Login
iscover
Could environment, social and governance (ESG) considerations drive an overhaul of how we view industrial and logistics assets?
Home to often lonely and repetitive work, developers, investors and occupiers of industrial and logistics assets are honing in on how to boost the sense of community within industrial estates and combat the rising tide of mental health and loneliness born in such working environments.
However, while the intentions are there, the execution is lacking due to several factors.
Sameer Chopra, CBRE’s Asia Pacific head of ESG research, cited an example from a client of his whereby both the occupier and the new occupier are focused on ESG considerations but face significant “construction challenges in new industrial precincts”, which he admitted has caused “a few headaches”.
Another headwind to ESG implementation across industrial and logistics assets is vacancy rates, with industrial landlords aiming to green their warehouses unable to do so in many cases due to an inability to relocate existing tenants.
“It’s a very, very tight market,” Mr Chopra said, adding “you don’t always see a green premium in a really tight market”.
“But whenever vacancy is a little higher, the number one thing we see is that the best green stock gets leased up, and we typically find that there’s about a 65 per cent advantage in leasing. So, you get about two-thirds more leasing deals done in green stock,” he explained.
Such leasing advantages are not the singular driver of this emphasis on ESG within the sector, with Ella Mudie, market management lead for green star at the Green Building Council of Australia (GBCA), noting the sector is “seeing a shift in thinking”.
In what can be a cold and lonely environment, Ms Mudie explained the tide is shifting with a “greater emphasis [placed] on people and their communities, and a growing concern for the impacts of industrial buildings and business activities on nature”.
Her belief is it’s not so much the ‘E’ owners and occupiers are focusing on, but rather the ‘S’, especially given the ever-changing nature of the modern workforce and the greater importance placed on health and wellbeing by Australian professionals at every level.
She described working in industrial estates, which have minimal public transport access and limited amenities on offer for employees, as “very different to the experience of being in a central business district office environment”.
“It’s about looking at what you can create on site to help people be active, whether that’s offering some gym facilities, or you can do more with landscaping so there’s outdoor amenity,” she said.
She touched on a growing number of operators “seeing value in having trees on site both from a nature point of view but also in terms of providing amenity for people to eat outdoors”.
Mr Chopra provided international examples of emphasising the ‘S’ in ESG in practice, including Japan helping tackle gender diversity issues for workers in multistorey warehouses by introducing childcare centres into new and existing assets.
Never miss a beat with 
Stay across what’s happening in the Australian commercial property market by signing up to receive industry-specific news and policy alerts, agency updates, and insights from reb.
Subscribe to reb Commercial:
Newsletter
