Green Star shines in new CBRE report

19 May 2017

A new CBRE Viewpoint has illuminated the benefits of environmentally sensitive design that could support a new generation of green industrial and logistics assets in Australia.

The report points to a host of Green Star certified projects taking shape across the country.

CBRE Senior Research Manager Kate Bailey said while historically, there had been less importance placed on sustainable design elements in the industrial sector, there was growing awareness around it from a development and occupier perspective.

“More firms are seeing value in developing and retrofitting industrial buildings with a focus on environmentally sensitive design, improving operating costs, functionality and attracting tenants,” Ms Bailey said.

“The rapid take up of the Green Star building standard across the commercial property sector is a reflection of the significant benefits offered to both building owners and tenants – and the huge potential currently untapped in the area of industrial and logistics.”

Dexus Head of Industrial Development, Chris Mackenzie, said greater tenant emphasis on workplace and operational efficiency was underpinning the rise of more environmentally-focused industrial assets.

“In Melbourne, the demand for new industrial facilities has been largely driven by a flight to quality – underpinned by customers seeking to reconfigure their supply chains and move to more efficient purpose-built facilities,” Mr Mackenzie said.

“A number of industrial tenants have been consolidating their facilities in order to achieve operational efficiencies, and Dexus has responded by integrating their customers’ operations into the design while focusing upon achieving operational savings through green star ratings and the integration of environmentally sustainable outcomes.”

A key example includes the collaboration between Dexus and Kathmandu to develop its 5 Star Green Star Laverton North facility in Melbourne. The facility incorporates a number of environmentally sustainable design initiatives such as solar panels, translucent roof sheeting, LED sensor lighting and strategic window placement for maximum light penetration during winter for natural heating.

Another prominent industrial developer, Frasers Property, is paving the way in greener design in Australia, with its Horsley Drive Business Park in Sydney’s Wetherill Park set to be the first 6 Star Green Star industrial asset.

“The Horsley Drive Business Park development provided the perfect platform to showcase our sustainability credentials, hence the decision to make this Australia’s first 6 Star Green Star industrial estate,” Frasers Property, General Manager, Northern Region, Ian Barter said.

“We are focused on delivering direct and real benefits to our customers by reducing their total occupancy costs and operating expenses, whilst also improving their health and wellbeing.”

The report shows Green Star rated buildings use 66% less electricity than average buildings; produce 62% fewer greenhouse gas emissions; use 51% less potable water and recycle 96% of their waste (compared with 58% for the average new construction project.

Ms Bailey said given the nature of industrial and logistics assets, there was huge environmental benefits to be garnered with the rise of green design in the sector.

“Industrial facilities can operate 24 hours a day with workers completing often repetitive tasks in noisy and poorly lit environments. The increase benefit of improving lighting alone can result in increased productivity of 18%,” Ms Bailey explained.

While the topic has found its way onto the agenda for both developers and occupiers in the industrial sector, CBRE’s Senior Managing Director for Industrial & Logistics in the Pacific region, Matt Haddon, said it wasn’t yet as much of a priority for investors.

“It’s still quite rare for many passive investors to include environmentally sensitive design considerations on their list of key buying criteria or even enquire about an asset’s Green Star rating,” Mr Haddon said.

“However, as the benefits of productivity, operating cost minimisation and tenant attraction and retention that can be achieved through Green Star construction become better understood across the industry, we think it’s only a matter of time before this practice becomes standard and that investors in the industrial and logistics space begin appreciating and paying a premium for assets that have the capacity to deliver these attributes.”