The economic feasibility of sustainable logistic real estate Bart De Smedt Roel Gevaers Department of Transport and Regional Economics University of Antwerp ERES Conference 2009 – June 26th - Stockholm Royal institute of Technology

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2 Introduction BUILDINGS: 40% of energy consumption and CO ² -emissions COMMERCIAL REAL ESTATE: RETAIL 43% OFFICES 34% LOGISTICS 23%

3 Introduction

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5 Research questions How does a green warehouse differ from a traditional warehouse? What are the difficulties in the financial valuation process of green warehouses? Can a certificate facilitate the appraisal of green logistic warehouses?

6 How do green warehouses differ from traditional ones? Traditional warehouse Old warehouse Green warehouse: - high-performance - reduce impact on environment and health Achieve through: Location, design, material selection, construction, operation, maintenance, removal and possible re-use

7 Location

8 Physical characteristics Example: $2 billion restoration of Ford’s 400 ha Rouge River manufacturing complex (Dearborn, MI, USA) Points of attention: Stormwater Green roofs Soil remediation Natural Lighting Workers safety Flexibility

9 Physical characteristics Example: Klavertje 4 ‘Greenport’, Province of Limburg (NL) Points of attention Rely on renewable forms of energy Maximize water reuse Minimize reliance on potable water Building orientation Daylighting and envelope design as active strategies (geothermal systems, adiabatic cooling and natural ventilation)

10 Physical characteristics Park Blue Planet, Chatterley Valley, UK(Gazeley) Magna Park Rhein, Main, Germany (Gazeley)

11 Financial valuation Necessary in order to move forward, overcome lack of hard data that quantify costs and benefits of individual environmental green features.  Based on a good model trade offs can be done by the sector. In the end, no logistic development can be truly sustainable unless it remains economically viable and continues to deliver a strong return to investors. This idea is sometimes lost in the debates and should not be forgotten.

12 Difficulties in financial valuation Position in the appraisal process  developer or user Paradox: sustainability - long term vision financial valuation - short term view Lack of real life cases in Belgium A lot of qualitative benefits

13 Certificate as a way to facilitate appraisal What should be incorporated in a certificate? -Sectorspecific certificate with only logistic building aspects -Overall building certificate with subdimensions for different sectors (offices, logistics, retail) -Total supply chain certificate The lack of common legislation has created a variety of certificates with different parameters (LEED, BREEAM, Green Star, DGNB, EEWH, Casbee,…).

14 Countries Measurement parameters Types of buildings LEEDUS Argentina Brazil Canada India Sustainable sites Water efficiency Materials & resources Indoor environmental quality Innovation & design processes New buildings Existing buildings Commercial interiors “Core & sells” School buildings Retail Rest homes Houses Neighbourhood development

15 BreeamUK The Netherlands Management Health Energy Transport Water Materials Waste Land use & ecology Pollution Offices Retail School buildings Prisons Court buildings Rest homes Industrial buildings Eco-homes

16 Green StarAustralia New-Sealand South-Africa Space use Spatial differentiation Conditional requirements: equal to Breeam Timing of the certification School buildings Rest homes Industrial buildings Mixed use Multi unit residential Offices Office interiors Retail

17 German Sustainable Building Certificate GermanyEcological quality Economical quality Socio-cultural quality Technical quality Quality of the building process Quality of the location All types of buildings

18 EEWHTaiwanEqual to LEED CasbeeJapanEnergy Resource efficiency Local environment Indoor environment Pre-design New construction Existing buildings Renovation Furthermore, the following countries have also their specific certificates: Mexico, France, Finland, China, Italy, Portugal, Singapore and Spain.

19 Certificate as a way to facilitate appraisal One clear, standard and transparant certificate is needed for the real estate market that is dominated by international operations. This would facilitate comparability and would facilitate therefore the appraisal process.

20 Conclusion Building green warehouses? All the stakeholders are willing but without certainty about the economic feasibility it stays problematic. First movers are already on the market but it is to early (data is not yet available) to make strong predictions on the evaluation.

21 Thank you for your attention