|
Increasing Tenant Demand for Environmental Performance Green Buildings Gaining Competitive Advantage
November, 2007
By Nancy Searchfield and Sarah Eadie
Sustainability has become a key issue for office tenants. Results of a recent survey of medium to large-scale tenants in Montreal, Toronto, Calgary and Vancouver show that decisions to relocate or reconfigure office space are largely driven by the desire for a location that can attract and retain staff and offer flexibility to accommodate an expanded workforce. Sustainability is inherent to an appealing location that provides a quality work environment.
"Our experience has shown that high-performance green buildings and commercial interiors can be cost-effective, increase employee comfort, retention and recruitment, and attract new business," says David Bowden, Canadian President of Brokerage Services with Colliers International, the sponsors of the office tenant survey. During July 24-31, 2007, 181 tenants occupying at least 10,000 square feet of office space were polled in an effort to gauge their site selection criteria and priorities, the relevance of various building features in retaining and attracting staff, and impressions about environmental sustainability.
Of those surveyed, 94% believe sustainability is important as a future component of good business practices, with 63% saying it is very important. All other factors being equal, 91% of tenants would give preference to a green building. 90% believe it is important for landlords and/or developers to make their portfolios green.
Tenants show a rising knowledge of green buildings with 70% reporting that they are either very or somewhat familiar with the benefits that sustainable buildings provide. More than half - 52% - of tenants are familiar with the term LEED (Leadership in Energy and Environmental Design).
Continued education surrounding sustainable building solutions will be a key driver in increasing the amount of tenants requesting environmentally friendly workplaces. Environmental performance is expected to be one of the biggest areas of future change in tenants' building requirements.
Three in five tenants (63%) say they would be prepared to pay a premium to occupy a more environmentally friendly workplace, with 14% willing to pay at least an extra 10%. As well, 62% of tenants anticipate they would be willing to pay a higher net rent if utility consumption was reduced by 30% - 25% would be willing to pay more than 10% extra.
PRIORITIES FOR STAFF RETENTION
Buildings that can offer sustainable features will differentiate their tenant offerings in the market and could attract growing tenant demand. Building owners will also need to be prepared to meet future changes in building requirements.
The workforce is often the most important and most costly component of any business. As work environments continue to evolve, companies will continue to strive to please their employees. Surveyed tenants rank a better location to attract and retain employees as the most important driver other than cost that would lead their organization to relocate or redesign their workplace in the next five years.
On average, tenants rate a location close to public transportation (8.7 out of 10), excellent indoor air quality and thermal comfort (8.7 out of 10), and a high level of natural light (8 out of 10) as being very important in attracting and retaining staff.
Tenants rank their ability to attract and retain young staff at 7.4 on a scale of 10. Environmental considerations, including: a site oriented for more maximum exposure to daylight (7.2); providing good environmental performance in energy and waste (7); and access to outdoors or green space for staff (7) are all features that are well rated for attracting and retaining staff.
Survey respondents were asked to list the three main drivers, other than cost, that would influence a relocation or redesign of their workplace over the next five years. They were given 19 options.
Fourteen percent ranked a better location to attract and retain staff as the most important factor influencing future relocation or redesign. Expansion or growth to accommodate more staff was the top reason for 13% of the respondents, while location in general was the number one factor for 10% of respondents.
Further down in the ranking of priorities, 2% of respondents saw opportunity for more flexible lease terms as the top reason for relocation, 2% highlighted better IT capabilities, and 2% opted for more building amenities. Only 1% of the surveyed tenants chose improved building management as the most important factor.
PREMISES TO COMPLEMENT GOOD BUSINESS PRACTICES
Tenants were asked to rate a list of nine characteristics or desired outcomes that could influence an organization's selection of new premises. These were weighted on a scale of 1 to 10, with 1 meaning "no influence" and 10 meaning "a deciding factor."
The top six choices from tenants were:
Health and well being of staff - 8.5
Corporate image - 7.7
Business growth and expansion - 7.6
Corporate social responsibility - 7.6
Triple bottom line accounting - 7.4
Attracting/retaining young staff - 7.4
Team development & collaboration - 7.3
Environmental sustainability - 7.3
Organizational transparency - 7.1
Almost all tenants surveyed (94%) indicated sustainability is important as a future component of good business practices, with 63% saying it is very important. Organizations that continue to demonstrate their commitment to sustainability are expected to receive support from prospective and current employees, as well as investors, customers and the general public.
By choosing an accessible location and sustainable premises designed to enhance occupant comfort and wellness, employers have the potential to create a workplace that is better for the environment and employees. Notably, 82% of the survey respondents indicated that sick leave, low productivity and low morale have an impact on their companies, and nearly one third (31%) saw it as a high impact.
Buildings offering a location close to public transit, excellent indoor air quality and thermal comfort, high levels of natural light, high-level security, a location near service related amenities and on-site secure parking are expected to attract growing demand in the marketplace. Forward-thinking owners and occupiers who offer sustainable work environments may gain competitive advantage, while reducing negative impacts on the environment.
Nancy Searchfield, CCIM, LEED AP, is a Senior Sales Representative and Sarah Eadie is a Marketing Specialist with Colliers International. The preceding article is drawn from Colliers International's 2007 Canadian Office Tenant Survey Results. For more information about the report, see the web site at www.colliersreports.com.
|
|