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Guest post by Phil's boss Adrian Barrick
This blog has now moved. Please visit Zerochampion.com and update your bookmarks
At this week's Shed Show at the Celtic Manor near Newport, you might have expected all visionary talk of creating more sustainable industrial property stock to be drowned out by the general hubbub surrounding the credit crunch and plunging capital values. And, frankly, who'd blame Britain's hard-boiled industrial property developers for concentrating on the business fundementals in these straitened times? Far from it, though.
What global operators in particular have realised is that from now on, delivering sustainable sheds is one of those very fundamentals - and the clever ones are starting to make it pay. A group of the leading players - including ProLogis, Gazeley, Segro and Goodman, and representing 87% of the UK market - have come together under the banner of a Developers' Forum to establish smart environmental project management systems, drive innovation in their respective supply chains, and create benchmarks for the carbon footprint of their buildings. The group is facilitated by dcarbon8, a sustainability and carbon consultancy headed by the engineer Guy Battle, and supported by the UK Green Building Council.
The personal passion that underpins the developers drive to clean up the former "dirty man" of the property industry was apparent to many of the 1100 attendees at the packed, Property Week-organised event. Gazeley's sustainability director Jonathan Fenton Jones spoke with rare eloquence at an encouragingly-oversubscribed break out session on the subject, holding up the company's Chatterley Valley project in Staffordshire as the blueprint for the next generation of eco-sheds, with its solar photovoltaic rooflights, bio-fuel power plant (with anaerobic digestors) and kinetic plates in the access road that generate electricity every time a truck rumbles over them. All light years from the super-sized, IKEA-esque kit of parts that has traditionally constituted the average industrial warehouse.
Altruism only gets you so far, though, especially in a conference that was launched with economist Roger Bootle predicting that capital values will fall 25% this year. The green thing that the sector wants to see most is dollar bills. So the most encouraging note from the speakers was the news that good sustainability is fast becoming good business. In that respect, there's a carrot and a couple of sticks. The first stick is that investors are starting to pore over developers' green credentials armed with increasing sophisticated metric tools, with obvious implications for a company's share price. The second stick is that customers - especially global corporates - have their own corporate social responsibility standards to maintain, and wouldn't want to be seen dead in a building that's likely to have a dodgy Energy Performance Certificate. The carrot is that the development numbers can stack up too. Gary Anderson, the European president of ProLogis told the Sheds audience that the incremental costs of a sustainable project - typically 1-3% - can be covered by charging 3% higher rents and having higher occupancy rates than for buildings lacking the credentials of, say, Chatterley Valley. Anderson also warned that sustainability will very soon become a distinguishing feature not just of individual developments, but of developers too. Those who cannot become "world class" will get left behind.
The higher initial outlay in sustainable features can be justified in construction and facilities management terms too. In its excellent 2008 Sustainability Report, Gazeley mentions a 60 000sq m warehouse built last year for John Lewis in which the developer lowered CO2 emissions by 39%, energy use by 40% and water use by 61%, producing annual savings of £238 000 - which means that it will achieve payback on the capital invested in just four years.
And if any of the assembled developers and agents were starting to get a little cynical at all the high-faluting talk of preserving the planet for future generations, Gazeley's chief executive Pat McGillycuddy had a neat one-liner bring them down to earth. "Sustainability is like muesli", he mused. "It takes like sh**, but you can live on it." Ditto shed developers, and their partners in construction, it would seem.
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