Although when we talk about climate change we discuss reducing our carbon emissions, which refers to carbon dioxide, reducing nitrous oxide from industry and productions is just as important.

While the nitrogen deposition caused by the construction sector in the Netherlands (0.6 per cent) is relatively limited compared with, for example, the agricultural sector (46 per cent), the Dutch Government’s attempts to comply with a court order to cut nitrogen pollution is affecting a number of property sectors in the country.

According to the Economic Institute for Construction (EIB), the number of Dutch new build projects will come to a halt in 2020 and 2021 as a result of the order to cut nitrogen. The residential sector seems to be hit the hardest, although the graph below shows the volume of logistics real estate under construction is also clearly declining. Around 30 per cent fewer permits for new build projects were issued in the third quarter of 2019 than the third quarter of 2018, according to CBS.

Since permits are expected to remain under pressure in 2020, improving existing buildings’ sustainability ratings seems to be an attractive alternative to new build. Up to now, the Government has mainly offered solutions for the agricultural and aviation sectors, the resolutions for the construction sector are not forthcoming and the measures that the Government is taking to limit nitrogen deposition need time to be implemented effectively.

As the demand for logistics real estate in the Netherlands continues and occupier demand for larger and higher sheds is increasing, the (re)development of old(er) sheds on brownfields is becoming more popular.

Does this mean that existing logistics real estate will increase in value? It’s too early to tell, especially when you consider that part of the existing stock is very outdated. These sheds are smaller and therefore do not meet the current modern occupier requirements for large sheds with a minimum clear height of 12.2 m and a heavy floor load. A possible increase in value will therefore only apply to some of the properties built before 2015.

There are some quick wins to reduce nitrogen emissions such as electric traffic movements to and from the distribution centres, but you can also think outside the box. Recently, colleagues organised an inspirational session on timber construction. Building with wood (Cross Laminated Timber) offers a sustainable alternative to building with concrete. With wood, the greenhouse gas CO2 is stored over time, while the production of concrete actually causes a lot of CO2 emissions.

It is also possible to build much faster with CLT, because of prefab preparations – a good way to reduce nitrogen emissions in the construction phase. A shed is perfect for building with wood, given their almost always straightforward shapes and limited height. As a result, it might not be too long until we see the first wooden distribution centre in the Netherlands.

Further information

Contact Savills Industrial & Logistics