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Industrial Property Loan Blog
2 min read
by Jeff Hamann

How Sustainable Features Boost Your Industrial Facility’s Worth

Reducing the environmental impact of an industrial property offers clear financial incentives.

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As everyone knows, environmental concerns have been on the rise for years. As real estate makes up nearly half of all global carbon emissions, many investors and developers have been looking for ways to reduce buildings’ carbon footprints — which may seem like a huge task for the sprawling industrial real estate sector in particular.

But it is happening, nonetheless. The U.S. Green Building Council, or USGBC, reported in September that close to 24 billion square feet of commercial real estate had been registered and certified under LEED from inception. While this includes all asset classes, from offices and multifamily to schools and hospitals, industrial properties are playing a larger and larger role.

Prologis, one of the world’s largest investors and developers of industrial real estate, outlines a clear set of benefits for ensuring your industrial assets are designed with sustainability in mind. Among these are numerous economic benefits for investors.

What Are the Financial Benefits of Building Sustainable Industrial Assets?

First, LEED-certified buildings tend to lease up faster. While this may not be such an impressive benefit in today’s industrial climate of skyrocketing demand when virtually everything is leasing rapidly, on the development side it can make the difference between a build-to-suit property leased before groundbreaking and one with the added uncertainty — and costs — of securing tenants once a development nears completion.

Beyond the development side, many tenants prefer properties with a smaller carbon footprint, because this can translate into lower operational costs. For occupiers under triple-net lease agreements, in particular, this can result in a massive overall savings.

Finally, LEED-certified commercial properties have an observed higher value relative to non-certified assets. Brokerage firm Cushman & Wakefield observed that in the past three years, office properties certified under LEED programs sold for 21.4% more on a per-square-foot basis, on average. While industrial real estate may not realize those same gains, given the faster lease-up rates and operational efficiencies — along with higher rents — there’s a clear incentive for sustainability in an industrial building.

Related Questions

What are the most common sustainable features for industrial facilities?

The most common sustainable features for industrial facilities include LED lighting, energy-efficient ventilation systems, and solar panels. Additionally, many industrial facilities are now being built with green roofs, rainwater harvesting systems, and other sustainable features.

LED lighting is becoming increasingly popular in industrial facilities due to its energy efficiency and long lifespan. LED lighting can reduce energy costs by up to 75%, and can last up to 50,000 hours.

Energy-efficient ventilation systems are also becoming more popular in industrial facilities. These systems can reduce energy costs by up to 30%, and can help to improve air quality in the facility.

Solar panels are becoming increasingly popular in industrial facilities due to their ability to generate renewable energy. Solar panels can reduce energy costs by up to 50%, and can help to reduce a facility's carbon footprint.

Green roofs are becoming increasingly popular in industrial facilities due to their ability to reduce energy costs and improve air quality. Green roofs can reduce energy costs by up to 40%, and can help to reduce a facility's carbon footprint.

Rainwater harvesting systems are also becoming more popular in industrial facilities. These systems can reduce water costs by up to 50%, and can help to reduce a facility's water usage.

What are the benefits of investing in sustainable features for an industrial facility?

Investing in sustainable features for an industrial facility can have many benefits. These include reducing energy costs, improving the building's environmental performance, and increasing the value of the property. Additionally, sustainable features can help attract tenants who are looking for green buildings. For example, LED lighting, improved ventilation systems, and energy-efficient HVAC systems can all help reduce energy costs and improve the building's environmental performance. Additionally, investing in sustainable features can help to increase the value of the property, as tenants are increasingly looking for green buildings.

How can sustainable features increase the value of an industrial facility?

Sustainable features, such as solar panels, LED lighting, and energy-efficient ventilation systems, can increase the value of an industrial facility by making it more attractive to tenants. Additionally, these features can reduce operating costs and improve the overall efficiency of the facility. For example, solar panels can reduce energy costs, while LED lighting can reduce lighting costs. Additionally, energy-efficient ventilation systems can reduce heating and cooling costs.

For more information, please visit Picking the Right Industrial Investment.

What are the most cost-effective sustainable features for an industrial facility?

The most cost-effective sustainable features for an industrial facility depend on the age and purpose of the building. Generally, LED lighting, ventilation systems, and office space upgrades are the most cost-effective sustainable features. For example, LED lighting is more energy-efficient than traditional lighting, and ventilation systems can help reduce energy costs. Additionally, increasing office space can help attract tenants and make the facility more attractive.

For more information, see What to Know Before Making Your 1st Industrial Property Investment and Picking the Right Industrial Investment.

What are the best ways to finance sustainable features for an industrial facility?

The best way to finance sustainable features for an industrial facility is to explore your industrial acquisition financing options. Many types of financing, for amounts both large and small, may be available to you. You can head to our portal and our advisors will connect you with a wide variety of lenders to get a quote at no charge. Additionally, you can look into technological and energy-efficiency improvements, like solar panels atop a structure’s roof, which could be an effective way to boost your asset’s value.

How can I ensure that my industrial facility is compliant with sustainability regulations?

To ensure that your industrial facility is compliant with sustainability regulations, you should conduct a green report. A green report helps to determine what, if any, opportunities there are to increase the energy efficiency of a property. These could include special windows, roof or wall insulation, new thermostats, LED lighting, energy-efficient appliances, and a variety of other upgrades. The report will also generally include the cost and the ‘payback’ period of each upgrade (i.e. the time it would take for the upgrade to pay for itself in the form of increased energy savings).

You can find more information about green reports and sustainability regulations in the following articles:

  • Picking the Right Industrial Investment
  • Due Diligence for Multifamily Investing
In this article:
  1. What Are the Financial Benefits of Building Sustainable Industrial Assets?
  2. Related Questions
  3. Get Financing

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