Industrial revolution: Why green is transforming industrial real estate

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The industrial sector has been fairly slow to embrace green buildings, but there are signs it has turned a corner. The payoff is clearer than ever and for forward-thinking companies, the benefits abound.

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Industrial revolution: Why green is transforming industrial real estate
When you think of green buildings, you probably picture a sophisticated, central office block – not sprawling industrial campuses. It’s true that industrial real estate has lagged behind other sectors in the push for more sustainable buildings and operations – until now that is.
There’s a fast growing appetite for greener manufacturing and distribution facilities – whether it’s installing onsite solar power generation or adding in windows to allow in natural light. There are currently over 1,750 LEED-certified industrial facilities all over the globe and even more are gearing up for certification. The sector appears to have turned a corner.

Industrials give the green light
Industrial real estate leaders are, by nature, focused on operating costs, presenting a barrier to any improvement that requires long time periods to get a return on investment. As little as five years ago, industrial asset owners and investors were barely looking at sustainability, so why the stark change?

One factor: energy-saving technology has matured, and become less expensive. The industrial sector accounts for about 30 percent of global energy consumption, and lighting makes up about 30 percent of energy usage in distribution facilities. Cutting energy use could mean major cost savings while improving corporate social responsibility (CSR) reporting.

In recent years, roughly half of the major third-party logistics and distribution companies have adopted today’s increasingly affordable energy-efficient LED lighting and smart control systems that significantly reduce lighting energy usage.
Greener facilities can also be a good marketing tool to attract the loyalty of consumers who ultimately use the products manufactured and stored within. A growing number of consumers now favour products delivered through a green supply chain, which includes distribution and manufacturing facilities that can document their green credibility.

In Dunstable, Prologis has just completed DC2, the UK’s first ‘Outstanding’ logistics park under BREEAM’s 2014 guidelines. This success follows that of DC1 on the same site. The two distribution centres at Prologis Park are constructed on brownfield land and both have been shortlisted for various BREAM awards.

Elsewhere, General Motors’ engine plant in Joinville, Brazil, is the first automotive plant in South America to achieve LEED Gold. It recycles filtered wastewater for use in cooling towers – saving the equivalent of nine Olympic-sized swimming pools of water a year, sending a strong corporate social responsibility message.

Gain from green
Perhaps the most obvious beneficiary in all this is companies looking to run their operations as efficiently as possible. But there is another angle here too. Factories that feature natural light and good indoor air quality, like Prologis Park in Dunstable, also boost the workers’ experience and, by extension, worker productivity.

The benefits of green industrial buildings abound, but it may not yet be the right time for everyone. Companies should take a hard look at the cost of improvements and timetable for break-even and positive returns, both tangible and intangible. Small improvements today can help pave the way for larger steps ahead.

Will industrial go full force into the future with LEED and BREEAM? Probably. It is not a matter of ‘if,’ but ‘when’.

This article was first published on JLL Real Views, JLL’s global site providing expert insights on the trends and developments shaping real estate.

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