The Covid-19 pandemic raised the stakes for senior housing design, making it more important than ever for these buildings to promote the health and wellness of residents, staff and visitors.
Private equity firm Harrison Street is seeking to be in the vanguard of healthy senior housing buildings, through a partnership with the Center for Active Design (CfAD). Launched a decade ago, CfAD is the licensed operator of Fitwel health building certification, which was created by the Centers for Disease Control & Prevention (CDC) and the General Services Administration (GSA).
Starting in 2019, Harrison Street collaborated with CfAD to create a specialized healthy building scorecard for senior housing. Chicago-based Harrison Street has invested about $10 billion in more than 256 senior housing communities since 2005.
Last month, Harrison Street announced that the firm will pursue Fitwel certification across a pipeline of more than 500 senior housing, student housing, medical office and life science properties.
But for senior housing properties in the Harrison Street portfolio, earning healthy building certification is just step one, Managing Director and Chief Impact Officer Jill Brosig told Senior Housing News.
The firm will be using the scorecard and certification process to track the effectiveness of certain health and wellness initiatives and features to drive better decision making, and she believes that Fitwel certification will ultimately increase valuations. And, there is research to support this belief.
Office buildings certified as healthy buildings in 10 large U.S. cities commanded 4.4% to 7% higher rents per square foot than their nearest non-certified peer properties, according to Massachusetts Institute of Technology (MIT) research.
“This premium for healthy spaces is independent of all other factors, such as LEED certification, building age, renovation, lease duration, and submarket,” the researchers noted.
A senior housing scorecard
Scholarly research forms the underpinning of Fitwel certification, with CfAD using an algorithm that draws on about 5,600 peer-reviewed studies to create weighted strategies for achieving healthy buildings across different sectors, CfAD President and CEO Joanna Frank told SHN.
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When it came to creating a scorecard specifically for senior housing, collaboration with owners and operators in the sector was crucial, and Harrison Street stepped up early on as a collaborator. It became clear that the typical healthy building scorecard wouldn’t translate to senior housing, Brosig said.
For example, a typical scorecard would award points for promoting the use of stairs rather than the elevator, such as by having staircases visible and accessible.
“If you’re talking about a senior living environment where people have difficulty walking, or they’re in wheelchairs, going up and down stairs isn’t an option,” Brosig said.
A number of Harrison Street’s operating partners weighed in as well, and collectively the group created a senior housing-specific scorecard that was piloted in two New York communities. The scorecard was first developed in 2019 and updated throughout 2020, including with Fitwel’s Viral Response module, which was developed in response to Covid-19.
The scorecard became commercially available in Feb. 2021, and includes items related to a variety of building and site components. These range from the large-scale — such as ensuring that a building is lead- and asbestos-safe — to more granular items, such as whether employees have access to a quiet room.
Issues that came to the forefront during Covid-19 are also prominent in the scorecard. For example, several items relate to infection control and air quality. Access to the outdoors also became critical to maintaining resident and staff wellbeing while properties were largely in lockdown mode, and the scorecard includes several items related to outdoor accessibility and the quality of outdoor spaces.
Given the differences between senior housing and other property types, Frank is interested to see what patterns emerge as more providers pursue certification. For example, food access is a common sticking point for other property types, if they are located in areas without convenient and affordable dining and grocery options. But given that senior living communities have dining programs, this is not likely to be a major issue.
As of early 2020, about 10 Harrison Street senior housing properties were registered and going through the pilot phase of completing the scorecard and pursuing certification. The whole process takes roughly 12 weeks. The goal for 2021 is to have 200 Harrison Street properties overall, across various sectors, certified.
Gaining certification is not guaranteed, but Brosig is confident that Harrison Street’s senior housing properties — which are high quality and generally of recent vintage — are well-positioned to earn certification without any major building upgrades or renovations needed. Most frequently, filling out the scorecard reveals relatively simple adjustments, such as putting in place certain policies.
“A lot of times these things aren’t that difficult, but it’s just making us realize, we need to make sure we have all of this,” she said. “This validates that our properties meet our expected standards for health and wellness, building design and operations.”
A growing trend
The healthy buildings movement was gaining momentum prior to Covid-19, but the pandemic showed real estate investors that they cannot afford to ignore this issue, Frank said.
“We experienced 140% growth last year, and we already had 80% growth the last year before that,” she said, referring to certification across all building types.
In addition to the pandemic, this interest in healthy building certification has been driven by investors’ increased focus on environmental, social and governance (ESG) factors. The impact of environmental and governance initiatives generally has been easier to measure than the impact of social initiatives, which was part of the attraction of having this Fitwel scorecard and certification, Brosig said.
Having the scorecard data will allow Harrison Street to analyze building performance and make comparisons; for example, do communities with high scores in certain healthy building categories tend to have better staff retention or fewer resident hospitalizations.
Marketing a Fitwel certification is another focus, as a means to help attract new residents, but Harrison Street also intends to investigate how much the certification matters to prospects, Brosig said.
There is a cost to pursuing Fitwel certification, which for a typical Harrison Street building will run to about $6,000 to $7,000 for a three-year certification, according to Brosig. Being able to demonstrate a return on that investment is important, and she is confident that certification will pay off — but also that meeting healthy building standards will and should become table stakes within the real estate industry.
“I don’t think everyone’s thinking this way, but I think this is where we need to go,” she said. “We really need to be much more cognizant and aware of how buildings are designed, how it impacts the health of occupants.”