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Verdani Vitals Q2 | June 2020
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As we work to advance sustainability in the built environment, Verdani Partners stands in solidarity with those working toward justice, inclusion and equal opportunity for Black communities and all those suffering from the structural and individual racism experienced in the U.S. and around the world. While millions of people participate in protests against racism and violence towards Black Americans, our hearts grieve for the thousands of men and women who have been killed as a result of long-standing, systemic inequities.
In order to truly have a sustainable society, we believe there must be justice everywhere. We envision a new future that truly honors the diversity of Black, Brown, and Indigenous people and ensures equality and human rights for everyone, especially people of color, LGBTQIA+ individuals, and marginalized communities. In these times of grief and transformation, we are working hard to support those in need and will continue to do our part to actively build a sustainable world and hold a higher vision for an equitable future. ~ Team Verdani
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COVID-19 Real Estate Readiness
This is Part 2 of a multi-part series on coronavirus and real estate with an ESG perspective. Topics include Resilience, Reopening, Wellness, Building Heath Certifications, Building Efficiency, Property Types Outlooks, Climate and Work From Home.
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Environmental & Governance / Risk Management
Rethinking Resilience
Since our last newsletter, the pandemic conversation has already shifted from one of how to quickly respond to a global health emergency to now one of how to best reopen the economy and adapt to the long-term reality of COVID-19.
In a similar spirit as the climate emergency and social inequality, the COVID-19 pandemic has rapidly demonstrated how connected, interdependent - and yet unequally impacted - we are as a global society in the face of another existential threat. Climate change, global health and inequality are indeed parallel threats that are interrelated. How we prepare for and adapt to them will require new thinking, cooperation and leadership on a scale we’ve never seen before.
“Resilience” has been both a strategic priority and buzzword in real estate for a while now, but how we interpret its meaning is changing as quickly as the world around us. Resiliency is ultimately how you - as a company, a portfolio, a building - prepare for and mitigate the risks from external shocks (such as climate change or the transition to a low carbon economy) and your ability to bounce back from them and continue operating in the face of new risks. We can now certainly add “pandemic resilience” and "operational resilience" to the growing list of considerations that building owners and operators need to plan for, invest in and monitor.
Despite the challenges, the current pandemic offers a unique window of opportunity for real estate companies to reevaluate their approaches to reduce risk and increase resilience, such as investment priorities and new engagement strategies. Updating policies and procedures, implementing social distancing requirements, adopting stronger IAQ and cleaning strategies, placing a stronger focus on occupant health, building back up supplies of protective equipment and other essential resources, and revamping communication channels with your stakeholders are all important efforts to prepare before an emergency. Whether it be weather-related or an infectious disease, these strategies are intrinsically related to ESG programs, which make sustainable portfolios better prepared and more resilient to new risks.
Buildings and places - and how we use them - will be more important than ever in a post-pandemic world. Re-imagining and re-calibrating mix-used developments will be especially important in getting tenants, residents, shoppers and clients back to engaging meaningfully with their communities in safe and healthy environments.
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Governance / Preparedness and Reactivation
Preparing for Reopening
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Employers have a duty under OSHA to provide a safe workplace. With many buildings and workplaces poised to gradually reopen starting this quarter, convincing people to come back to work with a sense of trust and security will require thoughtfully planned re-entry strategies and execution. A phased approach will likely be the norm for most workplaces, with physical distancing measures at the forefront (reduced employee density, desks spaces six feet apart, one-way foot traffic, etc.) and more control measures in place.
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For real estate managers, it’s important to immediately implement disease control protocols such as more frequently scheduled cleanings, increased orders of disinfectants and supplies, providing access to hand sanitizer and sanitizing wipes in common areas, and daily cleaning of frequently touched surfaces such as elevator buttons and door handles. Visible and well-trained cleaning staff will be critical.
Beyond hygiene and cleaning protocols, indoor air quality remains a key challenge. The majority of office buildings in the U.S. do not have adequate HVAC systems to bring in fresh air, and recirculated air promotes the spread of airborne pathogens. Running fans, upgrading to MERV13 filters and keeping them clean, and above all, increasing the rates of fresh air being brought in is a key way to improve building occupant health.
Frequent, clear communication with stakeholders is more critical now than ever before, across both physical and virtual work environments. Communicating regularly on your re-entry protocols will be helpful in building confidence among your occupants and ensuring compliance with evolving public health recommendations.
The Verdani team is hard at work with many clients to develop these types of communications, including a series of educational signs that will be displayed throughout buildings. Collecting ongoing employee and occupant feedback will enable property owners and managers to adopt best practices and stay prepared to deal with future emergency response needs.
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Social & Environmental / Health and Wellbeing, Certifications
Building Health at the Forefront
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The coronavirus pandemic highlighted the importance of indoor air quality (IAQ) and other health-related building features. The role of buildings cannot be overstated and will be more important than ever as occupant health and wellness takes center-stage in the global pandemic conversation. John Macomber explained, “Building owners (and their investors and lenders) in all sectors will have to both outfit their buildings to measure components of public health and also respond to their occupants doing their own assessments.”
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Building certifications such as Fitwel and WELL can help benchmark your buildings’ health and wellness performance while demonstrating a commitment to occupant safety and well-being. Some components of these certifications include:
- Ventilation effectiveness
- Water quality
- Cleaning protocols
- Natural daylight access
- Mental health promotion
Fitwel also addresses the importance of an individual’s sense of confidence and safety by incorporating strategies aimed at disclosing building health performance. For instance, one Fitwel strategy requires testing indoor air quality and its complimentary strategy is to share those test results with building occupants. WELL also addresses health and wellness of employees through promoting preventative care and reducing overall healthcare costs.
The green building certifications themselves are adapting to address new tenant demands and legal requirements in the wake of COVID-19. The Verdani Certification Team has earned an award for the highest number of Fitwel certifications in 2019 and we are seeing higher demand for certifications that focus on occupant health.
Verdani's Green Building Certification Team remains committed to guide and support owners and managers working toward healthier and safer spaces for building occupants.
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Building Health Certification Support
Verdani's Green Building Certification team has over 20 years of experience supporting clients nationally and internationally with advancing sustainability performance through corporate sustainability programs, ESG reporting and green building certifications. We are nationally recognized with awards for building health certifications consulting.
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Environmental & Governance / Building Operations
Low / No Occupancy Strategies
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To support physical distancing, many CRE owners and operators are leveraging technology for remote monitoring and remote access. Energy monitoring technology allows property teams to maintain surveillance of their buildings while decreasing their time on-site.
Real-time transparency into all aspects of building operations and data-driven decision making will be crucial to ensuring that targeted responses are possible across an entire building portfolio.
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Operating buildings efficiently during these times of reduced occupancy is critical to avoid unnecessary emissions and costs. The following best practices can be employed to optimize building performance:
- Clean and sanitize
- Proactively communicate
- Adjust to low occupancy mode
- Optimize building systems
- Reduce phantom energy loads
- Don’t turn off critical systems
- Notify security services
- Monitor and maintain
- Implement deferred maintenance projects
During low occupancy, there is more flexibility in setting temperature ranges, allowing managers to turn down ventilation and rely more on outside air cooling via economizers. In changing a building’s temperature setpoints, don’t forget that mold and moisture can become a problem if indoor dew points are not properly calibrated. ASHRAE recommends keeping relative humidity levels below 65 percent. Adjust fans, fridges, and freezers that normally run 24/7 but likely will not be needed during this time.
A silver lining to reduced occupancy is the opportunity to implement projects that otherwise would have been disruptive to occupants. For example, properties may elect to pursue technology upgrades, efficiency retrofits and certifications that focus on occupant health while property teams have some downtime from running a fully occupied building.
Verdani's experienced team of energy engineers is available to help maximize efficiency and optimize health settings of your building and portfolio.
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Efficiency & Engineering Support
Verdani's Technical Services and Engineering Team has extensive experience supporting clients, nationally and internationally, with optimizing performance through engineering, building and portfolio efficiency and technical services.
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Environmental & Governance
Outlook for Property Types
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Understandably, the COVID-19 pandemic is impacting property classes differently. Even within the same property class, there can be disparities at the sub-type and regional levels.
Office: The trajectory of the office market is being shaped by the emergence of structural changes in how workspace is used. Occupant health and safety is top of mind as strategies for enabling collaborative productivity and optimizing workforce flexibility are developed in parallel with policies for indefinite remote work scenarios.
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Multifamily: As people around the world are staying at home, multifamily is one of the most resilient sectors to the real estate impacts from COVID-19. However, persistent and growing unemployment numbers may soften rental demand for higher-income properties, bringing affordable housing to the forefront. Increasing health and safety operations and maintenance in high density communities will be a new struggle for apartment managers. While commercial properties see a decrease in energy consumption, multifamily properties are seeing an increase in their environmental footprint. Strategies for increasing resident communication, minimizing cross contamination, prioritizing health and safety and educating tenants on sustainable behavior will be key.
Retail: The COVID-19 pandemic has accelerated the shift to online shopping that had been evolving for the past decade at much faster rate. In recent weeks, major retail giants have declared bankruptcy due to revenue losses. Rent relief and lease restructuring will be critical while landlords and tenants adapt to new shopping models that support physical distancing. As many big box retail properties sit vacant, they could also bring an opportunity for redeveloping them into sustainable mixed use multifamily properties that can also help address dire housing shortages.
Industrial: Increases in online purchasing continue to boost demand for warehouse spaces. Amazon and Walmart are hiring thousands of additional warehouse workers as the pandemic has brought an unprecedented demand for online retail. Despite disruptions in the global supply chains, logistics spaces have been flourishing and are less affected by the negative impacts from the pandemic. The increased demand for industrial spaces might also bring new opportunities for adding sustainable features like solar panels and installing infrastructure for EV truck charging stations.
Hospitality: Undoubtedly one of the most negatively impacted properties in the short-term, hotels and other travel lodging are undergoing a severe demand shock. While the recovery pattern is difficult to determine, there may be increased demand from domestic travelers who are within a drive’s distance, followed by regional business travel.
Healthcare: Even with the upward shift of demand for healthcare, decision making for real estate may be delayed, impacting acquisition/disposition activity. Life science and telehealth operations will trend, despite impacts of local economic composition. Biotech, medical device, pharmaceutical and medical data and diagnostics facilities may be the strongest performers.
There's no doubt that the way we live and work is changing. COVID-19 presents an opportunity to change course and build a more sustainable, resilient and thriving future. As Albert Einstein once said, "In the midst of every crisis, there is great opportunity."
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Environment & Governance / Risk Management
Climate Action Urgency Remains
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Contrary to suggestions that climate change and ESG priorities are now on the backburner for governments and businesses, the COVID-19 pandemic has served as a harsh lesson on the costs of ignoring chronic issues like biodiversity loss and animal consumption. According to the CDC, 60% of infectious diseases are caused by pathogens spread between animals and humans, which underscores the importance of improving our relationship with the natural world and cultivating a respect for wildlife as we seek to prevent future pandemics.
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Global coronavirus shutdowns have created conditions in which greenhouse gas emissions have drastically reduced (around an 8% decline according to the IEA), non-essential consumption has been put into question, and wildlife is thriving again. According to a recent article by GRIST, as of April 27th our emissions during the pandemic fell by an impressive 5.5%. However, according to Carbon Brief, we need to achieve an annual reduction of 7.6% to prevent global warming from exceeding 1.5 -2 degrees Celsius in line with the global targets set by the Paris Agreement.
While the temporary drop in carbon emissions from global shutdowns is positive, it should not distract us from the systematic changes that are needed to slow the Earth's warming trend that is resulting in dangerous weather patterns. Scientists have identified that CO2 emission levels in the atmosphere should be less than 350 ppm, and we have currently surpassed 417 ppm. In order to correct climate change, it is important that there are individual behavior changes as well as a rapid global transition from a fossil fuel-based economy towards renewable energy, greater energy efficiency, and sustainable agricultural practices.
UN Secretary General, Antonio Guterres advises, "As the world begins planning for a post-pandemic recovery, the United Nations is calling on governments to seize the opportunity to 'build back better' by creating more sustainable, resilient and inclusive societies. With this restart, it brings an opportunity for nations to green their recovery packages and shape the 21st century economy in ways that are clean, green, healthy, safe and more resilient."
By using the current pandemic and its financial impacts as a lens, companies should now take a more proactive approach to the climate crisis by decarbonizing and becoming more sustainable. Leadership teams need to frame the impacts of climate-related issues more urgently in their overall and risk management strategies. Just as incremental building improvements will not be enough for pandemic re-entry protocols, incremental progress on emissions and waste will not be enough to avoid the catastrophic changes a 3-4°C world would inevitably bring.
Real asset owners and managers have a key role in mitigating these issues, similar to the role they have in getting the economy re-opened safely and in a more efficient, healthy and resilient way. While COVID-19 has granted us many lessons, the U.N.'s proposed climate actions would direct coronavirus recovery funds towards delivering new jobs and business opportunities through a clean, green transition that fosters sustainable growth and empowers communities to be more resilient. Climate risks and opportunities must be incorporated into the financial system, as well as all aspects of public policy making and infrastructure. As we work together as a global community, it is important to recognize the shared responsibility we have to build a more sustainable, healthy and resilient future for all.
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Social / Health and Wellness
Healthy at Home
Prioritizing Health and Wellness While Working Remotely
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Is working from home still in your foreseeable future?
The coronavirus global pandemic continues to cause a big shift in work patterns with many people still being required to stay at home due to strict social distancing measures. The health and wellness habits that were typically reinforced everyday in office buildings through cues in Fitwel or WELL certified workspaces may have diminished with the transition to the home office.
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In this month's blog, Madison Dorman, Verdani's Certification Coordinator, shares six best practices for implementing a work from home wellness program to help maximize your health and productivity. Read the Full Story
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Sustainability and ESG Support in COVID-19 Times
With over 20 years of sustainable real estate experience and numerous awards and global recognitions for ESG leadership, Verdani's Corporate Sustainability team is prepared to support clients in accelerating efficiency, resiliency, preparedness and performance across ESG outcomes.
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Research and Additional Resources
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COVID-19 | Real Estate Impact
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