Over the past 10 years, the demand for sustainable, environmentally friendly industrial real estate has moved from a niche request to a global standard. The U.S. Green Building Council’s (USGBC) Leadership in Energy & Environmental Design program, commonly known as LEED, is at the forefront of this shift, offering certifications for buildings, homes and communities that meet a variety of “green” requirements for design, construction, operation and maintenance.
This paper unpacks the forces behind LEED’s rapid rise in the industrial real estate sector, its benefits to industrial real estate developers, investors and tenants, as well as the challenges to attaining these coveted certifications. For more background on the history of LEED, please refer to the Appendix.
Why the Industrial Real Estate Sector is Warming Up to LEED
In the few years following LEED’s debut, the residential and commercial real estate sectors comprised the bulk of the program’s early adopters. A number of reasons caused the industrial sector to shy away from registering projects for LEED qualification. There were pervasive misconceptions that LEED was only applicable to homes or office space, and that LEED criteria was too narrow to include industrial project’s unique qualities.
Recently, however, attitudes have changed. In 2010, the USGBC reported only 198 LEED-certified industrial projects; as of July 2014, that number has jumped to over 1,300 nationwide1,2. A number of factors and new developments have inspired this industrial push toward LEED:
- Updated standards promote industrial inclusivity. In November 2013, the USGBC announced the latest version of the LEED program, “LEED v4.” This update aims to simplify the certification process (with a more robust technology platform and additional reference resources), and accommodate new market sectors, many of which fall within the industrial real estate realm. LEED v4 also includes new program adaptations for in-demand industrial spaces such as data center, warehouse and distribution center projects.
- Consumer expectations drive new tenant demands. Just as consumer technology habits have reinvented the way businesses think about IT, customer preferences are forcing a shift in how organizations approach sustainability. According to an early 2014 report by Walden University, 81% of adults worldwide say that when purchasing goods or services, they strive to “choose a company that behaves responsibly toward the people and environment … where it operates.”3 Seeking to prove their commitment to sustainability as a way to maintain customer loyalty and gain market share, companies from Frito-Lay to Skechers are setting a LEED standard for their manufacturing and distribution facilities.
- Complementary practices make for an inevitable match. Examining the requirement road to achieving LEED, along with the operating benefits post-certification, LEED aligns strongly with the types of projects industrial developers already pursue and the results their clients want. For example, brownfield remediation, in which previously unusable or contaminated sites are transformed into environmentally friendly, developable land, is just one of industrial real estate tactics that earns points toward LEED certification. Moreover, adhering to LEED standards for facility interiors and exteriors can result in significant savings around water, energy consumption, as well as transportation costs.
Building a Support Network for Successful LEED Certification Projects
Achieving any level of LEED certification is a strategic journey, one that takes precise planning and expertise in a number of areas, from site selection and construction to facility design and government regulations. Finding the right partner is the key to successfully earning LEED certifications for industrial properties. When searching for a development partner, evaluate candidates along the following factors:
- Knowledge of LEED certification requirements and process. It’s important to partner with companies that are members of the USGBC and that employ LEED-accredited professionals. These experts can help buildings achieve LEED certification, when appropriate. Since the decision to have your building LEED certified is a choice, the cost-benefit analysis must be assessed for each tenant or owner.
- Track record with public-private partnerships. At various points in the LEED certification process, tenants and their developers will need to work with local, state and even federal government agencies. Especially when selecting and remediating brownfield properties, developers may be required to navigate through a slew of public sector approvals and paperwork. Choosing a development partner with a history of government collaboration can ensure a more seamless certification process overall.
- A vision of sustainability, inside and out. External building fixtures such as high-reflectance roofing and the use of raw materials all contribute to LEED achievement, but for industrial tenants, there are a number of long-term benefits available from bringing eco-friendly technologies in-house. Building warehouse or plant space that’s flexible enough to accommodate specialty energy generators, strategically positioned windows to increase natural light, or tools for reducing water and electricity use, can fulfill LEED requirements and yield cost-savings down the line.
CenterPoint Properties: A Dedicated Partner in Sustainable Development & LEED Certification
For tenants looking to pursue LEED certification for their next industrial facility, CenterPoint offers a team of LEED-accredited professionals, and contractors equipped to support any level of LEED project. Since 2007, CenterPoint has been a national member of the USGBC, enabling the firm to work side by side with other industry leaders committed to sustainable development. Every building CenterPoint develops incorporates features that qualify for LEED points, such as enhanced insulation, energy efficient HVAC systems, automatic-censored light fixture controls and storm-water management solutions.
LEED by Example
To date, CenterPoint has worked on a number of LEED-certified properties across the country that showcase the advantages of environmentally-conscious development, and the impact it can have on business and community growth.
- Crothall Laundry Services’ Built-to-Suit Reduces Water Consumption by 40%. CenterPoint completed a build-to-suit project for Crothall Laundry Services, Inc., a division of Crothall Healthcare. As the second largest healthcare laundry provider in the U.S., Crothall Laundry Services process more than 450 million pounds of laundry annually.CenterPoint’s accredited professionals designed an eco-friendly and budget-conscious 82,950 square foot building on a 5.64-acre site in Oak Creek, Wisconsin, which became the first LEED-certified laundry in the world. This included the implementation of new technology that reduced water consumption by 40 percent compared with plants using traditional tunnel washing processes, saving Crothall approximately 8.5 Million gallons of water annually. CenterPoint’s professionals constructed the facility to accommodate Thermal Fluid Ironers that process up to 145 feet of bed sheets per minute and 1,200 bed sheets per hour, greatly improving efficiency for the company.
- National Nuclear Security Administration Cuts Manufacturing Site Footprint by 50%. CenterPoint completed the development of the National Nuclear Security Administration’s (NNSA) new National Security Campus in Kansas City, Missouri. The NNSA is responsible for the management and security of the U.S.’s nuclear weapons, and naval reactor programs, and is critical to supporting efforts to reduce nuclear weapons by maintaining existing systems and decommissioning weapons over time.CenterPoint’s development team designed a 1.5 Million square foot, LEED-Gold certified complex encompassing office and manufacturing space for the NNSA. The new campus reduces the Administration’s manufacturing site footprint by 50 percent, and offers unmatched annual operating cost savings. CenterPoint was instrumental in implementing a number of features to facilitate the campus’s LEED certification, including a solar heat-reflecting white roof, preferred parking spaces for fuel efficient and low emission vehicles, and high efficient plumbing infrastructure that will save more than 3.2 Million gallons of water each year.
About CenterPoint Properties
Based in Chicago, CenterPoint is a national industrial real estate firm focused on the development, acquisition and management of industrial property and transportation infrastructure. For more than two decades, CenterPoint has been a leader in sustainable development initiatives for the industrial real estate industry. As a member of the U.S. Green Building Council, we established the national model for rehabilitating blighted and underutilized industrial property into revitalized locations that comply with government regulations, reduce carbon footprints, and promote economic and business growth.
CenterPoint’s development projects have earned two U.S. EPA Phoenix Awards and numerous city, state and federal accolades, including various levels of LEED certifications. Strategically located near ports, rail terminals and population centers, our properties help companies increase logistics efficiency and reduce drayage, energy costs, waste output and the environmental impact and cost of transportation.
For more information about our innovative sustainable development programs and our team of LEED Accredited Professionals, visit our website at centerpointstg.wpengine.com.
A Brief History of LEED
USGBC introduced the LEED certification program in March 2000 as a way to call out residential, commercial and industrial properties with notable health and environmental performance in the United States and abroad. This prestigious designation demonstrates a strong commitment to sound environmental practices and is appreciated by shareholders, employees, customers, community members and other key stakeholders.
The LEED program is built around five ratings systems that gauge the extent to which a real estate project meets specific criteria. Currently, property may be rated by building construction and design, interior construction and design, building operations and maintenance, neighborhood development and homes. Under each rating system, projects earn credits for fulfilling certain requirements, such as proximity to transportation, the use of sustainable building materials and energy performance, among others. The credits a project receives determine its corresponding level of LEED certification: certified, silver, gold or platinum.
As of July 2014, over 30,000 projects in the U.S. are LEED registered, and nearly 20,000 have achieved certification.
- “Green Industrial” Caterino, Jennifer, Architect Magazine. December 30, 2010. http://www.architectmagazine.com/practice/green-industrial_o
- “Country Market Brief: United States” United States Green Building Council. July 17, 2014. http://www.usgbc.org/advocacy/country-market-brief
- “2013 Social Change Impact Report” Walden University. February 11, 2014.