The building sector plays an important role in achieving the climate targets. This also applies to logistics properties. In terms of number, they are more of a niche compared to other usage classes such as office or living, but in terms of area it looks different. Because a medium-sized warehouse can easily reach several thousand square meters, large ones even 50,000 square meters and more. It makes a difference whether you light them conventionally or equip them with energy-saving LED lights, whether you properly insulate the roof or not. The larger halls in particular are now more and more often designed, built and operated with sustainability in mind.
The impetus does not come primarily from the industry, but from politics. “The states are the drivers, Germany and the EU too. The driven ones are the investors, the large owners with their own funds and the project developers,” says Kuno Neumeier, managing director of the consulting firm Logivest, which specializes in logistics real estate. One expression of this political pressure is the so-called taxonomy regulation of the EU, which aims to make the sustainability of real estate investments transparent. From January next year, numerous technical evaluation criteria will be used to measure when an investment is considered sustainable in the sense of taxonomy. Real estate funds that are then considered to be unsustainable or not very sustainable could find it difficult to find investors in the future. Companies that operate unsustainable warehouses could be viewed badly by their customers for this. You will therefore no longer ask for such properties, which puts pressure on landlords to offer new halls according to the new standards and to retrofit existing halls. The so-called ESG criteria, which describe the extent to which an object is sustainable in terms of the environment, social and corporate governance, aim in the same direction.
LED lighting, solar panels on the roof – that could soon become standard
Those involved recognized the signs. For example, one of the world’s largest project developers for logistics real estate, Prologis, has committed itself to realizing 100 percent of its new development and renovation projects worldwide in accordance with sustainable building certifications. In addition, all properties are to be equipped with LED lighting by 2025, and in 2020 alone Prologis will have installed 40 megawatts of additional solar capacity on the roofs of its properties.
The new central warehouse of the sporting goods manufacturer Puma in Geiselwind, Franconia, has also been developed according to sustainability guidelines that specifically improve energy efficiency and environmental compatibility. There is its own photovoltaic system (PV) that will supply the building with certified green electricity in the future. In addition, a system for using rainwater to flush toilets and energy-saving LED lighting everywhere. Much of the roof area is planted with lawn. Gradually, 400 trees are to be planted on the 116,000 square meter site, which will then offset five tons of CO2.
First of all, all of this is expensive. But the costs are to be partially offset by falling operating costs. “Measures such as LED lamps and intelligent daylight control ensure that electricity consumption is up to 26 percent lower. With electricity prices rising, we assume that the investment in the PV system will be more than worthwhile within the next ten years,” explains Maximilian Molkenthin , Senior Head of Logistics at Puma. In addition to the environmental measures, Puma also wants to score points with the S of ESG, the social. That is why, for example, the workplaces have been ergonomically optimized. But there are also very tangible reasons. With more attractive jobs one hopes for advantages in personnel recruitment. “One goal of all measures in the social area is of course employee retention and recruitment,” says Neumeier. With a few exceptions, there is a chronic shortage of staff at all logistics locations in Germany.
Stephan Riechers, Head of Investment Management Logistics at the fund provider Union Investment, sees it similarly. “In the logistics sector in particular, there is still a lot of room for improvement when it comes to social issues. Until now, logistics properties have mostly been viewed as purely functional properties,” he says. Slowly but surely, this perspective is changing. Riechers knows warehouse operators who offer employees sports facilities during shift breaks and who ensure an appealing canteen with a good selection of food. They are creating outdoor seating, charging points for electric vehicles and are even thinking more and more about visually more appealing facades.
Small logisticians only rethink when new laws force them to do so
Examples like that from Puma or Prologis show that the pursuit of sustainability definitely plays an important role for big players, be it on the user side or also with the developers. However, this often does not yet apply to smaller logisticians. Above all, they see the effort involved and prefer to react only when they are forced to do so by regulation and laws. Sustainable measures can also be found, especially in new buildings. The conversion of the immense stock of halls in this country has hardly been tackled. Incidentally, the situation is similar in other property classes. This is probably one reason why real estate performed comparatively poorly in the federal government’s 2020 climate balance sheet. It is true that the CO2 emissions in the Corona year across all sectors were 40 percent lower than in the reference year 1990. However, the building sector performed worse than all other areas.
That could change in the future. “There is no getting around the decarbonization of the real estate portfolio. We expect that the legislature will tighten the reins significantly with regard to CO2 consumption. This is the only way to achieve the Paris climate protection targets,” says Riechers. Follow the development very closely. Otherwise you risk owning properties for which there is no longer any demand or which can no longer be traded because they do not meet the current requirements.
Despite the increasing demands on the sustainability of logistics properties, this building class is still popular with investors. Also because the returns are a little higher than in the office or living area. In addition, demand will remain stable or even increase due to the steadily increasing online trade. In addition, the corona pandemic has shown how important warehouses are to maintain supplies. This has increased the acceptance of this formerly rather unpopular property. “We think that logistics real estate is a very resilient asset class. This means that we can provide very stable rental income for our investors,” says Riechers. Union Investment therefore also wants to double its share of logistics properties in its portfolio in the medium term.