The Business Case for Healthy, Sustainable Buildings
Gregory Patton, a long-time building operator and now CEO of Sustainable Consulting Group, joins the podcast to talk about how making buildings healthier and more sustainable will also make them more profitable for owners. Greg’s practical knowledge on this topic gives building owners and operators actionable insights to take into their properties.
00:00 – Intro
03:57 – What makes a building healthy and why should it be attractive to building owners and operators?
07:00 – Is sustainability more than just energy efficiency?
09:23 – Have you found building engineers struggling with running their buildings for health vs. efficiency?
10:45 – Are tenants choosing buildings because their employees are more productive under the right environmental conditions?
12:11 – What are some of the sustainable and healthy building certifications and how buildings are incentivized to achieve them?
16:08 – What low-hanging fruit is there for building engineers to make the facilities healthier and more sustainable? 20:55 – Greg’s closing message
Additional information on this podcast topic:
LEED – https://www.usgbc.org/leed/why-leed
WELL – https://www.wellcertified.com/investingforhealth
Fitwel – https://www.fitwel.org/new-investor-consensus
SCG website – https://www.sustainablecg.com
[00:00:00.420] – Scott Holstein
Hi everyone, and welcome back to the Building Technology podcast, this is your host Scott Holstein, and today I’m joined by our guest, Gregory Patton.
Founder and CEO of Sustainable Consulting Group. Gregory is a 20 year veteran and the commercial real estate space. Gregory began his journey as an apprentice engineer in the early 2000s with CBRE in Miami, Florida, determined to learn everything about commercial real estate operations. He slowly worked his way through the ranks and became a chief operating engineer.
Having always excelled at operating properties efficiently. The transition into sustainability was an easy one. In 2016, he began earning his credentials and is a LEED AP for operations and maintenance, A LEED AP for interior design and construction. A WELL AP and a FITWELL ambassador. Today, Gregory runs Sustainable Consulting Group, a Denver, Colorado based national sustainability consulting firm. How are you doing Greg? Welcome to the podcast.
[00:00:55.380] – Greg Patton
Doing well. Scott, thanks for having me on today. Appreciate it.
[00:00:59.010] – Scott Holstein
Yeah, absolutely. I’ve always kind of looked at you as an authority on the topic of sustainability and today being that we’re going to be talking about the business case for healthy and sustainable buildings, I don’t know that we could have a better guest. So very happy to have you and reading your bio there, obviously, you come up through the ranks of commercial real estate and building operations, but tell us a little bit more about sustainable consulting group and what you guys are doing today.
[00:01:28.020] – Greg Patton
Yeah, thanks for the thanks for the great intro. And it’s kind of neat to be starting to get recognized as an authority in this in this field. That’s awesome. Thank you. Yeah. So sustainable consulting group. We are a full service national sustainability consulting firm headquartered out of Denver, Colorado, but we do work nationally. So sustainable consulting group. We do given my my background, like you said, in operations, maintenance and coming up through the ranks, a lot of existing building certifications.
So different types of green building certifications, if you will, the lead project management, healthy building certification, your Wells, your FITWELLs. And then we also offer several different other engineering services, if you will, ASHRAE energy assessments, building, commissioning, Energy Star Portfolio Management Review, and then also a bunch of construction related services that deal with sustainability.
[00:02:19.020] – Scott Holstein
OK, great. Now, imagine now that the healthy part of this, the healthy buildings, is a huge part of what people are looking for in these kinds of assessments. Is that was would that be an accurate guess?
[00:02:34.320] – Greg Patton
Yeah, I mean, that is one side of the assessments. But it’s unfortunate, given our current situation with Covid that kind of brought to light how important that healthy buildings are in the role that they play in the everyday life of people in the buildings. So, yeah, it’s definitely a hot topic right now, everything that’s going on in the world of Covid.
[00:02:54.210] – Scott Holstein
Absolutely. So today we’re going to talk about the business case for healthy, sustainable buildings and beyond the fact that it’s just the right thing to do for your building occupants and everybody involved. We’re going to discuss where it makes sense on the bottom line as well. So to get started, when we’re talking about the business case for healthy, sustainable buildings. Let’s talk about what it means before getting into the detail. So what kind of buildings are we talking about and what makes a building profitable or successful?
[00:03:28.250] – Greg Patton
Yeah, that’s a great question. I mean, really, you can make a business case for any type of of building, anything within the built environment. It’s going to be better for the bottom line of the ownership to have a sustainable building. So anybody that works within the realm of commercial real estate is what we’re going to be talking about with healthy and sustainable buildings.
[00:03:47.690] – Scott Holstein
So great, because healthy buildings are a hot topic right now. Let’s start there. Can you give our listeners an overview of what makes a building, quote, unquote, healthy and why this should be attractive to building owners and operators?
[00:04:01.140] – Greg Patton
Yeah, there’s so many different types of certifications out there for healthy buildings. Most of them are going to focus on what is the environment doing to promote the health and wellness of the occupants inside of it. So, you know, they’re going to focus on things like indoor air quality, obviously, which is a big hot topic right now with healthy buildings. But but then you get into the the acoustics of the building, the water quality of the building, the light levels in the building do you have views to natural habitats? Is the the ownership and the management company promoting a healthy lifestyle?
Are they trying to promote what type of snacks do they have available for the occupants if there’s a cafeteria on site? Do they have engineering controls in place to promote the fruits and vegetables rather than an occupant goes for break and grabs a bag of chips or something like that, our stairwells accessible and able to be used by the occupants to travel between the floors.
[00:04:55.490] – Scott Holstein
Interesting. So when I think of a healthy building coming from a controlled background, I of course think of indoor air quality. So good information knowing that there’s so much more to that than just the quality of the air or the environment of the building itself. So what about providing that healthy building and all of those healthy options should be attractive to building owners and operators?
[00:05:21.610] – Greg Patton
I mean, bottom line is going to have tenant retention. If you have a healthy space, you have healthy people inside of it, you’re going to have a healthy bottom line. And with ownerships it all comes back to the bottom line. The building is profitable and the occupants are happy and the tenants are renewing. It’s going to be better for for the ownership and for the management companies that are involved running the buildings.
[00:05:42.050] – Scott Holstein
And that is certainly something I think most of our facility manager listeners out there can relate to. Everybody’s asking them what kind of filters they’re using. And so many people are hyper-aware of the air they breathe and everything that they do now, people are doing their research. So you better you better be on top of it.
[00:06:01.280] – Greg Patton
Yeah, exactly. I it’s exciting to see that tenants are becoming more educated and asking more questions, not only of the occupants, but then but then the occupants come to consultants like us and say, what should we be doing to get these tenants safe back into the building once everything is back to quote unquote normal and they’re allowed back in the building. So it’s definitely an exciting thing to see within the industry the way that it is moving right now.
[00:06:24.320] – Scott Holstein
Like you mentioned at the beginning, it’s something that it’s been brought to light only recently in commercial real estate in particular, really the only place where you saw a focus or one of the places I saw focus on indoor air quality and having making sure that the building is quote unquote healthy, is in Healthcare facilities and very critical environments. But on the sustainability side of this, my first thought of sustainability is energy efficiency and the savings associated with it. But is sustainability more than just that?
[00:06:59.450] – Greg Patton
You know, coming from my operations background, I was always very fortunate in my early part of my career to have the chief engineers above me who really pushed and taught how important energy efficiency was. So my very first thought of sustainable buildings, even before I thought maybe sustainable was a word in commercial real estate, was the energy efficiency portion of buildings. But, you know, I kind of look at sustainability holistically, not only, like you say, the the energy efficiency portion of it, but then also this other topic, the healthy buildings.
[00:07:33.580] – Scott Holstein
So beyond the cost savings, how does operating a more sustainable building benefit building owners and operators? Is it similar to that of a healthy building or is it just tenants are more aware of this now and it’s more attractive because of it?
[00:07:47.620] – Greg Patton
Yes, that’s a great question. There’s been a lot of reports pushed out lately about the what the market is demanding right now. So we are definitely seeing a lot more demand for sustainable and healthy buildings. Just given the current situation, we coded the sustainable practices more in the market. JLL has what they call their three-thirty three-hundred rule, where every three dollars spent on utilities, thirty dollars is spent on rent and three hundred dollars is spent on an employee retention per square foot.
So it only makes sense that these companies are becoming more aware, especially as we get the younger generation, the millennials who are demanding healthier buildings, more sustainable buildings. We’re really seeing a big push in the market for right now.
[00:08:29.020] – Scott Holstein
That makes a lot of sense. And one of the areas you mentioned is the energy efficiency paired with healthy building. So one of the things that we’ve seen a lot with with our customers at Computrols is there’s a balance there. So you have indoor air quality being such a focus to achieve that level of indoor air quality. Oftentimes it requires more air changes, requires filters that are going to generate a bigger pressure drop. And so it’s a it’s kind of a balancing act of, OK, now my priority, rather than running this building as efficiently as possible, is first safety and health.
Have you talked to a lot of building engineers right now who are struggling with that?
[00:09:16.660] – Greg Patton
I’ve had a few conversations. When Covid first hit last year and everything started shutting down, myself and colleagues were kind of scrambling because a lot of clients were coming to us saying, what what should we do? What protocols should we be following? So it’s it’s good. It is like you said, it is a fine line to walk. And there’s always going to be tradeoffs with everything. And honestly, Scott, I mean, all this stuff and all the new data that’s coming out in the new protocols is really stuff that that we should have been doing all along.
I mean, none of this stuff is new. It’s new around Covid. But, you know, all these different types of indoor air quality checks and everything that we’re measuring is not only good for Covid, it’s really good for any type of airborne thing that’s that’s in the air. The Building Engineer, Facility Operator has the ability to step up and make their facility more healthy. It’s all going to go back to the bottom line. You may trade off a penny or a dollar here or there on your utility costs, but can you put a price tag on keeping a tenant in the building for another 10, 15, 20 years?
I think the cost of changing out filters or implementing any of these other strategies, engineering controls that are out there are going to far outweigh the utility costs.
[00:10:30.100] – Scott Holstein
Beyond the healthy and sustainable portion of what we’re talking about. I think that this kind of falls in somewhere in the middle of there. One of the things I’m hearing a lot about is metrics now that they’re able to put in place that measure productivity. And they’re saying, look, under the right conditions, under the right temperature, with more natural light, with with more fresh air, etc, people are actually happier and more productive.
And I guess what I want to know from you is, is that something that I mean, I understand that studies are able to quantify it. It’s probably not very easy, easily quantifiable for most building operators or even the tenants who are looking for that. But is that something that is another factor in terms of, OK, providing an environment where my employees can be more productive now, is that something that’s getting more attention?
[00:11:24.190] – Greg Patton
Yeah, definitely. I mean, that’s that’s kind of the backbone of the healthy building movement. You have healthy people in healthy buildings. You’re going to have a healthy economy. So there are definitely a lot of studies out there that put numbers to what you spoke of. But kind of each project varies from project to project.
And one of the things I noticed, if you guys don’t already follow Greg on LinkedIn or you’re not connected with them, I would recommend going there. He posts a lot of really great stuff. But one of the things I noticed is he’s got a lot of letters behind his name and I’m not sure what they all mean. So, you know, there are a lot of building certifications around sustainable and healthy buildings. Some of the ones I’ve heard of Energy Star, LEED, FITWELL, WELL, can you tell us more about these certifications and how buildings are incentivized to achieve them?
[00:12:11.920] – Greg Patton
Yeah, definitely. I do have a lot of acronyms. After my name, I had to create a whole other signature line just just to fit them all there. But yeah. So like you said in the beginning, I’m a LEED AP, which is LEED accredited professional for operations and maintenance, also LEED AP for interior design and construction and then covering the healthy building portion side I’m a WELL AP then also FITWELL ambassador. So, yeah, you you mentioned pretty much the big ones.
Energy Star lead FITWELL. Well, there’s a bunch of other ones that out there that have come to the market like Green Globes, Moment 360. They’re all really good certifications. Typically, I just like when I’m when I’m speaking with the client trying to get their sustainability goals. The bottom line is, what are you trying to achieve? If you’re going for a pure energy efficiency? Energy Star is a great place to start. If you don’t have a huge budget.
Energy Star portfolio manager is a free service through the through the EPA. It does require some site visits from an engineer and a sealed and stamped energy performance data from an engineer. But that’s a really good place to start. Obviously, everybody knows LEED it’s almost a four letter dirty word where nobody wants to say it, but everybody knows they have to do it. And then the healthy building portion really started gaining traction a couple of years ago.
WELL was released, I think, back in 2016. After years of science back data from the International WELL Building Institute, they launched a pilot program. And it’s a really good, healthy building certification. It is a little bit cost prohibitive just because of how heavy it is into measurement and verification of the indoor environment. And then you also have FITWELL. FITWELL is an interesting program. I’ve kind of heard it described as WELL, light, which I don’t really like that, the only way that it is WELL light is the cost of it.
FITWELL was launched by the CDC and GSA for their pilot program, the GSA buildings around the country. So it’s backed by the CDC and years of research to put this program together. It’s now operated by the Center for Active Design.
[00:14:15.530] – Scott Holstein
Obviously, we see, I’ve seen in my travels to many commercial buildings, they have LEED Platinum, LEED Gold, all of these different certifications, and they put it right on that front door. So it’s obviously something they’re very proud of. Have there been studies that have shown that buildings with the certifications for higher dollar per square foot, or was there any advantage to doing that from a business standpoint?
[00:14:44.960] – Greg Patton
Yeah, I mean, like I said, when I started in my sustainability journey because of my background, it was always about the energy efficiency. Are you operating the building efficiently? There are definitely studies. And just for instance, between twenty fifteen and twenty eighteen, the cost effectiveness of LEED certified buildings had one point two billion dollars in energy savings, one hundred and forty nine point five million dollars of water savings, seven hundred and fifteen point three million dollars in maintenance savings, and then another fifty four point two million dollars away saving.
So that’s a pretty strong business case on the financial side. But as I started getting more involved in the sustainability world and working with it, I also kind of look at it. The ownership is looking at the financial case of it, but you’re able to save all this money while doing something good to save and restore our planet. That’s another strong business case for it, too.
[00:15:37.850] – Scott Holstein
So for our building engineers who are listening out there, who may be interested and just getting started, I know you mentioned the Energy Star was Energy Star certification is probably a good place to start. And certainly we’ll link to a lot of the resources that you need to get to these different certifications as far as, let’s say, low hanging fruit goes for these building engineers, where would you recommend they get started looking for opportunities to make their buildings more healthy and sustainable?
[00:16:10.160] – Greg Patton
Yeah, that’s a great question. Like you said Energy Star is a really great low budget, but that’s not going to really identify it, like you said, the low hanging fruit. So if the operators budget, budget allows the really the best thing to do on energy, ASHRAE calls them energy audits. I don’t like the audit work because it kind of has a negative connotation. So I like to call them energy assessments. There’s the three different levels of energy assessments one, two and three.
One is it’s kind of just like a cursory overview of thirty thousand foot overview of how the facility is operating. A level two is a little bit more in depth. It involves a site visit and then at the end a report is produced and then the third gets a little more intensive where it’s going to identify capital improvement projects that dealership can undertake to become more energy efficient. So for for my recommendations, it would be to start with an energy assessment.
[00:16:59.180] – Scott Holstein
And I’ll tell you, one of the hesitations I heard about getting energy assessments is essentially it provides you with a list of things to do. But obviously there’s there’s varying levels of recommendations where it’s all going all the way from DIY to capital budget project. Do you think that there’s enough there on the self performing side to justify the cost with that alone?
[00:17:27.920] – Greg Patton
Yeah, definitely. I mean, the energy assessment, even a level two, level three, it’s not only going to identify energy efficiency opportunities, but a good energy assessor is going to give you a detailed report at the end and kind of put a dollar amount to it so that you can take it to your ownership or management, your property manager, and say, you know, these are the things that we’re going to need to do to implement to get where we need to be.
And here’s the cost savings associated with the return on investment for refitting the entire building with LEDs or going through and changing out the flushometers or changing out the aerators. So, yeah, there’s definitely it can be cost prohibitive. And unfortunately, a lot of times what we see is somebody will engage a consultant to do energy assessment and then never do anything with it.
[00:18:09.270] – Scott Holstein
Yeah, right. That’s you get all these lists of recommendations and they gather dust. Doesn’t do you a whole lot of good if you’re not planning on taking action on those things. So I guess that’s something for building engineers who are considering doing an energy assessment. It seems logical enough, but make sure beyond what you’ve budgeted for that assessment that you either have the bandwidth in-house or potentially the budget to deploy some of those recommendations, right?
[00:18:35.820] – Greg Patton
Exactly. Exactly. And there’s there’s a lot of different one of the biggest challenges of our energy assessment done is the money behind it. But there’s so many different companies out there that provide financial assistance at low or no cost to the ownership to get these types of energy upgrades done. And then there’s also a ton of rebates out there. Check with your local utility company and see there may be rebates available for lighting upgrades or for other types of utility upgrades.
[00:19:03.780] – Scott Holstein
Absolutely. That’s a great point. We have a podcast that we did a while back on the C-PACE program, and we also covered a few other national energy incentives. But beyond that, there there are state incentives out there. There are utility companies who are offering incentives as well. So when you think, well, this is out of my budget, that’s something to go check out. We’ll try to link you to a few of those resources in our podcast here as well.
[00:19:29.790] – Greg Patton
Yeah, definitely. We also partner with a good energy financing company to provide stuff like that. So I’m also available as a resource for that.
[00:19:37.890] – Scott Holstein
Yeah, absolutely. And that’s something to take advantage of. We understand how much legwork can go into researching those things and trying to figure out whether or not they’re viable for your particular situation. There are companies out there that specialize in that, so don’t feel like you have to do it alone. Reach out and start a conversation and see what they can do for you.
[00:19:58.080] – Greg Patton
Yeah, yeah. One other thing I wanted to bring up, you know, all these different certifications, a lot of conversations, I have obviously sometimes just depending on the size of the project, that can be really, really cost prohibitive just because of the certification cost and the consulting fee. So, you know, a lot of people say, well, we’re running the building efficiently, we’re running it per LEED guidelines. I always like to say that’s kind of like going to college for four years and then not showing up for your final exams at fourth year.
So you have all the knowledge behind it, but you don’t actually have the degree, right?
[00:20:27.840] – Scott Holstein
That’s a great comparison. Greg, I mean, that’s really all the questions that I have for you today. Kind of open the floor to you. Anything in particular on the topic of the business case for healthy, sustainable buildings that we didn’t cover here?
[00:20:44.340] – Greg Patton
No, I think we ran a pretty good gamut of all the topics. At the very least, do something, do something to make your building better, more energy efficient, healthier. Like you said, the low hanging fruit are always there. And a good building operator, good facility manager is always going to be able to identify those and run the building efficiently.
[00:21:03.980] – Scott Holstein
Oh, great. Thank you again to Gregory Payton for joining the podcast today. Greg, you’re certainly welcome back anytime. Really appreciate you joining us.
[00:21:14.220] – Greg Patton
Yeah. Yeah. Thanks for your time today.
[00:21:16.470] – Scott Holstein
All right. Thank you all for listening. This is Scott Holstein for the Building Technology podcast signing off.