How social health is driving real estate investment
Buildings for diverse workers, plus investor values, are becoming more prominent
The social health of buildings, which includes features to reflect diverse workforces and even the ethical position of investors, is rising up the ranks of importance for investors and occupier organisations in the wake of the COVID pandemic as the office market continues to be heavily influenced by tenant demands.
Facilities that account for more diverse building users and a wider community are expected to feature more prominently in new and refurbished buildings, according to a report citing the themes expected to drive investments in 2022.
“We're now starting to hear greater discussion around whether a building has the inclusion of a prayer room and whether there are gender neutral end-of-trip facilities to account for a diverse workforce,” says Andrew Ballantyne, head of research – Australia, JLL.
In addition, amphitheaters or additional steps are being included in buildings to encourage community integration and interaction.
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Speaking on JLL’s Perspectives podcast, Ballantyne adds that investors are becoming more discerning about which tenants to have in their buildings.
“Previously, the focus was very much on the quality of the covenant. That is, what is the organisation’s credit rating? What's the term of the lease? But now there's a lot more discussion around whether a tenant has particularly strong political views, or operating in an industry which is a high pollutant?”
Healthcare will be another major growth area for Australia and New Zealand real estate markets, owing to changing demographics and evolving technology. The sector is accounting for a wave of occupier requirements set to come through over 2022 and 2023.
“You might have thought that a rise in healthcare would have meant more private hospitals, but we are seeing a migration towards offices that need to be repurposed and given better environmental credentials and then that lending itself to healthcare tenants,” says Fergal Harris, JLL’s head of capital markets for Australia, who was also speaking on the Perspectives podcast. “It’s not your typical area of growth for the office market, but it’s very much an emerging trend.”
Healthcare and social governance are two of the five factors driving investment decisions in 2022, according to JLL. The other three are a higher interest rate environment, the comeback of COVID-impacted sectors, and a shift to infill logistics.
Ballantyne and Harris explore the themes in detail on episode 29 of JLL’s Perspectives podcast, which can be downloaded here.
Contact Andrew Ballantyne
Head of research - Australia, JLL
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