by Katie Ross
The goal of Cushman & Wakefield’s Sustainability Services team is simple: helping clients save money while being kinder to the environment. But, that means much more than simply reducing how much companies spend on electricity. Now sustainability is also a key part of how companies can attract, and keep, millennial talent.
Let’s start off with some basics:
- The millennial generation was born between the early 80s early 2000s.
- It’s the first generation to grow up immersed in the digital world. The ease with which they use mobile and social technologies to immediately access data, ideas, and inspiration, and instantly communicate and collaborate across cities, states, and countries, has changed the way all of us interact with the professional world.
- Millennials have recently inched past other generations and represent the largest share of the US labor market. Furthermore, by 2025, Millennials will account for 75% of the workforce.
So they’re a large group, and different from all others, but why is that important?
According to a 2016 Deloitte study, 2/3 of millennials express a desire to leave their company by 2020. Furthermore, the study states that the average millennial works at a company for 3 years…total. Gone are the days of lifelong loyalty to a firm. With such high mobility, it’s simply not possible to dismiss millennials in the workforce or the ideas and desires they have about their work environments.
So what do millennial actually want in their work environment?
Millennials overwhelmingly report wanting to work for an organization that reflects their own values. In other words, mission-driven, socially conscious companies.
- 50% of millennials say they’ll take a pay cut to find work that matches their values.
- 90% want to use their skills for “good.”
- 9 out of every 10 millennials feel that success in business should be measured by more than just profits.
So, millennials are a better connected and more discerning labor pool. How does this impact commercial real estate?
First, some background: over the past 10 years, sustainability in the commercial real estate office market has meant LEED and ENERGY STAR. Sustainability was sold mainly as a mechanism to reduce operating expenses. Interestingly, during the market downturn we saw an over 200% increase in LEED certifications. This was largely due to the high vacancy rate in the District and a need to invest in order to attract tenants.
Fast forward to 2016. LEED has become a proxy for quality and has largely become a given for many class A office buildings. In the District’s CBD, approximately 40% of the office buildings are LEED for Existing Building certified. This has been driven by tenants, like the GSA, asking for LEED certified space, and increasing pressure on investors to report portfolio-wide sustainability initiatives. It’s not trivial. GRESB or the global real estate sustainability benchmark is used by the District’s largest owners such as Vornado, Brookfield, and Boston Properties to report to their investors. GRESB reporting represents over 2.8 trillion dollars in assets globally.
But, despite its popularity, LEED has not, and largely is not currently, the most significant driver of leases or rental prices.
Instead owners that believe LEED & Sustainability are just a ‘check in the box’ are thinking about it in the wrong way. LEED & Sustainability can actually serve as a model for attracting and retaining millennials.
OK, so what does that look like?
- Better allocation of space.
Communal working areas that have access to day-lighting and views have become imperative for improved health and productivity. Millennials are the generation that wants work to be their ‘second family.’ A great example of this is at 11 Dupont. Historically, the window line facing Dupont Circle was reserved for executive offices and conference space. When a philanthropic consulting firm redesigned the space, they claimed that prime real estate for the masses. Now the space is designed with a café, communal sitting areas and it’s open to all of their associates.
- Align amenities with mission.
Millennials want to feel as though their companies are walking the walk. Here are two examples: The first is Jose Andres promoting healthy eating and local produce. Knowing that is at the core of his business and his mission, he has worked with building owners to install rooftop farms to grow food for his restaurants. The second is the Humane Society. When Cushman & Wakefield was helping them to find a new space, we knew that allowing dogs in the workplace would be a nearly non-negotiable item for them.
- Go beyond LEED.
It’s important to differentiate your building from the other 40%. Whether this be pursuing a certification like WELL, which focuses on occupant health and wellness, or pursuing a design feature that extends beyond the requirements of a traditional rating system. Cushman & Wakefield’s client, Capital Crossing, is a great example of this. In addition to pursuing LEED Platinum, they are also installing water cisterns that capture and treat 90% of storm water runoff and a cogeneration plant which simultaneously generates heat and power. This development is also installing an eco-chimney system which cleans the garage exhaust by means of living filters of plant material and a green roof with 18” beds – meaning they can accommodate trees and plantings beyond the typical sedum. All of this is far more than is required for LEED certification, instead it is meant to set the building, and companies that choose to lease space in the building, apart from their competitors.
What started as something that was good for the bottom line has actually ended up being something millennials look for when deciding between companies. Taking steps like these will save you money in the long run, and produce happier, healthier, and more productive workers.
Katie Ross, LEED AP O+M, WELL AP
Associate Vice President, Sustainability Services