Healthy buildings: optional to obligatory overnight

Matthew Warner (MW): Good morning, good afternoon and good evening. My name is Matt Warner and I’m the portfolio manager of Real Estate Equity at Manulife Investment Management. At Manulife, we know that buildings have a tremendous impact on our health and well-being. The COVID-19 pandemic has elevated the expectation for healthy indoor environments, centering decision-making around buildings to prioritize people, and social impact presents a massive opportunity to developers, investors and tenants alike. Today, with the help of world-renowned healthy buildings expert Dr. Joseph Allen, we’ll discuss the 9 Foundations of a Healthy Building, how building owners and investors can prepare their workplaces for a healthy and safe return, and the economics of healthy building investments, building the case for healthy real estate. Today’s presentation is brought to you by IREI, in partnership with Manulife Investment Management. We will spend the first portion of the presentation hearing from Dr. Allen, and the second portion will be allocated to questions and answers. You will notice there is a Q&A feature at the bottom of your screen. Please submit your questions at any time throughout the presentation and we will get through as many as possible. As a reminder, this session is being recorded and will be sent to those who registered early next week in case you miss anything or want to forward this presentation to a colleague. The playback video will also be available on irie.com. If you’re interested in receiving a free copy of Dr. Allen’s book, Healthy Buildings: How Indoor Spaces Drive Performance and Productivity, please submit a question using the first and last name you used to register for the event. Someone from our team will then be in touch to coordinate its delivery.

 

I would now like to introduce you to Dr. Joseph Allen. Dr. Allen is the CEO and founder of 9 Foundations and an associate professor at Harvard T.H. Chan School of Public Health, where he directs the Healthy Buildings program. Before joining the faculty at Harvard, he spent several years in the private sector, leading teams of scientists and engineers to investigate and resolve hundreds of indoor environmental quality issues. His academic research focuses on the critical role the indoor environment plays in our overall health. With the help of Dr. Allen and his team at 9 Foundations, Manulife Investment Management’s real estate team developed a Return to Office playbook, which provided a clear overview of how our buildings should be managed amidst the rapidly evolving landscape. It included guidelines on employee behavior, communication standards and operational system upgrades. Our team at Manulife continues to engage with Dr. Allen, and we are happy to have him here today to learn more about healthy buildings and how they have shifted from optional to obligatory overnight. Dr. Allen, thank you and welcome.

 

Dr. Joseph Allen (JA): All right, thanks so much, Matthew. I appreciate that nice and kind introduction. It’s great to be here and I want to thank IREI for the invitation. It’s been a pleasure working with the Manulife team now for many months, and this Return to Office playbook plan and their entire Investment Management real estate team. And really, this goes back to my earlier work doing consulting around forensic investigations of sick buildings and in 10 years or longer of doing that kind of work, it became quite apparent we know what needs to be done to keep people safe indoors. In fact, we know what it takes to keep people not just safe but also help them thrive.

 

So, in addition to Manulife, I have been working with and advising organizations across the spectrum, everything from biotech and finance to K-12 schools, universities, the prison system, courts, police departments, big entertainment companies. So really, it’s all starting with the fundamentals of the science. But really what we’re talking about today is a broader idea of healthy buildings and this new norm, and also the business case for healthy buildings.

 

One of my co-authors there, John Macomber, co-author of the book, is a professor at Harvard Business School, and we’ve teamed up over the past several years to make this business case for healthy buildings and I’m going to make the case from the health side, certainly, and also bring in the business case. So, I’m going to keep this pretty zippy and I’ll move it along so we have time plenty of time for Q&A.

 

But let’s start with some big picture framing. I’m not going to go through all these global mega changes, none bigger than the current pandemic of course, but think about even where we were before the pandemic. Rapid population growth on a path to nine billion people on the planet; rapid urbanization, first time in history more people live in cities than do not; these forces are colliding, creating strains on our natural ecosystems; we have a changing climate; and thinking about population growth and urbanization, India alone will add 400 million people - 400 million - to cities by 2050. So, to put that in perspective, I’m in Boston right now and it’s the equivalent of adding a city the size of Boston every three weeks from today through 2050. So massive changes are happening, changing definitions of health, our buildings and of course the nature of the Earth. And last, number 10, our values are changing, in a good way in my opinion, and rightly so.

 

So, let’s jump into buildings, specifically. I start most of my presentations by asking this question: Why are we ignoring the 90%? And there’s two parts to this. The first is, we’re an indoor species; we spend 90% of our time indoors. So, I’ll have you do a little experiment here. Take your age; multiply it by 0.9. That’s how many years you’ve lived indoors. So, I’m 45, I’ve lived 40 years of my life inside schools, offices, my home, airplanes, cars, and these days it seems like 99% of my time, if not more, is spent in this one single room. Yet if you think about what we spend most of our time focusing on and studying, it’s the 10%, it’s things like outdoor air pollution. We even have protections for that 10% of where we’ve spent time. We have things like the National Ambient Air Quality Standards. There is no corollary for that 90% of where we spend our time. There is no National Indoor Air Quality Standard. There should be. The other part of this 90% we’re ignoring is the true cost of operating our business. So, this is a savvy group in this space. I don’t have to talk about this at length but of course that’s the people inside of our building. Yet if you think of what we’ve been doing so far, we’ve mostly prioritized green buildings, and green buildings come with a lot of important benefits: reductions in energy, waste, water. But that actually accounts for maybe 1% of that 10% cost. The true cost, and where the movement is going, is to capture the value of the 90% cost: People, and where they spend their time.

 

All right, so another thought experiment. If we were live, I’d call on people to answer this question, but I’ll do it this way. I want you to think about how you know what you know about healthy living. How do you know that exercise is good for you? We all know this, what is it these days, 30 minutes a day, or something like this (again, I’m failing miserably there, thanks to the pandemic). We all know that this is a healthy meal. We all know that we have to eat healthy to be healthy. We all know that outdoor air pollution is bad for us. We all know that cigarette smoking is bad for us. But really, how do you know these things?

 

I would argue that most of what we know about healthy living comes from these large human epidemiological cohort studies that follow tens of thousands of people for decades, following their behaviors, their actions, and also tracking health outcomes. So, who gets cancer, who doesn’t; who has heart disease, and who doesn’t. Well, we’ve learned a lot from these studies. The Framingham Heart Study, the Nurses’ Health Study, tens of thousands of nurses participated, hundreds of thousands, the famous Harvard Six Cities Air Pollution Study. Okay, these are really important studies, but what do they all have in common besides following tens of thousands of people over time? None of them talk about the place where we spend all of our time. None of them talk about the role of the building and that 90% of our life.

 

And so, it’s actually a glaring hole in our understanding - I’d say widespread understanding - of what it means to lead a healthy and live a healthy life. Very few people would point to buildings first and say, well yeah, certainly you have to exercise and eat well but also my indoor air quality matters, right? It’s a total afterthought. Hopefully that’s changing right now in the pandemic. There is a massive opportunity in front of us. So, what matters in terms of the 90% of where we spend our time? Well, there are a lot of things that matter, actually.

 

My Harvard team released a report a few years ago called the 9 Foundations of a Healthy Building and here, this was in response to conversations with industry leaders, where I think I was at the real estate roundtable many years ago now and said, look, we’re overcomplicating what it takes to have a healthy building. It’s just a handful of factors. And a whole bunch of people leaned in and said, well, what are they? And it occurred to me there was this disconnect. We had what I think as decades of science in public health that hadn’t permeated the market. So, I wrote this report, highlighting all these nine foundations of a healthy building and how they influence health, and bringing in some of that scientific evidence we wrote our report around.

 

So, I’m going to start talking about a couple in particular up top: ventilation and air quality. A few years ago, we wanted to look at what is the impact on worker productivity as it relates to indoor air quality. We started a series of studies called the Cog FX Studies, for cognitive function, and in the first study we enrolled knowledge workers. Twenty-four knowledge workers spent six days with us over two weeks in this kind of ugly, cubicle farm in the top right, did their normal work routine, 9 to 5, and we fed them and kept them there. They were blinded to what we were actually doing and at the end of the day we would administer a cognitive function battery.

 

What they didn’t know was that from the floor below (depicted in the bottom right) we were changing the air they were breathing in really subtle ways, and really just changing three variables: Bringing in more outdoor air, lowering the CO₂ concentration and lowering the chemical load on the space of common VOCs (volatile organic compounds), things that off-gas from dry cleaning, personal care products, carpets, wood furniture, surface cleaners. So, a highly controlled environment, controlling for everything else. Caffeine intake, how well they slept, salary, education.

 

And what we find is really quite dramatic and shocking. It should be shocking to most people. Across nine domains of higher order cognitive function, we saw that when people spend time in this optimized indoor environment, again of just three variables that most buildings can hit right now, and controlling for all these other factors, we find these significant and dramatic impacts across all domains - so that’s the dark green bar relative to a conventional office building (that brown bar). Across domains that you will recognize as being quite relevant to business: crisis response, how you orient yourself to problems and tasks, how you seek and utilize information, the breadth of your strategic thinking and approach. So again, indoor air quality, big picture indoor air quality, minor adjustments can have big impacts on cognitive function.

 

We also see impacts of CO₂ and across the horizontal axis there, that’s carbon dioxide concentration. And for reference, a typical office building has about a thousand parts per million of CO₂ and we started to see effects at these levels, and in fact, I wasn’t planning on doing this but I’ll do it, I tracked CO₂ in my office. It’s at a thousand parts per million, 1,100 parts per million right now. So that’s high. These are above levels at which we see effects. Previously, we had thought this was a level that was benign, not really impacting us. I feel fine, I hope I am performing okay here, but it’s telling me that the CO₂ levels are actually high in my office right now, and our research shows that this has an impact on my decision-making performance and cognitive function. So, I’ll open my window and see if the second half of the presentation is better. But I’ll show the data, I’ll show the monitor again towards the end and we’ll see if the CO₂ concentrations go down. They should.

 

All right, I want to move from buildings to bring this into something everybody knows and talks about: Airplanes. For many years I researched airplane air quality and in 2013, I was the lead author of a National Academy’s report on infectious disease transmission in airplanes. So, I know airplane ventilation quite well and you all do too. So, here’s a graph showing a typical flight. The red line is pressure so with boarding there’s nothing, then the pressure changed during ascent and cruise. But pay attention to the blue dotted line. That’s the CO₂ concentration. So, I told you that a thousand parts per million was too high. And if you look at the bottom of that y-axis, the vertical axis, this is all above 1,200 to 1,800 parts per million. And look at that really high concentration at boarding. It was very common for us to see CO₂ concentration during our testing of airplanes at 2,500 parts per million.

 

Now think about what happens when you get on a plane. Maybe some people haven’t been on a plane in a while, but recall, very often it can be a middle-of-the-day flight. You sit down in the plane and what happens? You fall asleep. You’re tired. There is no ventilation. Planes rarely have gate-based ventilation operating. So, I’ll talk about it in the context of cognitive function performance, but I have been writing a lot about buildings and COVID and airplanes too. Airlines need to make sure that gate-based ventilation is running, particularly in the middle of a pandemic for this reason. All right, but let’s stay on productivity.

 

So, we’ve studied office workers with the Cog FX Study, but this time we studied pilots. We actually enrolled 30 active commercial airline pilots, this is in a flight simulator, a brand new A320 flight simulator. The person on the left in the back is our scientist, a professional FAA rater, and we subjected the pilots to three-hour flight routines, repeated, randomized and blinded, and the only thing we changed was the carbon dioxide level in the cockpit and we tested their flight performance against 21 advanced maneuvers, including things like a single-engine failure during flight. You all saw those quite scary videos of an engine on fire after the engine ripped apart in-flight. And things like a failed or aborted takeoff. And when we do that, we find that the pilots who are breathing the air with higher CO₂ concentrations were more likely to fail advanced flight maneuvers, including mid-air collisions, when the air quality was worse in the cabin, controlling for all other factors again. Here’s an example of rejected takeoff. The pilot in the green does a good job, recognizes there’s a problem, slows the plane down. The pilot in the red has a hard time with the plane, takes too long, fails the maneuver following the same protocols that the U.S. FAA follows. So, I just brought this in because it’s something we all know and have experienced, sitting on an airplane, getting tired, ventilation not working and showing that these effects we saw in office workers extend to all sorts of activities. This is real-world life performance with active commercial airline pilots. I won’t tell you the fail rate, but air quality matters in the airplane and everywhere.

 

All right, so let’s get back to buildings and this idea of worker cognitive function and indoor air quality influencing performance. Well, the other part of the 90% that we’ve been ignoring is the business implications of better indoor air quality. I’ll walk through the second analysis we did from our Cog FX Study. We knew we’d get pushback, but what does it cost to create this healthy building with better ventilation? So, we modeled it all across the United States, commercial office buildings, all different types of building typologies and mechanical systems. It doesn’t really matter that it was in the U.S., we just wanted a broad geographic representation with different climate zones, so all climate zones.

 

We estimate the cost in the order of worst case $40 per person per year to achieve this higher ventilation rate. If you use energy-efficient technologies, it’s down to dollars per person per year. If you ask facilities managers what this costs to do, they overestimate it by a factor of three to 10. In other words, you say, what do you think it’s going to take to implement this? They say it’s $100 per person per year. Our worst case - worst case - was $40, after energy-efficient systems down to dollars per person per year. So sometimes 100x over estimate. And that’s important because that’s where the conversation historically has stopped. Hey, there’s a cost here; can’t do it; it’s not in my facilities budget. A facilities director job is not worker productivity, not necessarily worker productivity. Most of them are not tasked with that. It’s energy savings only.

 

Now we model our Cog FX results using employment data. This is all peer-reviewed and published. I’ve written a couple of articles in Harvard Business Review about this now, but we find that when we look at the benefits, it’s in the order of $6,000 to $7,000 per person per year, U.S. dollars per person per year, against that backdrop of a couple of dollars per person per year. This is a gross underestimate of the benefit, because the reality is we know that there are more benefits to higher ventilation rates: Reductions in worker absenteeism I’ll talk about in a second; reductions in infectious disease transmission. So, if anything, a gross underestimate. I had a CEO of a major company tell me, look, if your math is off by two orders of magnitude, it’s still worth it. And he’s right. In one sense, it’s still worth it even if it’s wrong, but he’s wrong in the other sense. Our math is not off by two orders of magnitude.

 

All right, so let’s bring you to the book here. It’s really generous of Manulife to offer a book to anyone who types a question into the box, so I think you have to leave your name. But there’s a lot of good information there we hope that extends. We talk about this study so you can read about it in more depth than I’ve covered here, but also, we walk into the business case here. This is a podcast we did with Harvard Business Review “Is the Healthiest Building in the World Worth the Rent?” I teamed up with Harvard business professor John Macomber, my co-author, and I’ll walk through some of the thinking in the book to see how this plays out.

 

So here in the book, and we have some real examples of buildings, but in this case it’s a made-up company, Health & Wealth, Inc., a baseline company, 40 employees, average annual salary $75,000, payroll as a percent of revenue 50%, revenue at 2x revenue to payroll, and we followed the rule of thumb given by JLL, a nice little way to think about this, the 3/30/300 rule. For every $3 in utilities, $30 in rent, $300 on payroll. And so, we create this basic pro forma for this company and then we can model out what happens with this $6 million company here when we start to put in some of these healthy building strategies. We walk through this in the book in more detail. So, on the left there, what if the company says, hey, we’re going to give you the greenest, greenest, greenest, we’re going to chase every last piece of energy in the building, we’re going to reduce energy consumption by 20%. Remarkable and significant and important. You save about $6,000 on utility costs, that’s great. Bottom right there, the net impact on income after taxes is less than half a percent. Really good for the environment, we need to do this. Business impact is minor at this point. And many organizations have already captured all the low-hanging fruit. It’s difficult to find another 20% in energy savings right now. What happens if we extend to some of the benefits, so in this case, let’s add a payroll effect. A 1% difference. Is that reasonable? And we see on the bottom right, net change. Now we’re approaching a 2% increase in net income after taxes. But is that reasonable, that 1%?

 

Well, we can look at other studies. And this is what we did in the book. The study by a colleague, Don Milton, looked at worker absenteeism as it relates to healthy building strategies, and he found 1.6 fewer missed workdays in companies that pursued these healthy building strategies. And what are the healthy building strategies in that study? Higher ventilation rates. And so, you can map this out - 250 worker days per year with this salary, it’s about two missed workdays from Dr. Milton’s study and it’s not hard to come up with this 1% number. So even if we say 1%, you’ve already covered your energy costs and you get an almost 2% net increase.

 

Well, let’s extend that and bring in the worker cognitive function work that my team and others have done. So, to be clear, I mention a few studies here but the literature here is really deep, actually decades deep. So, let’s say a 2% productivity boost, top line. Is that reasonable? Well, I’ll tell you that the cognitive function test scores I showed you in the Cog FX Study worker test scores doubled. They doubled in terms of their performance by just changing a couple of these factors. So, let’s say it’s 2%. Bottom right, net change 9%.

 

And this is the key point. If we start addressing worker health and productivity, it leads to massive impacts because obviously workers are the biggest expense in the building, yet the green building movement hasn’t fully embraced this healthy building movement. So, there are costs to this, right? Higher energy, higher ventilation rates. The extra utility costs for higher ventilation rates, we add this into the model. Really no real impact on bottom-line performance. This is cheap relative to the game.

 

Now one of the things we talk about in the book that I think is really quite important is this barrier to adoption and sometimes its perceived conflict. If I am a building owner and I develop a healthy building, why would I spend more if the benefit all goes to the tenant? Tenant workers are getting the benefit. Well, we show in the book and make the case throughout the book that there’s plenty of room for sharing here. So even in this company, if they were hit with a 10% higher rent for this healthy building, they can absorb that cost and still see a premium, an overall massive net impact on net income after taxes.

 

Another way to think about this is what we heard from another CEO who is pursuing healthy building strategies and essentially saw it as a hedge: In an up market, I get the premium; down market, I get the tenant. And that’s what we’re seeing right now. So, all else held equal, which building are you going to go back to? A healthy building or a not healthy building? I think very few workers are going to go back into anything that’s not a healthy building at this point. The norms and expectations have fully changed.

 

All right, so let’s stretch it here. What if our Cog FX Study is a gross underestimate of the benefit of healthy buildings? So, I talk about the nine foundations of a healthy building, all these factors that influence our health. So far, I’ve just talked about ventilation and I gave us a 2% boost on productivity. So, I’ll add one more percent here for all the other foundations and I’ll bring in some other studies to justify it. So, we did work at Harvard looking at the impact of temperature. It turns out people like a certain pretty tight temperature range in their buildings and when it drifts off of that, as we sometimes see from these minimum targets for temperature and thermal health, in our work we found a 2% dip in worker throughput, again knowledge workers. This was young knowledge workers between 20 and 25 mostly. So, a 2% dip in throughput. Lawrence Berkeley National Lab did a study and finds a 10% decrease in relative productivity when you’re outside of this preferred thermal condition. So just adding one more layer on this, on top of ventilation, thermal health, one of the nine foundations of a healthy building.

 

I just gave you two of the many dozens of studies showing benefits to productivity from even slight improvements. I’m not even talking about lighting and biophilic design and water quality and particle concentrations and healthy materials and all these other factors that we know influence our health. Acoustics. So big picture, we start to focus on these things, bottom right, we can have a massive impact on bottom-line performance for businesses. I’ve tried to make the case quickly here, and I hope you’ll all get a free copy of the book and see if we convince you in that book.

 

All right, I want to move to the topic of the day, of course. So, buildings also, talking about productivity and health, buildings also fight disease, and they can promote health and they should be an active component of every business’s strategy against disease transmission. This is not anything new. This is an editorial I wrote with a colleague in December 2019 talking about the power of healthy buildings to advance health for all and we talked about buildings and pandemics. It was never a question of if; it was always a matter of when. We didn’t know that a month later this would start happening in China, but we knew when it did happen buildings would play a key role.

 

Here’s the problem: I’m not going to go into the details, I promise, on this slide. This one’s the big picture overview. This is a 100-year history of ventilation rates in buildings. The target ventilation for healthy buildings that we like is this dotted red line. The current ventilation standards that govern building ventilation rates in every place you spend your time, you go shopping at a store, you’re in a restaurant, you’re in a school, you go to a ball game, indoors, all these ventilation rates are set by the same standard-setting body and they’re low. They’re below what we know is a level that promotes health. This has ushered in what is the sick building era. So, we’ve known [about this] and this is my concern.

 

The first piece I wrote on the novel coronavirus was February 9, 2020, “Healthy Buildings Need to Be the First Line of Defense Against this Virus”, knowing that current ventilation standards were not sufficient to protect against this virus. Last year, almost a year ago to the day, I wrote this article in The New York Times, again highlighting this. If buildings are managed poorly, they can aid in the spread of disease, but if you get it right, they can be important tools to reducing the spread. In fact, one of the most important tools because we know that far field airborne transmission can happen, transmission beyond six feet. Respiratory aerosols will build up indoors unless they are diluted out of the air or cleaned out of the air.

This is nothing new. We’ve known this for a long time. We’ve just lost our way. Florence Nightingale, 160 years ago [wrote], “…fresh air from an open window is the only defence a true nurse either asks or needs.”

 

Over the course of the past 100 years, really with the global energy crisis in the late 70s, we started tightening up our building envelopes and we forgot all our lessons learned from the past decades that we needed to bring in more outdoor air. We choked off the air supply for buildings and the result is the rise of sick building syndrome. Really not a surprise, very easy to connect the dots.

 

Before I get off COVID, I want to be sure I place healthy buildings in the context of what else matters. We’ve done this with Manulife, talking about the hierarchy of controls, a layered defense approach, the Swiss cheese model, whatever you want to call it. No one strategy in of itself is sufficient, just like healthy buildings are not. So, you layer all these defenses on top of each other. Work from home. Bringing people back. Testing and screening if you can. Engineering controls like healthy building strategies. Better ventilation. Better filtration. Administration controls like de-densification, spreading people out. And of course, mask wearing. And there’s a great light at the end of the tunnel, so we’re getting through this. The vaccines are safe and effective and quite a miracle, so there is certainly light at the end of the road here.

 

I want to wrap up with my last few minutes here talking about this big question: How do you know it’s working? You think you implement these healthy building strategies, that’s good, and the only real way to know is to take the pulse of the building. My co-author and I wrote this piece last year at Harvard Business School, “Who Guarantees Your Safe Workplace Return?”, where we talk about these factors, including measuring and tracking health performance indicators. This is also covered in our book - I’m really not trying to sell a book here - I just want to let you know where you can find these resources if you want to dig deeper into the concepts.

 

So, the idea of health performance indicators comes from KPIs, key performance indicators, but we like HPIs, let’s be intentional about health, and this 2x2 grid is simplified this way. Above the horizontal line, that’s people. We can track leading and lagging indicators, happiness, complaints, sick days, but below the horizontal line, that’s the building. I like the bottom left the best, the leading indicators. If we design and operate buildings correctly from the beginning, we know that building performance drives human performance and that ultimately drives business performance. So, said better, we can impact the top line on this chart - people - by paying attention to what’s below the horizontal line - and that’s our buildings.

And that includes taking the pulse of our building.

 

So I promised I’d share it so all right, I’m now under a thousand parts per million, that’s good. I have my window open. I feel a little sharper and the CO₂ is dropping. I mean, these are the basics that we’ve known for a long time. This is not hard to do. I will say I can talk about it in the Q&A if anyone’s interested, if you want to talk more about sensors and where the market’s going, I’m happy to do that because there’s been a real big movement in this space over the past couple of years that’s accelerated just recently.

 

Wrapping up here, you know, this information or the change in expectation is happening and people are interviewing their buildings. That might sound kind of odd but it’s the truth. In the book we give a couple of examples talking about looking at the website Glassdoor. So Glassdoor is where people dish on all sorts of things about their company they work for, good and bad. Much of it is around culture, salary, titles, bosses. People complain, people also write good things. It’s a bit like Yelp, but for work.

 

 Well, if you look at Glassdoor and look at what people are saying, they’re actually talking about their building. We pull some examples from the book: People are saying it smells like sewage in here. How can anyone concentrate in here? The temperature is uncomfortable, makes me think about leaving. How does the management not pay attention to the air quality in this building? So, this is now being attached to brands. And prior to the pandemic, I think some companies would just brush this off, employees complaining.

 

But look at some of these comments now that are happening related to people’s buildings, good and bad. So, the first one’s bad: How is this office different than being on a virus-infected cruise ship? So, if that’s your company, that now lives with you, and every future employee that wants to research your company sees that and it’s an indicator, maybe, to somebody looking that this wasn’t taken seriously. And compared to the bottom one, health and safety of the entire workforce is of the utmost importance. I couldn’t be happier. So, people are interviewing their building, not just interviewing their building, they’re sharing what they’re learning about the building.

 

So, I want to wrap up again by reiterating something here that we’ve talked about. A handful of these nine foundations of a healthy building but each one we could spend an hour or two on going deep on the science around how they influence not only worker health but also worker productivity. And big picture, the decisions we make regarding our buildings today are having a massive influence on our health and productivity going forward and, in fact, it will have massive implications for the health of all of us for decades to come. So, thank you for inviting me to present. I’m really looking forward to the Q&A, and I’ll pass it back now, thank you.

 

MW: Great, thank you, Dr. Allen. So just a reminder if anyone has a question, please feel free to enter it in the Q&A box at the bottom of the screen. Dr. Allen, a few questions around the pro forma have come in. When you think about implementing healthy building strategies, are there any upfront costs in terms of capex that owners have to take into consideration in order to get some of those benefits, the higher ventilation rates or the filtration?

 

JA: Yes, great question, and in particular around new design, this comes up a lot. Some studies have been done looking at capex and not just opex costs, and for new buildings they estimate it depends on, well, some of these are a couple of years old and the first buildings that were ever done so there’s a bit of a premium they paid. But the cost can be anywhere from 1% to 5% or 6% of the cost on the capex side, depending on which strategies you choose. That said, I’ll tell you about what we’re doing at Harvard and give you an example. We started doing this, we have a new science building that opened up and we just had a big press release about it. It comes online in September. We’ve been driving healthy building strategies into that building and we take something like healthier materials. We’re able to do this at no additional cost and no impact to timeline on the project, no impact on performance of the materials and no impact on aesthetic. This field is changing quickly and like anything as it gets adopted, the more tools and technology that become available, the capex costs will drop significantly. We’re already seeing that.

 

MW: Great. Then I guess maybe just a follow on to that, it sounds at least from a new building design, are there limitations in terms of renovating existing assets or any different perspective that you advise clients in terms of how to implement those strategies for existing assets?

 

JA: Yeah, it’s a really good question and there’s a - misnomer is not quite the right word - but it’s on the line there of where I’m going. Healthy buildings can only be the new shiny building that’s going up in the world’s greatest cities, flagship buildings. The reality is that’s not the case. You can take existing buildings and turn them into healthy buildings, and I know this from experience. As I said in my opening, prior to joining the faculty full time at Harvard I was in consulting. I had a part-time appointment at Harvard, I was mostly doing consulting around buildings and healthy buildings and sick buildings, unfortunately. There wasn’t a building that had an issue that we couldn’t turn into a healthy building with just a little bit of attention. Some of these were the worst of the worst in the sick building space. Cancer clusters, disease clusters, outbreaks in hospitals where people had died. And in each of these, they seem like problems that are intractable; they can’t be solved. It just takes a little bit and it’s a focus on the basics: The mechanical systems, the water quality. And you can actually rehab any of these buildings to be sure that it’s performing optimally.

 

Also, I think really important in existing buildings, a good first step is to take the pulse of the building. I don’t mean a once-a-year kind of quick-and-dirty indoor air quality assessment. A real assessment of the building, where it stands so you know how far off we are from a healthy building and importantly, is there anything that’s really off that needs attention? Is there water damage or mold or is there some weird VOC (volatile organic compound) that’s been detected in the air sampling that tells you something’s unusual in this building? We have to pay attention to it. So, the only way to know is to start peeking and taking the pulse of the building and starting to measure to be sure that it’s performing. Then you can start to spend your dollars smartly in an existing building. You find out where the problems are and then you can leverage your resources better and correct anything that even is slightly off.

 

MW: I think maybe that’s a good segue because there have been some questions around sensors. Could you maybe expand on, it sounds like there’s been quite a bit of improvements in that space. I’m assuming that gives you your best understanding of what the pulse of your building is.

 

JA: Yeah, so for sure, there has been a proliferation of lower cost real-time monitors. That said, let me take a step back and say monitoring indoors or taking the pulse should include two components. One is traditional indoor air quality measures. I’m an industrial hygienist. Nobody knows what an industrial hygienist is but this is the field that anticipates, recognizes, assesses and controls hazards. In fact, if you don’t have a CIH or an IH on board in your company I’d say get one on board soon, especially right now during this crisis. So, there are traditional techniques: Take an air sample, take a water sample, send it to a lab. The lab can only measure a certain number of things and get that back. That’s a snapshot. The other is these newer real-time sensors, and this is developing quickly, where you can measure a handful of things right now reliably, but in real time. Carbon dioxide, a good proxy for ventilation, temperature humidity, particle concentrations, VOCs, lighting, acoustics. And a couple of others are actually coming out. I just saw a new one today.

 

So, the field is moving in this direction and I’ve been talking with a lot of clients. If you’re not going there right now anyway, you’ll be dragged into this soon because the technology is not going to stop here. Soon we’ll be measuring everything on our phones or on a $100 sensor. And importantly, people are sharing. I talked about sharing on Glassdoor. This CO₂ monitor I showed? I showed it on CNN, maybe in November or December, and the company sold out of them right away. All over social media right now, you can find people with this sensor and others actually shaming companies. Many people are misusing these to be honest because there’s more nuance than just saying what’s the current level - and I’m at 880 - there’s more nuance into what that means. So, people are misusing them but that doesn’t necessarily matter if it’s your company and somebody says, hey, airline x, I’m on your plane and the CO₂ is 1,800 parts per million. I’ve heard that’s not safe. Or so-and-so retail shop, I’m shopping at your store and I’m going to blast it all over Twitter that your CO₂ is too high. That’s happening and it’s only going to happen more and more.

 

So as a strategy, many companies are starting to say let’s get a handle on our own indoor air quality monitoring that’s validated with good protocols, so that when these happen you can rebut and say, thank you for your interest and concern. We’re monitoring our indoor air quality in real time too, and rest assured this is what we see and if we see something that’s out of spec, we address it. This is something companies have to get a handle on really fast because the technology is moving, the devices are getting cheaper and cheaper. Now that everyone’s aware of indoor air quality and why it matters to health because of COVID, people are starting to measure these things and report on it.

 

MW: Great. We’re seeing in our own portfolio, particularly on the office side, more tenants are engaging in thinking about returning to the office in the near term, and I think given some of the positive news around vaccines and the caseloads, are you seeing that in your client base? And maybe expanding beyond that, what do you think the challenges are in terms of getting companies in general back in the office, fully utilizing their spaces again?

 

JA: Yes, I have seen a real shift, particularly in the past couple of months. I think early on many companies were maybe quite pleased with how they could transition to a work-from-home model and stayed pretty productive. I feel like I’ve heard from a lot more companies - and by that, I mean senior executives - talking about culture and you know, maybe the first couple of months, fine, but how do you onboard, how do you mentor, how do you keep that culture going when everyone’s remote? I see a bigger shift in that conversation and with some organizations, planning for return to buildings, return to office, whatever you want to call it, soon because for that precise reason these companies I’ve been working with are tracking these metrics. They have controls in place, and they are making decisions based on the science.

 

Certainly, we’re seeing the impact of a few different factors in driving down cases and with more and more of the high-risk people vaccinated, we will see cases and hospitalizations and deaths disaggregate, meaning we used to predict we had a certain number of cases. Three weeks later, that’s a certain number of hospitalizations, that’s a certain number of deaths the week after. Well, you take out the high-risk people, we’ll still have cases circulating but it’s mostly going to be low-risk people and will no longer track with hospitalizations and deaths, which will drop. So, people’s comfort level, you’re seeing the surveys that are coming out. Even just this morning, I saw another one [about] people’s comfort level in terms of anxiety around the virus. One of the big challenges that companies are facing is that there is still a subset of people who are not going to do anything until everyone is vaccinated, we hit herd immunity, this virus is no longer out there, which isn’t going to happen.

 

I see more companies talk about the importance of a communication strategy. How do you let people know what you’ve done? How do you make things that are invisible visible? If you put all these enhancements on ventilation, nobody can see that. They can see you doing all the extra cleaning, the hygiene theater stuff, but they can’t see better ventilation, better air quality, so you have to communicate that. And so, to get that last group comfortable, we see companies talking about these kinds of trainings and communication.

 

MW: Some questions around public transportation I think is maybe another concern, particularly where we are in Boston. Obviously, most people rely on that to get to work. Any thoughts there in terms of how anything you think is being done around that to allay concerns or improvements there?

 

JA: Yeah, I think that’s a big concern for folks and with the vaccine, that’s going to help a lot. If you look at things like subway, I’ve looked at subway ventilation. It’s actually quite good. The problem happens in a place like New York. I lived in New York for a while and at rush hour, there’s no way to avoid it. It’s overcrowded. There’s no room and there’s just no way to avoid it. So, what I’ve been advising some organizations to do is to really be flexible. I think many are doing this in terms of can we not have everyone arrive at 9 a.m. and everyone go to lunch at 11:59 and hit the elevators at the same time and leave at 5:01 at the end of the day? So, by offering flexibility not only do you de-densify your lobby and the space and create some flex there, but you also create flex in terms of the loads on public transportation.

 

That said, if I was on a subway or bus I would feel okay right now as long as everyone is masked. Remember, the most effective and important strategy, more than ventilation or filtration, is universal masking at this point because it’s source control and it’s two layers of protection. My mask and yours, so two filters, two 70%-efficient masks’ combined effect is 91%. That’s before any space and before any ventilation or filtration. So that’s going to be the most effective part and I’ll mention one other thing, not quite the daily commute but despite what I said about airplanes showing CO₂, I’ve written a piece and I’ve studied this. Actually, air quality in airplanes is really quite good. The safest part of your travel in terms of virus transmission is when you’re in your seat and the airplane systems are running. You get 20 air changes per hour, half the air is recirculated through HEPA filters, very little flow between the space. It’s the time during boarding I’m more concerned about and also, I’d be more concerned about other aspects of travel, including restaurants in the airport and where you go after you arrive.

 

MW: Interesting question if you think about the issues and the opportunities associated with healthy buildings, getting that to scale and from the perspective of equity and inclusion. I think some of the early adopters or movers have been in the high-end class A office towers. How do you think about the wider adoption, particularly for more equitable, getting that out from that perspective?

 

JA: Yeah, absolutely I agree with the comment. I appreciate the comment. This is something that keeps me awake because this whole movement will fail. It will be a failure if it’s confined to these elite buildings with unlimited budgets, right? There are always early adopters, and the idea is how do you take the learnings from these and make sure they hit everyone everywhere? The motto of the healthy buildings team at Harvard is “the health of all people, in all buildings, everywhere, every day”. What’s key to this and why we start with that evidence base is we produce the science that shows that healthy buildings lead to better outcomes. Then we operate on multiple levels. One, trying to operate through the market, so to get these things so they just become the norm. There’s nothing special about it, right? These don’t have to be anything special. I want to be put out of business in the healthy building space soon, where everybody just does it.

 

Second, we’re operating through the standard-setting body, so it essentially becomes codified. One of the big problems, let’s take ventilation. The standard-setting body for ventilation is ASHRAE. When ASHRAE sets a standard that’s not based on health, this permeates everywhere. It permeates in housing, affordable housing, single-family homes, it permeates into schools, schools are chronically under ventilated. It permeates everywhere because that becomes what is code and that’s what is developed to and people think, well, I’m hitting code, it must be acceptable. But it’s objectively not acceptable. So absolutely, the healthy building movement has to be equitable and I think the way to get there is to make sure that these solutions and tools reach everyone in all the different markets and we influence the policies that have led to the development of unhealthy buildings.

 

I talked about ventilation but it’s through all aspects. It’s through standards on lighting, it’s through standards on what’s an acceptable material and the chemicals that are in these materials that we then put into buildings. Even the basics, if you look at schools, for example, I’ve been doing a lot of work on schools. We talk about what kind of systems we can put in place in some of these schools. Some of these schools don’t even have running water. So, there’s a long way to go here and I guess my hope is that with the stimulus funds coming in, and this is happening in many countries, that it really represents a chance to get it right, where these funds can go to solutions in places that haven’t had the resources to do this at all, ever. So, think about a school without running water. There’s billions of dollars now flowing and it needs to go towards these kind of solutions.

 

MW: I think you touched on other properties. You talked about schools and homes and apartment buildings but just in general beyond the office. I mean, you’ve seen discussion, are you seeing this dialogue around healthy building strategies in apartment buildings or other property types where institutional owners invest in real estate?

 

JA: Yeah, absolutely. So, I focus a lot on commercial and worker productivity, and I could easily do another hour on other types of buildings including residential apartment buildings and otherwise, and there the metrics change a little bit. We’ve done research looking at healthy building strategies and how it influences sleep quality. Most people probably spend a third of their life in a 10x10 foot box on this planet. And what do people think about? Well, they probably want a good pillow and a good mattress, right? But what about the air quality when you’re sleeping for eight hours a day in that room? And it’s a total afterthought. So, the proposition changes because you could start to think about healthy building strategies not in terms of productivity and cognitive function - that matters - but also mental health and sleep quality and well-being.

 

So, we know these nine foundations of a healthy building also influence those factors and now you have this kind of merging of work and home for a lot of people and so you have that other element. We just kicked off a new study at Harvard called Home Work, which is designed to look at how working from home influences mental health, physical health and productivity, recognizing now there’s a bit of a merge here for some people and trying to understand the building factor. So absolutely, I should have said that earlier on when I focused on commercial real estate that these rules and principles, they’re universal, really. They apply equally to schools. I have done hours of presentations on schools. Better ventilation and healthy building strategies lead to better student test performance on math tests and reading tests and fewer asthma attacks. I showed you the example from an airplane so the same fundamental principles about what’s happening in the indoor air - airplanes, schools, homes, offices - every indoor environment, really, and we could show studies that show a link to an important outcome.

 

MW: Great. A question around, and I think you did touch on this a little bit about how you can actually reduce your opex cost, but when you think about maybe some of the friction or the competing interests, particularly around climate change or carbon cap targets and then the impact from creating healthier spaces or strategies, any thoughts there just to kind of expand on some of your earlier comments?

JA: Yeah, this is the big thing that’s hitting right now. So, where’s this conflict happening versus health and energy efficiency? Let me start with what I think is a big problem. Or a big statement maybe. We can’t have energy-efficient buildings at the expense of human health. We’ve done that for a long time. And we don’t have to. It doesn’t have to be this dichotomous trade-off: It’s energy or our health. We could have perfectly energy-efficient buildings, and nobody shows up and we seal it off. But that’s not going to help anybody.

 

And so, we’ve been presented with this false choice of energy or health and the reality is, you can get both. Thinking about the adoption of energy-efficient systems in buildings has to be, it’s a must, at a grid level so this is taking it out of the buildings, but we have to get to - soon - a place where the energy system delivered to building is not polluting, it’s not based on fossil fuel combustion. If we don’t get there we’re going to be in big trouble and when we do get there, and I’m confident we will, then the marginal cost for a building that uses more energy becomes less. The environmental impact associated with that energy use is less. And we’re building these buildings for 50-, 100-year lifetime, so we have to keep that in mind. Now these energy-efficient technologies on new systems, right, we can do this, we can reduce energy while providing benefits to indoor air quality.

 

Another thing that I’ll mention which I think every building should do is commission. Retro commissioning, ongoing commissioning. Commissioning, if you’re not familiar with it, is essentially like giving your car a tune-up but it’s for your building systems. Lawrence Berkeley National Lab shows most buildings on average can save 15% or 20% on energy if they haven’t been commissioned. So, there’s some low-hanging fruit there and what people don’t know maybe about commissioning is that not only does it help on the energy side but actually commissioning is shown to be associated with improved indoor air quality. Your system starts to perform better. It really starts to perform the way it was intentionally designed but sometimes there’s neglect that happens in buildings over time. So, I think those are some key strategies to try to reduce that friction between energy and health going forward.

 

MW: I know that LEED has expanded some of their indoor air quality in terms of their points systems. There’s Fitwel, there’s WELL, what is your thinking in terms of benchmarking this going forward, and I’m sure there is a level of uncertainty, but I’m just curious where you think where the next steps are in terms of really that benchmarking piece around healthy buildings?

 

JA: Yeah, it’s an important conversation. We gave a whole chapter to it in the book on healthy building certifications, recognizing that the green building movement - wildly successful and important over the past 20+ years - largely focused on energy waste and water, but with a component on indoor air quality. Now the green building ratings systems have some focus on indoor air quality but it’s not a complete focus on healthy buildings. There’s a component of it because there’s so much that they’re also tackling. So, it was inevitable that there would be a rise in healthy building certifications, and we talk about two of the leading ones in particular, Fitwel out of the U.S. CDC, now administered by a non-profit, and the WELL building certification, which is a for-profit company owned by Delos. And they approach it quite differently in terms of what constitutes a healthy building. Their costs are different, their approach is quite different. And so, we see what’s clear is that the market is really interested in this and showing something to say I pursued this.

 

How do you tell people it’s a healthy building? We haven’t seen a clear winner. I actually think there’s room for them and more, and in our book we’re pretty agnostic on, you know, we’re not out here to pick winners. But we say we put down some principles of what we think any healthy building certification should have and what to look for. It absolutely has to be objective, grounded in the hard science. It has to be adaptable. Look at what’s happened in the past year with the science that’s changed almost every minute in terms of our understanding of this virus. So, these standards need to be flexible. I really believe we have to incorporate this monitoring piece, this pulse of the building, and we actually write in the book that this will be the chapter that gets outdated the quickest because these two certifications are evolving and there’ll likely be others.

 

Here’s what I think is really important, maybe the most important part of that chapter on certifications. When we talk about health, it has to be approached differently. If you mess up on a green building and you get your energy calculation wrong, not great. You get your health calculation wrong, that’s a problem. You’re now in the territory of Elizabeth Holmes, in my view, of Theranos, and we put a cautionary tale in there. You’re making a claim about somebody’s health and if it’s - not that anybody’s fraudulently doing this - but if it’s not right but you are promising a building that is delivering something, you get it wrong on energy, okay; you get it wrong on somebody’s health, it’s a very big statement there. So, what I’m encouraged by is I see companies that are pursuing this, taking it very seriously, following that science closely to say look, we’re going to follow the science on what needs to be done to keep our employees and visitors and customers safe and protected and thriving in their buildings.

 

MW: That’s great. Well, I think we’re coming up on the top of the hour. We really appreciate your time, Dr. Allen. We thank everybody online, all the participants, all the great questions. We will follow up with people who had requests for books. I enjoyed your book and I think that this is obviously very topical and something that owners and tenants and employees are going to be spending a lot of attention on going forward.

 

JA: Thanks so much. I really enjoyed the questions and thanks for inviting me.

 

MW: Great, thank you.