Water-cooler conversations used to focus on last night’s TV. Now they’re less about watching sports and more about last night’s training session.
Companies are responding to a growing number of fitness-minded employees by improving their health and wellness amenities. State-of-the-art office gyms, locker rooms and lunchtime fitness classes are becoming key amenities for helping attract and retain workers—particularly the fitness-focused Millennial generation.
Landlords also recognize that onsite fitness amenities can differentiate a property in a competitive market, bring in the tenants and increase the property price when it’s time to sell. With construction costs trending upward, however, companies must weigh the costs of even the most worthwhile amenities against the expected benefits, just as in any other business decision—and it’s easy to over-invest.
The health and well-being premium
Office build-outs that include both outdoor space and indoor improvements increase overall workplace productivity by 16 percent, according to JLL research, and that’s highly motivating for corporate employers. Also important are bike storage, green space, stair-centric designs that encourage physical activity, and other health-sustaining amenities that can help attract and retain employees. Since employee turnover is costly, retention can save company money in the long run.
“Employees today want to work for a company that shares their values, and that includes health and fitness, along with environmental sustainability,” says Jessica Bollhoefer, Vice President and Sustainability Practice Co-Lead, JLL Project and Development Services.
As health and well-being features catch on, some companies are pursuing the new WELL designation. This up-and-coming standard recognizes facilities that meet rigorous standards for air quality, lighting design, drinking water, fitness and comfort, and even workplace health benefits such as maternity and stress leave, and availability of healthy food.
WELL-designated buildings may eventually command a premium just as LEED (Leadership in Energy and Environmental Design) buildings do. A report from the Urban Land Institute found that developers of WELL-designed buildings said market response exceeded their expectations in terms of lease take-up and sales rates, along with higher rents and sales premiums along with interest from lenders and investors.
Weighing the costs
As beneficial as health and fitness amenities can be, renovations and build-outs require careful planning and investment. Nationwide, construction costs continue to rise, largely because of a skilled construction labor shortage.
The cost for office fit-outs in 2017 averaged $152.88 per square foot across the U.S. after tenant incentives were taken into account, rising to above $190 per square foot in San Francisco and Silicon Valley. “Renovations become even more costly if developers use expensive materials or do custom build-outs,” Bollhoefer notes. “Fitness amenities like bike rooms can be well worth the cost, but, as construction costs continue to grow, you have to think strategically about what amenities are truly important.”
The demand for state-of-the-art technology further increases the price. Electrical costs are the biggest-ticket item, making up over a quarter of the typical renovation budget. Gyms, with their massive electrical demands, are especially expensive for this reason. And those spacious windows that boost work and workout productivity with plentiful natural light? Glass, like construction labor, is in short supply and costly.
Office gyms have unique construction demands because of the dual requirements for easy access and safe parameters for workout equipment. Acoustical ceilings, carpet, resilient flooring, special fire-suppression materials and other finishes for workout space are more costly than general office materials. Average workplace gym costs range from $30 per square foot to $120 per square foot, depending on size.
Other special considerations for fitness and health amenities include heating, ventilation and air conditioning (HVAC) for workout comfort, and soundproofing to avoid distracting the rest of the office. In urban settings where bike lanes and bike-sharing programs are common, some companies are adding amenities just for cycling commuters. Bike racks average $300 to $400 per unit, however, and cyclists also need shower rooms and bicycle storage areas.
“Landlords or corporate tenants sometimes overlook the extra costs that health and fitness amenities can entail,” notes Bollhoefer. “Once you build out a workout space and shower room, for instance, you still need the exercise equipment and fixtures for the showers—and it all adds up.”
Whether the landlord or the corporate employer is footing the bill, Bollhoefer advises companies to look closely at the materials being used and to budget carefully for renovations aimed at well-being. Ideally, a building can offer both a healthy environment and a healthy bottom line for both corporate tenants and property owners and investors.