Publications

- September 1, 2019: Vol. 13, Number 8

Beyond bricks and mortar: Why it is our duty to put wellbeing at the heart of investing

by Chris Taylor

Traditionally, return on investment has been calculated according to financial performance. However, returns are and should be more than monetary — they should also be measured according to the return for society at large. The two are not mutually exclusive and, when combined, have the potential to deliver outcomes far beyond financial performance to improve the lives of many.

The most effective investment strategies generate real value through a long-term and sustainable approach — one with people at its heart. By contributing to an individual’s and a society’s wellbeing, landlords and real estate owners can drive value by ensuring the appeal and longevity of an asset.

These views have been reflected in the market, where we have seen a fundamental shift in trends, behaviour and requirements, which incorporate wellbeing and sustainability as a key priority. In an increasingly fast-paced world, now is the time to focus on how physical assets can be adapted to contribute to the current and future wellbeing of both individuals and society.

Rising expectations

JLL published findings in January of this year highlighting the rising expectations as to what workplace experiences should be providing. The global research study — Workplace powered by Human Experience: an investor perspective — stated that “employee satisfaction, performance and wellbeing are the new measures of success”. Consequently, employee demands are now “filtering through to investment strategies” and investors are supplementing traditional measures with particular attention on employee satisfaction.

As lines between work and personal time blur, it is all the more important to find new ways to ensure that people get everything they need in one place to find a happy, healthy balance. Improving both the physical and mental wellbeing of tenants, clients and communities is paramount.

As institutional investors, it is imperative that we not only take our role as active managers seriously, but that we also set an industry standard, by, for example, pursuing investments that support the wellness of people who live and work at our developments. This includes providing high-quality facilities and design, local amenities, exceptional placemaking, outside spaces, convenience, and connectivity.

This can be seen first-hand at Wellington Place in Leeds in the UK, an office park where tenants have access to health and fitness facilities and one of the largest open spaces in the city. Workers can also benefit from free bike hire, participatory initiatives such as a workplace choir, and a broad programme of live music, events and street food. Wellington Place therefore meets the needs of growing businesses across a range of sectors, by thinking beyond just bricks and mortar. It is blossoming into a prestigious European city-centre business quarter that attracts high- quality and long-term occupiers and supports their wellbeing needs.

Benefitting society

It should also be recognised that asset managers’ responsibilities to their clients are broad. We owe it to clients to invest responsibly and sustainably, which will serve to benefit society in a long-lasting and meaningful way. Responsible investment and stewardship should be central to the vision that underpins all of our assets.

This attitude underpins the work behind NOMA, Manchester’s largest urban regeneration scheme and the biggest development project in North West England.

Now coming to life, investment into the scheme’s 20-acre masterplan is creating new homes, offices, hotels, shops, restaurants and bars around vibrant spaces and the public realm. NOMA is helping to put Manchester on the map as a growing business hub and innovation district that attracts the brightest talent, both locally and from further afield. The considerable impact such a development can have on the region and its economy, as well as the surrounding regions, cannot be underestimated.

Offering a range of community events focused on improving the wellness of tenants is one approach towards cultivating a sense of belonging and creating a healthy division between work and play — something that can be challenging to attain in the modern world. At NOMA, however, the site is delivering meaningful holistic returns through its offering of yoga classes, food festivals, music and art events, and even a networking event that further integrates people into the community.

Achieving the vision of an engaging place where people enjoy living, socialising and working has been made possible through a forward-thinking and neighbourhood-led approach. NOMA has been responsibly planned and curated in a manner that simultaneously respects the area’s rich heritage and character, whilst introducing complementary modern and sustainable design.

The choices we make as an industry make a substantial difference to society. Through investing responsibly, it is possible to create spaces that nurture the wellbeing of tenants, resulting in a better society for all and fuelling a sense of community pride that will last for years to come.

 

Chris Taylor is head of private markets at Hermes Investment Management.

 

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