategies that are promoting health, you run the risk of having stranded assets, it’s going to start to impact asset value. And the big shift in the market that we’ve seen, because of COVID, is that health before COVID, and prioritizing the people in your buildings before COVID was seen as a nice to have, like when I’ve done everything else, then I’m going to start to think about health and the people in my building, but only when I’ve kind of checked all the rest of the boxes. Now, post COVID people and health is seen as a risk, it is seen as a central focus of saying it’s basically table stakes, that you have to be able to demonstrate and articulate to your tenants or to your residents or to your employees, how you are both protecting and promoting their health. And it’s the first question that folks are going to ask when they’re looking at real estate, as opposed to on that second list of questions once they’ve you know, looked at all of the other pieces. And because of that demand, and it’s really demand from individuals and tenants that are driving this, it is now in the risk column because if you can’t show how you’re promoting health, that is obviously you’re going to start to be a risk when it comes to attracting and retaining tenants, etc, which which obviously affects value
J Darrin Gross 25:00
You know, that’s fascinating. Question for you. So the fit well system the model or the kind of the ranking system, is that unique to the US? Or is it a worldwide used system or
Joanna Frank 25:17
so it’s it’s worldwide, we’re in 50 countries already, kind of major markets or North America, the UK and Europe at the moment, but it’s applicable across global portfolios. And we have lots of users using it across a global portfolio of assets. So you’re able to take a single standard, and use it globally, to assess both kind of like how you’re promoting health now, to assess that risk, and also to generate that kind of insight into how to continue to promote health in a way that is quantifiable. The thing that makes fitwel unique is because it has that huge body of real estate, real estate research behind it, we were able to actually wait every strategy numerically. And it’s a reflection of the measurable impact that it has on healthy strategy and the body of research behind it. So we can actually say that from the research, we can, we can quantify the relative impact of a particular strategy against another. So how walkable a neighborhood is, for example, compared to the access to transit, compared to having operable blinds, compared to your food policy, by each one of those has a measurably different impact on health. And the body of evidence behind it is different as well. So the weighting really allows you to as a user, to not just have a list of all of the things you could do, but that list is an order of the greatest impact. And we’ve also just in the last couple of days, further aligned, fit wealth strategies, we’ve just put out a guide to s metrics. So you know, ESG, big subject of conversation will actually account for 50 trillion of assets under management by 2025. So that’s a third of the world’s assets under management. ESG very important that we are able to demonstrate how promoting health and prioritizing people directly correlates to that material risk. And so we put out a guide the fitwel guide to measuring s just a few days ago, because there’s been a lot of work. And there’s a lot of sophistication about how to measure E in the ESG. It’s a much more mature feel like folks have been looking at sustainability and environmental sustainability for a lot longer than they’ve been looking at health. And so we heard from the market that we really need you to provide us insight on how to measure that’s s metric how to measure society in a kind of like, the social impact of buildings, the people side of buildings. So yeah, I mean, it’s it’s happening fast. But but there’s a lot of knowledge there. What I, the part that I am encouraged about is that, for health and for us metrics, all of this, we have this incredible body of knowledge coming from a different profession, right? Public Health, has been studying this for a long time. So we aren’t starting from scratch. We’ve had a pandemic, oh my goodness, how does health How is health impacted by a building? Right? That knowledge already existed, that research had already been done? We’d actually already translated it, it was really the demand that wasn’t there. So now the demand is here, the knowledge already exists. And it’s a case of ensuring that that knowledge is relevant and directly responds to the needs of the real estate industry.
J Darrin Gross 28:38
Got it? As far as scoring a building, how does that? Do you survey the the tenants? Do you? Is there like a portion for the building owner, the property manager? How is the actual logistics of determining a score? How’s that done?
Joanna Frank 29:00
Yeah, so it’s a per asset assessment that you’re using. And for each different asset type, right. So it could be multifamily residential, it could be garden style residential, it could be commercial property, industrial property, there are different groupings of strategies that are relevant to each of those asset classes. And so you’re only going to see the strategies and the scorecard that is relevant to both your asset type, but also to you as where you’re coming into it. So if you’re the tenant, you’re going to use a scorecard that is specifically designed for you as a tenant that commercial interior scorecard is looking at as a tenant, this is what you can control about the building. If I’m a building owner, and I only control the base building, I don’t control my tenant spaces, then you use the commercial scorecard. But as as that base building and so it’s it’s a sophisticated Tech Tech platform fit well. And so basically you take your own adventure Right, you tell it right, I am the tenant in this building. And therefore, you know, this is this is the correct scorecard scorecard for you, you will only see the strategies and the way that they’re worded. So it’s relevant to you as as whichever kind of side of the equation you’re on whether you’re the challenge, or whether you’re the building owner. And there’s also a whole building scorecard. So if you are the building owner, and you’re the tenant, so you owner occupied, then then there’s a scorecard that handles that situation as well. We also have scorecards that are looking at the site, the complete site, so we have that for both industrial properties as well as for residential properties. And so that is a scenario where, say I developing or investing in a masterplan community, where I own the whole site. And I’m providing all of the shared amenities and shared spaces, but I’m not actually developing the individual houses. So that scorecard is looking at the kind of the site wide impact that you’re having, but not at the individual buildings on the site. And likewise, for industrial, a lot of industrial properties are triple net lease, as I’m sure you know. And so the property owner only controls the kind of surrounding space and the box itself, they are not doing the build out or controlling the operation of the interior of that box. Right, that’s being that’s being completely taken by the whomever the tenant is. And so that scorecard is is looking at that scenario as well. So we try to we work very closely with the real estate industry. So we bring the evidence base, and then we work very closely with our real estate partners. To understand what is possible, what is practical, how do you implement this from your perspective, as different levels of kind of worked with a lot of investor owners like quadreal, and trio vest, and then we work with a lot of real estate investment trusts, who have large portfolios of assets. And then we do work with a lot of tenants as well, folks like Mehta, that small company, and Microsoft, and Salesforce and so on. So, so we work across each of those different groups as well and, and really see ourselves as a partner to the industry because we don’t run a real estate portfolio, right? I’m not, I don’t have a huge company where I’m the tenant in hundreds of buildings across the world. So we have to rely on and we value the partners that we have in the industry who really give us their feedback and tell us what they need.
J Darrin Gross 32:31
Got it. And as far as the the platform and the the app, is there any kind of a critical mass of feedback in order to get like a score? So have you had like a multi tenant building? You know, is one tenant if they take the score, you know? Or is it going to be the deciding factor? Or is it you know, just to take a percentage of the tenants to comply to get a score?
Joanna Frank 32:58
No, you can do it per tenant. So each tenant can get that use of the commercial interior scorecard to assess the space that they control. That’s because that impacts the people in their space, right. So it’s all about impacting people. And those spaces impact their employees. So yes, you can do it space at a time of Florida to time, a building at a time, or many are now doing assessing those individual assets of fund at a time. So saying, in order for us to have validated ESG data, we need to be looking at all of the assets in a particular fund, because that’s how will they you know, how we’re reporting out to ESG rating systems. So, you, you still start with that per asset, assessment, whether it’s a building or a space or a site, and then that feeds into your larger data set, which is really looking at that entity wide data set, which you then as a real estate professional use to report out to your investors, whether it’s through ESG or any other any other data is going to be looking at fund wide risk.
J Darrin Gross 34:08
No, not I’m assuming that the the, the monetary value of of a higher score more desirable. Space is a you’re more likely to have a building that’s full, fully rented, one that people want to rent, and that’s that’s going to translate just naturally to the to the bottom line for the landlord investor having you know, having a desirable location and people want to lease or occupy. That’s, that’s cool. Yeah. If we couldn’t like, oh, go ahead.
Joanna Frank 34:44
Sorry. Yeah, MIT put out a piece of research in 2020. So that was pre COVID data, which is even more interesting that there was a direct correlation between an increase in rent premium and having a healthy building certification and it didn’t matter. There’s which Healthy buildings certification. And the rent increase the rent premium was between 4.4 and 7.7%. And it was a very large dataset. So even prior to COVID, having a healthy building certification was correlating to higher rent premiums. And that was before demand went, you know, skyrocketed, which is what’s happened over COVID.
J Darrin Gross 35:20
Now, that’s, that’s, that’s awesome. I have, I feel like I’m the, I’ve been putting in a lot of data for years and years and years, feels like finally the the data is being used. Not always, for me, sometimes it feels like it’s against me. But nonetheless, you know, we’re actually there’s such a body of data on all points, that that it can actually be used, studied and applied to the situation. And that’s great. Joanna, if we could, I’d like to shift gears here for a second. As I mentioned, by day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with risk. And there’s three strategies we typically consider, we first look to see if there’s a way we can avoid the risk. And when that’s not an option, we look to see if there’s a way we can minimize the risk. And when we cannot avoid nor minimize the risk, then we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is. And as such, I like to ask my guests, if they can look at their own situation, could be clients, investors, the market interest rates, however you would like to identify and and what do you consider to be the biggest risk? And again, for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you, Joanna Frank, what is the Biggest Risk?
Joanna Frank 36:51
the people in your buildings, because as we’ve talked about it is people that really decide value by what we value as people and our society translates into the value of your asset. So that kind of comes back to why location, why is this location more valuable than another location it is because we, as people value those attributes. And we can see that and we can correlate it with real data, right. So we as people value being in a neighborhood that is walkable, and there is a lot of data, a lot of stats that shows the direct correlation between the increasing amount of walkability of the location and that increase in value. So, so we as people are going to, we’re going to decide when a building or when a property is really good for us and good for our businesses way before the physical risk that we’re going to see if we’re talking about climate change as an example. flood risk is a good one, just because if you’re looking at flood risk from a When will my property flood physically, that is obviously the risk to the bricks and mortar way in advance of that physical event of flooding, that property is going to lose value, because of the perception from people of the risk of that flood, I am not going to move my business into that building, because that building is in a flood zone. And I don’t want to take the risk of whenever that flood occurs because of the disruption to my business because of putting my people in harm’s way. So the value and the risk associated with that flood is happening way in advance of the physical flooding, because we as people aren’t going to be building that into our assessment of value. Likewise, the temperature change, right, some cities, some regions are going to become less and less optimum for people to thrive, and therefore that’s going to start to affect people’s willingness to move there. Right? If it’s 120 degrees on the high street, like that is no longer an optimum environment for people it is actually suboptimal, right. So now you have an issue about value for that real estate, the buildings will be fine. But as people will say, I don’t want to live that right, that’s too hot. I don’t want to have air conditioning on all the time. And then of course, we can have a whole energy conversation. Likewise, air quality, the air quality is going to affect my quality of life, my tenants and my my family. I’m going to start to bake that into whether I value this location or how I value this location. So it is people that are really driving value of real estate and it is people who are going to be the greatest risk factor because of climate change. And because of all of these other societal changes way in advance of buildings starting to have the Like, you know, physical implications on buildings?
J Darrin Gross 40:03
No, I love it the the just recognizing, you know, the risk, and you know how people fit into that question. That’s great. I appreciate that. Joanna, where can listeners go if you’d like to learn more connect with you?
Joanna Frank 40:21
Sure. So fitwel.org will give you all of the information about the fitwel standard. All of the pieces of research that I mentioned, you can download for free, you can also download the standard for free, as well. So you know, a lot of what we do it is about educating the market and providing this information to the real estate industry, because this is still new to most people. So the idea that we can quantify the impact we’re having on people, the idea that you can quantify trust, that you can quantify the impact of a building on people’s mental health, this is still new to most professionals in the real estate sector. So even though it’s been well established by evidence that’s coming, again, from a different profession, that’s coming from public health. So this is new news, this is still right at the beginning of the journey. And so we’re really providing as much information as possible to the industry. So that folks can see that there is a correlation between value and health. And really responding to that demand in the market. So yeah, fit well.org folks can see all of this information, and obviously, then they can go ahead and use the standard. If if it makes sense, you know, for where they’re at. And as far as avoiding risk, I would say that folks are using fit, well put as part of their due diligence process now in order to assess potential investment, right. So not just how do I take the existing assets I have in my portfolio and improve them, but also, when I’m looking to invest in a portfolio of assets or an individual asset? How do I bake this into my due diligence process? So that I can quantify that risk? And I can avoid investing in that asset? If it isn’t meeting my minimum standards?
J Darrin Gross 42:06
Well, that’s, that’s Well, I mean, I can see that totally, from a due diligence standpoint. And, and also, even if, if, if currently, it’s not an asset or an opportunity that its core as well, maybe what what could be done to make it more of a, you know, attractive, more desirable, but to have that, that frame of reference, and to apply those principles. That makes a lot of sense. So, Joanna, I cannot say thanks enough for taking the time to talk today. I’ve enjoyed talking with you learned a lot, and I look forward to doing it again soon.
Joanna Frank 42:42
Great. I appreciate it. Thank you.
J Darrin Gross 42:44
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