How industrial developers are raising the game on sustainability

Building materials, energy efficiency and waste management have been key to reducing real estate’s impact on the environment.

But the industrial sector is beginning to look at delivery routes, too, leveraging technology to advance corporate sustainability strategies.

For instance, an industrial facility in Western Sydney, Australia, measures the carbon output of delivery vehicles, an effort that earned it points towards green certification. The Port of Cleveland, in Ohio, is increasingly using waterways rather than intermodal rail and road routes.

Meanwhile, couriers and retail giants are using electric vehicles for last mile deliveries.

Such efforts are coming amid a broader push toward sustainable corporate practices. While green solutions have long played a limited role in driving decisions among industrial occupiers, sustainability is playing an increasingly important role in supply chains and logistics real estate, according to JLL’s Future of Global Logistics Real Estate report.

“As an industry we’ve got to push the boundaries of what we think we can achieve if we are going to move the needle on climate change,” says Damien Silvester, sustainability analyst, JLL.

Being green pays

Sustainability is now among the top three considerations when occupiers look to lease commercial real estate, according to JLL’s Responsible Real Estate survey.

The survey of 550 corporate real estate leaders in Asia Pacific found that 70 percent of them are willing to pay a rental premium to lease green buildings. Some are already paying 7 percent to 10 percent more in rental costs to help them meet decarbonisation targets.

While green certification of buildings is increasing, experts are concerned the growth is insufficient to meet tenants’ ambitious net-zero targets, especially industrial buildings.

In Australia and New Zealand just 300 industrial buildings have a Green Star rating out of 2,785 certifications awarded between 2002 and 2020, according to the agency.

“Retailers’ customer bases are increasingly questioning supply chain impacts on the environment and so we expect ESG considerations to become incorporated more into industrial building design,” says Annabel McFarlane, head of logistics and industrial research, JLL.

Transport and technology are seen as key ways to make advances on this front.

“Whether it be electrification or renewable fuels, there are a lot of efforts being made to reduce the environmental impact of the infrastructure driving ecommerce,” says Michael Ignatiadis, JLL’s head of supply chain and logistics solutions – APAC, in the podcast ‘The true cost of fast deliveries.’

“But there’s no doubt there’s an even more sustainable way forward and that can only be achieved by investors, tenants, landlords and the government working together,” he says.