Building industrial properties in cities, after years of those properties being developed outside of urban centers, could become a more attractive proposition for firms because of sustainability considerations.
A case study released by Cushman & Wakefield Global Business Consulting group on Monday, suggests the pursuit of sustainable development can help lure some firms with an environmental bent back to cities. The reason is simple: Urban sites provide the ability to gain credits for LEED certification because those locations often provide the required development density, access to public transition and often brownfield development opportunities.
“Organizations are increasingly pursuing sustainability goals for the industrial facilities within their supply chains – and achieving LEED certification for these facilities can be a meaningful differentiator,” said Matt Poreba, Cushman and Wakefield Consulting Manager and author of the report, said in a news release.
Leadership in Energy and Environmental Design is a green-building certification that requires projects to meet certain “prerequisites and and earn points to achieve different levels of certification,” according to the U.S. Green Building Council, which establishes the criteria for the certification. LEED certification does have its critics, who argue that certified buildings, which can get credits for simply installing bike racks, don’t go far enough to address sustainability issues.
In the Baltimore metro area, most new industrial products have been focused in suburban areas in the Interstate 95 corridor, with large projects at Baltimore Crossroads @95 and in Harford County, where the demand for industrial properties is being driven in large part by the “e-commerce” sector.
In Colliers International’s first-quarter report, the Baltimore metro area’s industrial market continued its strong recent performance. The industrial/flex market vacancy rate remained around 9.2 percent, where it was for most of the past year, despite 1.2 million square feet of space being delivered in the first quarter. That report also tracked 180 tenants currently in the market that are looking for a combined 3.2 million square feet of industrial/flex space.
But strict zoning that doesn’t permit industrial development in the suburban counties has created a constrained land market. As a result, redevelopment of industrial projects is becoming increasingly popular. Combine that with urban sites making it easier to obtain LEED certification and it makes sense that some of the industrial properties in the Baltimore area will be more attractive for redevelopment.
A prime example of that is Duke Realty’s Chesapeake Commerce Center. In 2006, the company purchased the 2.6 million square foot site, the former home of a General Motors manufacturing plant. Duke demolished the old GM buildings and redeveloped the area as Class A industrial space, including the 1-million-square-foot Amazon Distribution center, and the first LEED certified industrial building in Maryland at 5901 Holabird Ave.
According to Duke’s website, the company touted green development at 5901 Holabird Ave. and several other properties throughout the country as one the ways clients can reduce their operating costs.
“We believe these efforts are not only respectful of our world’s resources, but also help strengthen the relationships we have with our tenants. By keeping operating costs in check, our customers’ profitability is favorably impacted through long-term savings,” the company’s website reads.