Logistics – the future is sustainable
The logistics sector could be forgiven for becoming complacent due to the seemingly never-ending demand for prime warehouse space (by way of an example and as reported in the property press, Amazon has already acquired more warehouse space in the UK in 2020 than it did in the entirety of 2019, and is on course to take more than the 5 million sq ft of space it did in 2018). However, the developers that operate within the sector are acutely aware that in order to remain on trend, the sector (much like the rest of the world) needs to operate in a sustainable fashion.
Example of the current sustainability wave
Recent examples of how the sector is prioritising sustainability include:
- PLP announcing that its 343,000 sq ft warehouse in Smithywood, Sheffield will be its first net zero carbon-ready development (net-zero carbon is achieved by balancing carbon emissions with carbon removal). PLP has also committed to delivering all future projects to the UK Green Building Council’s Net Zero Carbon Ready standard;
- Tritax Symmetry committing to all new developments in its portfolio being net zero carbon. The announcement followed a 12-month study with parent group Tritax Big Box REIT to assess how the business could make construction of its schemes net zero carbon; and
- SEGRO aiming to reduce its carbon footprint by 40% by 2025, sending nothing to landfill by 2025 and reducing the embodied carbon in its buildings by 20% by 2025.
Producing a sustainable scheme goes hand in hand with keeping up with the latest developments in technology, and a sustainable scheme will therefore be very attractive to both the large occupiers (e.g. Amazon) which are driving the demand within the sector, and investors.
How can schemes achieve net zero carbon?
The sector is undertaking a number of initiatives and is experiencing a number of trends which together are driving towards net zero carbon schemes. Examples include:
- the installation of photovoltaic panels on schemes which are capable of supplying enough energy to power large parts of the scheme;
- the strengthening of roofing so that additional photovoltaic panels can be installed if required by occupiers;
- the commitment to achieving a minimum BREEAM rating of “Very Good” and an EPC rating of ‘A’;
- the rise of AI is resulting in fewer employees being required to travel to work, which is in turn reducing carbon emissions;
- the employees that remain are continuing to be encouraged to walk or cycle to work wherever possible;
- the expected increase in the use of electric lorries and vans, which could ultimately make fleets of diesel guzzling lorries a thing of the past;
- careful material choices and quality construction are resulting in airtight logistics buildings, which is fundamental to high energy conservation; and
- the rise of LED lighting.
Net zero carbon is not without challenges
Of course, developers face challenges when striving towards net zero carbon ready developments. Traditional construction materials (e.g. concrete, steel and cladding) all have high embodied carbon content. Developers will need to work with its supply chain in order to source alternate cost-effective materials and sustainability consultants will need to be engaged early on during the life cycle of a development in order to determine the best approach to take on an individual project.
That said, the logistics sector has a strong track record for overcoming challenges and has flat out refused to entertain ideas of complacency, which is why it is here to stay.
Paul Grayson is a Senior Associate in our Commercial Real Estate team.