More than 16 billion square feet of industrial property blankets the United States with another 750 million square feet (msf) on the way. Within these facilities, nearly everything we consume is produced, stored and distributed. The sheer quantity of warehouses makes the greening of the sector an essential component of achieving both community and corporate sustainability goals. Occupying buildings that are designed to be environmentally friendly is one action firms can take to transition to net zero, which means cutting greenhouse gas emissions to as close to zero as possible. Choosing sites in optimal locations that lower transportation costs can reduce the carbon footprint of supply chains by an even greater amount. According to a report from the World Economic Forum, buildings drive 13% of the logistics sector’s carbon emissions, while transportation encompasses the remaining 87%.

U.S. LEED-Certified Industrial Property Statistics

In terms of building design, choosing environmentally friendly construction materials, lighting and landscaping all impact sustainability. While these factors can reduce environmental impact, the activities occurring within facilities will further drive energy consumption to a large degree, with manufacturing having much higher utility demand than distribution. Additionally, with their enormous flat roofs which can exceed 1.0 msf, warehouses are prime for installation of solar arrays. In fact, Amazon and Prologis are among the top 10 corporate users of solar. Amazon occupies nearly 400 msf of industrial space and Prologis owns 609 msf in the United States.

LEED certification offers a method of quantifying green warehouse space. Only a relatively small percentage of industrial inventory is currently certified, equating to 1 out of 28 buildings constructed since 2000. One challenge to implementation has been the LEED standards themselves which historically were not tailored for industrial properties. It was not until LEED v4 went into effect in December 2013 that industrial buildings had their own set of standards. Prior to that, warehouses had to adapt LEED models for other property types. It is notable that LEED industrial buildings outperform the broader market by a significant degree with a 38% rent premium and vacancy rate of 1.9% (versus 4.2% for the U.S. overall).

Map of LEED-Certified Industrial Properties and Drive Times to CBDs in Top 30 MSAs

Transportation is the biggest polluter on the supply chain. Vehicles comprise 30% of greenhouse gas emissions, with trucks making up nearly 25% of those transportation-based emissions, according to the EPA. Electrifying truck fleets will help, but currently electric vehicles comprise less than 1% of vehicles on the road in the United States. Location determines the miles that the goods stored inside the warehouse will have to travel, and choosing sites in proximity to ports and population centers aids in reducing fuel consumption. Additionally, locating near where the labor force resides and where public transportation options exist can minimize the carbon footprint of warehouse worker commutes. Looking at the more than 800 LEED-certified industrial buildings over 100,000 square feet across the U.S., nearly 30% are located within a 30-minute drive of the Central Business District (CBD) in the 30 largest metro areas. These properties, which represent green buildings located close to city centers with dense populations of consumers and workers, offer the greatest potential to reduce carbon emissions for logistics operations.

With transportation costs tending to make up 50% of total supply chain costs in distribution, reducing transport distance in site selection favorably aligns financial and environmental goals, particularly in light of the recent increases in freight rates and fuel prices. The challenge is the limited supply and premium cost of green buildings in close and commutable locations. Also, new construction is made difficult by the land constraints and community opposition to warehouse development near residential areas. As corporations and governments look to achieve net zero, a major focus on the logistics sector warrants careful consideration of environmentally friendly building design as well as public and municipal education regarding the benefits of expanded public transportation and infrastructure, as well as locating facilities proximate to population centers.

Source: ESRI, EPA, World Economic Forum, MWPVL, Prologis, Solar Energy Industry Association, Accenture

Opinions expressed by the author are their own.