UPDATED: 7 pm 13 August, 2024. Industrial sheds are not what they used to be. Once big spaces packed with goods waiting for shipment but a roof structure that was a tad too flimsy to carry a decent solar array, they’ve now transformed into a vastly different beast.
Today’s industrial “big sheds” are high-energy, highly automated, roboticised infrastructures managed by highly skilled professionals.
Corporate giants such as Amazon, Lululemon, Electrolux and Myer are their occupants.
And rolling along over the top of the normal imperatives of razor thin retail margins – like a tsunami reaching peak impact – are the massive ESG imperatives – mandatory disclosure of scope 3 emissions in particular.
- The Fifth Estate is hosting an in person and online masterclass on this topic on 28 August at Dexus Place
According to Dexus, one of the country’s biggest commercial and industrial property owners, the quality of the industrial facility matters to the tenants – most of whom are on their own intense ESG journey. As many fall into the large categories of corporates, they are also on a hard deadline for scope 3 emissions disclosures.
But then, so are the owners.
According to a recent report from JLL, some owners are rejecting some tenants because of poor ESG performance, which will reflect badly on their books.
One source said that with scope 3 emissions and mandatory reporting, the owners with the highest aspirations can’t afford to partner with dirty customers. “They need to be a clean user, or we won’t consider them,” the source said.
What changed?
With COVID lockdowns came a boom in e-commerce, and industrial property had to pivot away from smaller and localised facilities to larger urban fringe facilities.
Fitouts now typically include fully automated storage and retrieval or automated guided vehicles (AGVs), which require enormous power and data consumption.
According to Dexus development manager Jacob Clark who will present at the maserclass, “Instead of standard sheds [made of] steel and concrete, they are now very complex high tech facilities.”
These days, the hubs often serve as Asia Pacific headquarters and with a distributed workforce, even senior managers sometimes want to work in the facility instead of coming into the city. This means that facilities that might be 20,000 square metres or more will often incorporate sophisticated offices and amenity spaces such as cafes, change rooms, bike racks, and other office amenities.
More on sub zero carbon and sustainable tenants
According to Clark, some tenants are achieving zero carbon emissions – or a sub zero carbon footprint, as he put it. This means they are going beyond offsetting emissions to removing or sequestering more carbon than the facility produces – mostly through excess on site renewable energy generation, which then goes back to the grid.
Other ESG features increasingly include rainwater harvesting, EV charging stations, timber cladding, bike paths, ventilation, and community managers to manage social aspects of the building.
The question of energy costs is part of the “commercial discussion as to who’s paying for it with our facilities,” Clark says.
Clark says standard sheds offered by the landowners come with minimum 99Kw solar, but more can be added, meaning ESG technology is developed “hand in hand” with tenants, who spearhead the demand requirements for facilities.
Batteries allow tenants to store energy from the sun during peak supply times, which can then be exported back into the grid during peak demand times to neutralise any wholesale price fluctuations.
The benefits
According to Clark, the financial case for these sustainability investments is strong, with many financial and operational benefits when incorporating renewable energy, energy storage, and other sustainability features into industrial sheds. Landlords often gain cost savings, increased revenues, and increased property value.
Benefits include:
- reduced power bills: by installing solar panels and batteries, the facility’s ongoing power and energy costs can be reduced by 15-20 per cent or even close to 100 per cent if designed for net zero energy consumption.
- ability to generate additional revenue: battery storage system can store excess solar energy to discharge during peak grid demands and be paid for the effort
- increased rent: sustainable features can lower operating costs and possible higher rent charges to tenants
- alignment with tenant sustainability goals: most large corporate tenants have their own emissions reduction targets, so the sustainable design of the shed will help them meet those goals
- futureproofing: building facilities with 100 per cent structural capacity to handle solar panels helps futureproof the asset against expected increases in sustainability requirements over the building’s lifetime
Clark says Dexus is designing its industrial facilities with 100 per cent structural capacity for solar arrays to accommodate the increasing demand for solar panels on roofs that traditionally are not designed to carry any more weight than a tin roof.
The company partners with solar providers such as Energy Aware to offer tenants the ability to install multi-megawatt solar systems on the rooftops of its facilities.