Green Industrial Facilities Gaining Popularity

The U.S. Green Building Council says that the market of green industrial buildings had grown by 375% in the four years leading up to 2013. These buildings mean opportunities for contractors, energy savings and more productive employees.

September 12, 2016

The Method Soap building in Chicago’s Pullman neighborhood boasts impressive wind and solar energy sources and in 2014 became the first and only LEED Platinum certified manufacturing plant in its industry

When you think of green commercial buildings, what springs to mind? Apartment towers with rooftop gardens? How about office buildings equipped with low-flow toilets and energy-efficient windows?

It’s true that office buildings and multifamily projects make up a large portion of the LEED-certified commercial properties across the country. But it’s easy to forget that industrial buildings — warehouses, distribution centers and factories — can also be green.

The number of industrial buildings that have achieved LEED certification status is steadily growing. According to the U.S. Green Building Council (USGBC), there are currently more than 1,755 LEED-certified industrial facilities worldwide totaling more than 496 million square feet and an additional 2,710 projects registered totaling nearly 737 million square feet.

Industrial facilities, which include manufacturing buildings, warehouses, distribution centers and industrial campuses, operate on a vastly larger scale than homes, office buildings or even a university campus. The manufacturing sector alone is responsible for 30% of the nation’s total energy consumption and uses an estimated 15,900 million gallons of water per day, which is roughly 4% of total daily water use. Through LEED certification, the world's most widely used green building rating program, industrial facilities are more resource efficient and high-performing, which translates to increased asset value and millions of dollars in savings for owners and operators.

This is no surprise to Karl Heitman, president and founder of Heitman Architects Incorporated in Itasca, IL. Heitman says that building green, and seeking LEED certification, is a smart financial move for the owners of industrial buildings. At the same time, green warehouses and manufacturing space makes good economic sense for the companies that lease or buy industrial space. As you drive down your environmental impact, you often find large cost savings. LEED can help both reduce the environmental impact and the cost associated with running a factory. When you consider the size and scale of industrial faculties and today’s business models, we are talking about millions of dollars in savings and conservation on a truly massive scale.

Green buildings consume less energy. For the owners and tenants of industrial facilities, this will result in lower operating costs each year. Green buildings are also healthier workplaces, Heitman says, resulting in healthier and more productive employees.

“There is a lot of potential when it comes to industrial facilities and green building,” Heitman says. “Green is a smart thing to do economically for industrial developers.”

Take the LEED

A 2016 survey, conducted by the USGBC and Dodge Data & Analytics, predicts that the global green building market will more than double by 2018. In the U.S., nearly half (44%) of the respondents to the study report that they are currently doing more than 30% of their projects green, and 58% report that they will be building green at that level by 2018.

That means the green building isn’t just a nice thing to do anymore. It’s an expectation and saying that becoming involved in LEED projects is too costly is no longer a viable excuse.

“The costs of going green have pretty much gone away,” Heitman says. “To get a baseline LEED-certified building today doesn’t involve nearly as many hard costs as it once did. To get to Silver, Gold or Platinum levels, yes, you are talking about some additional costs. But for baseline LEED projects, the buildings being designed today come with only minor increases in hard building costs.”

That doesn’t mean that there aren’t some additional costs to getting LEED certification. Owners will have to pay for the process itself of getting certified. That cost can range from $50,000 to $100,000, Heitman says.

However, green buildings are gaining popularity not for the soul reason of owners hanging a plaque on their door. In fact, branding/public relations and internal corporate commitment have seen notable drops in response between 2012 and the current 2015 study.

“Some developers really understand the value of green building,” Heitman says. “They understand that there is a corporate social responsibility for going green. But they also understand that building green gives them a benefit that they can pass onto their tenants. Their tenants are looking for greener solutions, so they are attracted to green buildings. That is a benefit to the owners and developers of industrial facilities.”

Heitman says that he expects to see even more green industrial facilities to pop up around the Chicago area in the coming months. Already, the bigger companies, the Fortune 500 firms, are routinely going green with their manufacturing and warehouse facilities, he says. The number of smaller companies pursuing green is also increasing, although at a slower pace, Heitman says.

“Once more tenants and companies start demanding it, the mass market will change,” Heitman says. “Most developers will follow the demand. If companies are demanding green, they will follow that demand.”

The Method Way of Sustainability

Today’s consumers increasingly want to purchase products that have come from green, sustainable manufacturing facilities, Heitman says. That’s another incentive for tenants to locate their businesses in green industrial properties. And it’s another incentive for owners who want to attract these tenants.

The Chicago area is home to many LEED-certified industrial projects. Heitman and his company, for instance, partnered with Summit DB and William McDonough + Partners on the Method Soap facility that began operating in Chicago’s Pullman neighborhood last year. Workers at this LEED-Platinum facility, the only LEED-Platinum manufacturing facility to date in this industry, manufactures and ship environmentally sustainable hand and dish soap.

During construction, local and recycled materials were used whenever possible and the company was able to reach their goal of sending zero material to landfill. The site is powered by a 230-ft-tall commercial-grade wind turbine. The site also has solar tracking trees in the parking lot, a solar water heating system, natural and energy-efficient lighting, as well as heat-reflective concrete and low-flow water fixtures throughout the building. Method says that by using a combination of conservation and renewable energy, they are on track to reduce their energy consumption by more than 50% at this facility alone.

To top it all off (literally), Method installed a 75,000 square foot greenhouse roof that is operated by urban agriculture company, Gotham Greens. The rooftop greenhouse is gearing up to produce 500 tons of fresh, pesticide-free produce annually, which is good news for the local community and nearby retailers and restaurants.

Method also houses both their manufacturing and bottling operations in one spot that serves as a distribution center for both Method and Ecover. Having everything in one building allows the company to reduce their carbon footprint. With this location, the company has also positioned themselves to source ingredients and distribute products efficiently across North America.

“That is an impressive facility, but it’s not just a philanthropic effort" Heitman says. "It was a businessman who put that plan together. The reason that facility works is because it makes business sense. It reduced the costs of the company’s supply chain. It relies on renewable energy sources, so it also reduces the operations costs.”

That facility has received plenty of press. But there are other LEED industrial facilities scattered across the Chicago area that have been just as important.

Heitman’s company worked with Clarius Partners on that company’s more than 1-million-square-foot warehouse in the company’s master-planned Clarius Park Joliet in the south Chicago suburb of Joliet. That building received LEED-Silver certification back in 2014.

Heitman Architects also worked with Peak Construction Corporation on a Sunstar facility in Schaumburg. This LEED-certified building features a 365-ft-long 22-ft-high glass wall that overlooks the facility’s manufacturing floor. This allows nature daylight to wash over the floor, providing a healthier environment for workers and lower operating costs for Sunstar.

Additional information for this article also provided by Dan Rafter, editor, Midwest Real Estate News.

Reasons to Go Green

Heitman said that there are two main reasons why industrial developers build green. First, they can reduce their operating costs through energy savings and tax credits.

“When you get that better envelope, those higher insulation values and that higher-efficiency lighting, you will get buildings that consume less energy,” Heitman says. “Green buildings also take advantage of daylighting through clerestory windows or skylights. That also reduces the amount of energy buildings industrial buildings consume each year.”

The USGBC says that LEED-certified buildings also report maintenance costs that are almost 20% lower than traditional commercial buildings. Green retrofit projects typically lower operating costs by almost 10% in just one year, according to the council.

Building owners can also qualify for the 179D tax credit, also known as the Commercial Building Deduction, when their buildings meet certain energy-efficient guidelines. This is another source of financial savings for which industrial owners can qualify.

In addition, green buildings increase in value quickly, with the USGBC reporting that green features make the average building an instant 8-10% more valuable than the same facility would be without green features.

This means that the return on investment that owners receive by building green is rapid. The USGBC says that green retrofit projects, including on industrial facilities, pay for themselves in an average of just seven years.

The second big reason for owners to go green? Employees who get more work done.

Heitman says that productive employees are an often-ignored benefit of green industrial buildings.

“Green buildings generally have employees who are more productive,” Heitman says. “Having that natural daylight, clean air and less CO2 creates higher productivity and lower absenteeism. Green buildings also tend to attract employees. They help companies retain their best employees, too.”

Four Additional Green Building Impacts

Recycling: In most cases and locations there is no legal requirement to recycle. But if you want a LEED certified facility, that means there is an incentive to recycle and goals can be set to help divert waste from local landfills. The USGBC has even gone so far as to tie employee bonuses to environmental performance goals.
Green cleaning: Janitorial chemicals and associated wastes are potential issues for buildings that operate on an industrial scale. By purchasing and using green cleaning supplies and methods where possible, companies can reduce their liability, waste management and disposal costs which ultimately saves time and money.
Materials and supply chain: Just picture how much flooring or carpeting material goes into any industrial facility, or imagine how many walls are painted for each building. The manufacturing industry can transform suppliers by asking for low or no VOC paint, for carpeting and flooring materials that contain recycled content and don’t off gas from toxic adhesives.
Infrastructure for the site: Over 5,000 people can work on a single industrial facility up to seven days a week and parking needs to be provided for those cars. Designing facilities that encourage car pooling, biking to work and electrical vehicle charging reduces this impact. In addition, the parking lots provide real estate that can be used for solar charging as well as shade coverings for employee vehicles. Finally, large parking lots usually mean light poles, trenches to run cables and transfer electricity to each parking spot, monitoring systems and a grid system for all of the light poles. Instead, put in stand-alone poles that are solar powered, reducing both energy and infrastructure costs.