ESG to the fore as Yorks shed pipeline swells

Yorkshire’s pipeline of industrial space has increased for a third year running, with more than 20m sq ft set to come to market this year, according to EG Radius data. Planning records reveal 2023 will see almost a third more new-build space in the region, up from around 13.6m sq ft in 2022 and 8.6m sq ft in 2021. Schemes are also increasingly emphasising their green credentials and aiming to be low-carbon in construction and operation (see below). Planning documents show two of the largest – Peel Logistics’ 2.3m sq ft Bessemer Park in Sheffield and Henderson Park’s 11m sq ft Konect in Knottingley – have been designed to achieve a BREEAM Very Good rating. Expert view How is the drive to more sustainable buildings changing the market? Rebecca Schofield, partner and head of the Yorkshire industrial team, Knight Frank Industrial buildings are evolving. Yesterday’s big sheds provided huge spaces for logistics and distribution uses with often little thought for the impact they had on the environment and who worked in them. These spaces in 2023 are a different animal. The green credentials of a building, the social impact on employees, including having accessible labour nearby, and the positive benefits for the wider markets, society and the world, are now a firm focus. ESG is increasingly front and centre of property investment decisions in the industrial sector. The climate change topic has been around for decades, but investors, occupiers, developers and lenders are now concentrating on ESG strategies and practical applications to help properties become more sustainable now and throughout their lifecycle. Development For developers, environmental considerations start with geospatial mapping and site selection and continue through planning, design and development, including renewable energy and regulatory compliance, to leasing, operation and management. It is also occupiers who are looking at ESG, from corporates to SMEs. They have their own CSR requirements and want these to be aligned with any building move or purchase. Labour is one of the key drivers when occupiers take new space. Occupiers look at the available labour market within easy reach so they can recruit and retain staff, and assess whether there are good public transport links and practical elements like electric vehicle charging points and cycle bays. They are also looking at ways to utilise outside space better for staff, with seating areas and fit trails for well-being. In addition, employees  want to see that where they work fits with their own beliefs about sustainability. Rising occupier costs Occupiers face business rate revaluations in 2023 which, along with higher fuel and energy bills, will add to operating costs. Location and specification will be increasingly important. Well-located, energy-efficient facilities that can help firms mitigate costs will be key to maximising efficiencies. All this means the industry is looking to build more sustainably. Current examples in Yorkshire include GLP’s speculative build of Mammoth 602 at G-Park in Doncaster, which was the largest and most sustainable speculative building available in the North of England. The GLP enhanced specification includes Excellent BREEAM rating; LED lighting; low-water-spray taps; 12% less embodied carbon than industry standard; 15% less carbon in day-to-day operations; provision for electric vehicles; Planet Mark offered for first year of occupancy to help manage energy use; G-Hive scheme and wildflower planting to improve biodiversity; 100% recycled and recyclable carpets; and VOC-free natural paint. Firehorn Trusts’ Barnsley 340 scheme will boast net zero carbon construction, while Harworth Group’s Gateway36 phase two is transforming 51 acres of former industrial land into inspiring places to work. The three speculatively developed units range from 20,000 to 49,500 sq ft. These schemes illustrate that industrial and distribution units are no longer just places to store or manufacture products. Many have head office functions and a large staff base where the well-being of employees is now at the forefront, just as it is for typical office occupiers. Knight Frank contributed almost 4.8m sq ft of industrial deals to EG Radius in 2022, including more than 1.6m sq ft in Yorkshire & Humberside view them at www.egi.co.uk/radiusdx/contributor-rankings-2022-deals