Industrial evolution: Why green is becoming mainstream
As land in major urban centres becomes scarce and expensive, developers are setting their sights higher by adding floors to their warehouses.
When you think of green buildings, you probably picture sophisticated, downtown office towers—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.
There’s a fast growing appetite for greener manufacturing and distribution facilities – whether installing onsite solar power generation or adding in windows to allow in natural light, according to a new United States Green Building Council (USGBC) report.
“The industrial sector has been slower to adopt green building features, but the sector has turned a corner, and now the boom is on,” says Rick Steger, Senior Vice President for JLL’s Project and Development Services. “Technology and the economy have both improved, and the long-term payoff is clearer than ever.”
From the United States to Brazil to Japan, more than 1,750 industrial facilities around the world have achieved the USGBC’s Leadership in Environmental Efficiency Award (LEED), and another 2,710 industrial facilities are currently in the process of preparing for certification.
Industrial real estate gives green the green light
In some ways, the sector’s move to LEED represents a natural evolution as industrial properties become bona fide trophy space in the U.S. real estate investment scene. At the same time, industrial real estate leaders are, by nature, focused on operating costs, presenting a barrier to any improvement that requires long time periods to demonstrate return on investment.
“Five years ago, owners and investors would say ‘I’ll take a look at sustainability initiatives—but I’m not spending another dime on it.’ Three years ago, everyone was asking, ‘What are we going to do about sustainability?’ They were taking a hard look, but not actually going there,” Steger says. “But today, everyone’s saying, ‘Let’s do it.'”
Why the change? One factor: energy-saving technology has matured, and become less expensive. The U.S. manufacturing industry is responsible for 30 percent of U.S. 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) reports. 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 favor products delivered through a green supply chain, which includes distribution and manufacturing facilities that can document their green credibility.
In Chicago, Method, a company that mass-produces sustainably-produced soap and cleaning products, has opened the world’s first LEED-platinum soap factory. The facility, designed by local architect Karl Heitman known for evangelizing the benefits of LEED certification in the industrial sector, draws on renewable energy sources with an onsite wind turbine and solar heating system.
And why leave a massive rooftop empty when it could bring in revenue? Method rents out the roof of its Chicago factory to Gotham Greens, which has built a 75,000-square-foot greenhouse that also helps insulate the factory beneath. In Japan, solar rooftops on Kyocera’s industrial facilities generate more than seven megawatts of power each year.
Elsewhere, General Motors’ engine plant in Joinville, Brazil, has become the first automotive plant in South America to achieve LEED Gold. Its reverse osmosis system recycles filtered wastewater for use in cooling towers—saving the equivalent of nine Olympic-sized swimming pools of water a year and supporting a corporate social responsibility message.
Go LEED or go home?
Sustainable buildings also drive tenant value, as employee engagement is tied to green and healthy workplaces. Factories that feature natural light and maintain indoor air quality, like Method’s and the LEED Silver Tasty Baking Company factory in Philadelphia, also boost the worker experience—and by extension, worker productivity.
The benefits of green industrial building abound, but it may not yet be time for everyone. Steger recommends taking a hard look at cost of improvements and timetable for break-even and positive returns, both tangible and intangible. “Small improvements today,” he says, “can help pave the way for larger steps ahead.”
Will industrial go full force ahead into the future of LEED? Probably. As Steger says, “it is not a matter of ‘if,’ but ‘how’.”