If any property sector has been late to the party on sustainability, it’s industrial. It’s true that some sectors are still yet to leave home on the journey, but what’s interesting about industrial is how strongly the appetite is growing, at least at the top end.
When Mirvac and its partner Australian Retirement Trust announced a new lease at the 56 hectare Aspect Industrial Estate at Kemps Creek in Western Sydney, it would have been hard to dismiss the bragging rights.
Not only did the 66,000 square metre building achieve top sustainability ratings, but the tenant, the giant Winnings Group that retails whitegoods, was also chuffed, loudly proclaiming its commitment to a more sustainable future not just with its recycling policies for its products but the very premises it operates from.
The building has been rated six Star Green Star – Design and As Built rating. But it went further, achieving a carbon neutral certification for upfront embodied carbon. Other buildings too have matched this in the Mirvac portfolio, and increasingly top tier tenants are including this in their development briefs.
The sector has come a long way. The days of the much-loved “sheds” of vast but cheaply built structures to house “stuff” are on the way out.
“It used to be that ‘we’re not that interested because no one really cares’, but now everybody cares.”
Instead, tenants now want sustainable industrial buildings and alongside, top-notch offices to rival the best in the CBD, so that their highly qualified staff often using the premises to run regional or even global headquarters, won’t feel they’re missing out.
But then the sector is vastly different to its antecedents and way more important. In many ways it’s a nexus for two critical drivers of our rapidly changing economy.
One is the logistics sector that serves our human analogue needs for “things” that we now increasingly source online and must be physically delivered to our doorstep.
The other taps our desire for ever better and more sophisticated technology and our furious appetite for AI, met through the growth in data centres.
As these two sub sectors grow – and sometimes meld – they attract ever greater scrutiny.
Investors, property owners and tenants want to know they can get bragging rights that might rival Winnings’. At least at the top end.
Andrew Quade, who is general manager industrial for Mirvac, has tracked the evolution of this sector through his 25 years in the business.
And though he’s been in the current job for less than three years he’s well embedded in the company’s early leadership ambitions on sustainability that’s now jumped the divide from the commercial sector to industrial.
The company’s big sustainability campaign more than a decade ago called “This Changes Everything” set a new high bar for others in the industry to aspire to, he says in a recent interview.
It’s a benchmark and a legacy that is now being reinforced.
The target in 2014 was to be net positive by 2030 and this year the company recommitted to the target, he says.
“So there’s a really, really strong focus on making sure we’re doing everything we can to hit that target and more. Industrial is really contributing to that.”
The Aspect development is a case in point. But also, the company’s previous project Switchyards at Auburn, also in Western Sydney.
Quade says: “The evolution for Green Star was pretty easy to track for offices, but not so much for industrial”.
“Industrial was a bit of a hard one to wrangle, so it came a little bit later. But the fact that we’re getting Six Star Green star ratings now, and that the tool’s developing and evolving is great to see.
“We’re embracing that and trying to be right at the front of that journey.”
Carbon neutral
Along with that ambition is the growing appreciation for carbon neutral certification for upfront embodied carbon.
Along with Winnings, logistics operators CEBA at the Calibre Estate at Eastern Creek, B dynamic at Aspect and several more buildings coming on line will also be likewise certified.
How hard is it to achieve carbon neutral certification?
Quade says the biggest challenge for industrial buildings is the steel and concrete, with concrete the biggest challenge, given the many so-called “hard stands” or heavy-duty parking and manoeuvring spaces for trucks.
“We really go hard at sourcing those products.”
In recent times the company has changed its steel supplier in the search for lower embodied carbon.
“Back in the day, there just wasn’t enough focus on it [ESG], it wasn’t seen as a really valuable exploration for suppliers to meet low carbon products, and now they realise that if they don’t do it, they’ll miss out.
“It used to be that ‘we’re not that interested because no one really cares’, but now everybody cares.”
Other materials too come in for scrutiny – especially in office areas – carpets for instance, with a potential new supplier offering half of the embodied carbon of rivals, and in kitchen benchtops made out of recycled glass.
Materials “just keep evolving” Quade says.
It’s good for the team to be working with ambitious partners, he says. And there is the innovation that’s linked with sustainability, he adds.
“There’s a lot of things happening out there that we’re exploring in the industrial field that hopefully will come to fruition in the next year or two to get us even better outcomes.”
But perhaps the biggest change has been from investors
In recent times, development briefs are coming to the market that, along with detailed building specifications, include carbon neutral certification.
“The more sophisticated tenants are demanding it.
“If you can’t deliver some of those sustainability outcomes, then they’ll look elsewhere.”
The Winnings story
Winnings stood out as a highly committed tenant, Quade says.
“They’re very, very focused on sustainability, and they’re really proud about some of the recycling that they’re doing out there, beyond what we’re able to provide.”
They feel it enhances their reputation and credibility as a business in Australia and globally, he says.
Such tenants love to find solar on the roof, EV charging facilities, water harvesting and green surrounds.
Up front, however, is the awareness that solar will save them money. Tenants will say it’s a “real win, because we still have to be market competitive”, Quade says. “There’s no escaping that, because people are looking for the bottom dollar [saving].”
The company puts a minimum 100 kilowatt of solar on every shed, but for Winnings it was 650 kilowatts.
Investors
Many investors are also highly focused on sustainability.
Driving their interest is the reporting requirements but also commitments they’ve made to stakeholders.
“Domestically, globally, it’s all kind of morphing together, because I don’t think, in recent times, I’ve seen anyone not interested in telling a good story around sustainability.”
For the property owner
For Mirvac, “it’s future proofing yourself against anything that might happen.” Tenants are saving $1 million in energy costs thanks to the solar installations, Quade says.
And there’s the “reputational point of view – the return there is significant. Having a reputation and delivering on what you say you’re going to deliver is proving to give us dividends.”
Suppliers used in the Aspect development:
- Concrete: Holcim for Winnings warehouse
- Structural Steel (supply and install): Profab, for Winnings warehouse
- Carpet: Interface
- Champagne bottle benchtops: Noveco Surfaces
- Carbon offset: high quality, preferably Australian nature-based carbon offsets, with community benefits, such as those offered by registered charity Greenfleet