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The financial case for high performance buildings

Quantifying the bottom line of improved productivity, retention, and wellness

1 Oct 2018

The business case for High Performance Buildings (HPBs) traditionally cites energy savings and increased asset value as the most appealing incentives. But another – and arguably greater – form of enhanced value creation that comes through HPBs is rarely discussed: HPBs benefit the people who occupy them, which in turn produces significant positive impacts on a company’s bottom line.

This is a remarkable oversight, as companies make tremendous investments in employees by way of the design, construction, and operation of their workspaces, but don’t often draw the full connection between employees and their space. This paper provides commercial real estate owner-occupants and tenants with metrics to evaluate the financial impact of HPBs on occupants.

By applying financial impact calculations to findings from over 60 robust research studies on the effect of HPBs in three key occupant impact areas (Productivity, Retention, and Wellness), this paper arrives at the financial impacts below to help owner-occupants and tenants quantify the benefits of investing in HPB strategies. The calculations assume a hypothetical company in a 150,000 square foot (SF) building or space, and an average 183 SF per person, totaling 820 employees.

Because a first cost is required to calculate Net Present Value (NPV), stok assigns a $20 per SF cost premium for HPBs. This is a conservative assumption based on an analysis of research on the cost premium for HPBs to date (referenced in Section 3.2). Based on the analysis below, by designing for the occupant, owner-occupants and tenants can gain $3,395 per employee in annual profit, or $18.56 per SF in annual profit. This is an NPV of $21,172 per employee, or $115 per SF, over ten years, assuming the conservative $20 per SF cost premium stated above. This total only includes productivity, retention, and wellness findings. Include utility and maintenance savings, and the total NPV of HPBs results in $23,584 per employee, or $129 per SF, over ten years.

Although utility and maintenance cost savings are the most frequently cited benefit of HPBs, they offer some of the smallest financial value. As shown in this report, 43% of the total value comes from enhanced employee productivity, 41% from increased employee retention, 7% from improved employee wellness, 7% from utility savings, and 2% from maintenance savings. Given this breakdown, human-centered design should be a critical consideration when creating an HPB.

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