Panattoni: Technology is the key to going green

This article is sponsored by Panattoni

There is a sharpening focus on accreditation, but the drive to meet ESG expectations and requirements comes just as much from a genuine desire to build net-zero buildings for society’s sake, say Panattoni’s Nick Cripps, director of capital markets Europe and head of UK capital markets, and Emilia Dębowska, director of sustainability.

How important is ESG for real estate managers?

Nick Cripps: Covid accelerated ESG’s importance massively. In the last two years it rose up everyone’s agenda. At any industry function I attend now, ESG and the current challenging economic environment are the principal topics of conversation amongst real estate investors, with almost no exceptions. 

No one can now treat ESG simply as a box-ticking exercise and just pay lip service to it, and there are many reasons why. In part, this is driven by the European regulators – bureaucratic regulations such as EU Taxonomy – while sustainability surveys undertaken by investors are now more important than ever; they often form part of the suite of technical surveys undertaken during pre-acquisition due diligence alongside building and environmental surveys.

Investors are focused on understanding the exact risk that any building may become obsolete and when, and they are being much more selective about what they want to own and the associated costs of ownership. There is also a response to users and occupiers themselves having changed agendas with their own net-zero targets, which is a major driver behind the desire to reduce the carbon footprint of real estate ownerships.

From an occupational point of view, the energy crisis has focused everybody’s mind on operational and economic efficiencies, as energy is such a large part of a worrying rise in an occupier’s overall cost stack. This is focusing the minds of occupiers on their operational efficiency and further increasing the desire to operate out of modern, fit for purpose facilities.

What are the main elements in a green strategy for industrial and logistics real estate?

Emilia Dębowska: Technology is the key to any green strategy. Solar panels are one of the most important tools for us. Improving energy efficiency of the building and reducing energy consumption is a priority. LED lighting, used with dynamic control systems, also significantly reduces energy consumption – in some cases it can lower consumption by up to 80 percent.

The technology around building management systems is developing fast. Smart meters are very important for operational efficiency, while heat pumps can replace heating using fossil fuels. 

However, this goes beyond energy to include biodiversity and employee wellbeing. So, another technology which we are increasingly using is rainwater harvesting.

We started looking at all of these sustainability issues some years ago and began to undertake energy modeling to ensure we could obtain BREEAM’s excellent certification. Some nine million square meters of our real estate has been certified, with another five million square meters in the process.

NC: We are very keen to keep up with all modern sustainable approaches. We have to be alert to all of the developments in solar power; the ratio of the number of roof lights to roof space; the move away from gas to heat pumps; and certainly, the importance of biodiversity and wellbeing features. 

Our goal is to ensure all of our new buildings are net zero by 2025. One of the biggest challenges in meeting this comes with energy intensive uses such as data centers or larger manufacturing facilities; there is no getting away from the fact that they are
power-hungry operations and that solar panels in isolation will never provide sufficient energy on a standalone basis. 

Having said that, we can do an awful lot to reduce this, through building insulation and the installation of the most energy efficient cooling systems. It is our hope that we can be more ambitious in this area in the future using on-site green energy sources as the principal source of energy consumption.

Are there particular challenges for developers of new properties? What is the role of the circular economy?

ED: Inevitably in our sector there is a focus on new construction. We have to fulfill the demands of occupiers for more modern spaces and this means being very alert to planning and construction issues. Our core focus is to be a green developer.

The circular economy plays a role here. I think by far the most important aspect of this is which site we choose for any new development, so we have a preference for brownfield over greenfield, building new warehouses in old places and adding in an element of biodiversity as well. Our developments in France, Italy and Germany are now as much as 95 percent brownfield.

We also have a focus on using green materials as much as possible. Sometimes this means building with wood, but most often we seek out materials with a good EPD and FSC certification. We are seeking to use low energy materials and are big supporters of initiatives such as green steel, although I think it will take some time for these developments to bear fruit.

Above all it is important to plan a new building in the appropriate way. This means reducing energy consumption once operating, but also looking at broader issues such as the transport used to bring the materials on site. We all consider embodied carbon now and for this the planning stage is crucial. How that pans out is different in different countries.

What is your own experience across Europe regarding different countries?

NC: There are certainly different challenges when it comes to the various geographies we operate in, whether that be climate, planning standards or market practices. But ultimately our ambition is to raise all of our developments to a uniform standard exchanging our knowhow across Europe.

Of course, we have to accept that there are inherent differences. It is obviously much more productive to use solar power in countries like Spain, Portugal and Italy than it is in some of the Northern and Eastern European countries.

There are also different grid capacity issues. With many of our warehouse developments, we are actually generating surplus energy which needs to flow back into the grid. Sometimes this is simply not possible, as some countries or sites do not have the infrastructure there to do this and battery technology is not yet a viable solution for efficient on-site energy storage.

Some geographies are pushing ahead with EVs and it is becoming increasingly important for us to install charging points for both commercial vehicle fleets as well as the staff. However, this in itself then poses challenges for the amount of power they are drawing and what power is available. 

This means meeting the energy requirements for building a new warehouse are greater than just reinforcing the roof for solar panels. It is very important for us to buy sites where we know that appropriate power is available, and at the very least, if not readily available, there is an opportunity to increase the power provision to site. However, it is clear that onsite power generation will help alleviate these pressures and this should be a longer-term ambition.

ED: We are working in most countries to put solar panels on roofs, but sometimes regulators don’t help us. Every country has different requirements when it comes to undertaking the upgrading of building space. This means we have to have different dialogues adapted for the different countries in which we operate.

That sounds challenging. Are there some countries which are easier?

NC: I find the UK to be one of the more advanced markets when it comes to ensuring reduced energy usage and implementing sustainable features. And the UK is ahead when it comes to “base build design.”

For example, in all of the buildings we are developing in the UK we dedicate 15 percent of roof space to roof lights, which means you often don’t have to use internal lights at all. This would contrast to other countries where it might only be 1 to 2 percent of the roof space.

I would also say the UK is ahead when it comes to the use of heat pumps. They aren’t the standard in other countries and in some jurisdictions such as Spain and Italy they aren’t really in use at all. However, they form part of our standard base build design in all of our developments in the UK.

ED: We are changing local practice in some countries with full co-operation. Germany is growing rapidly and there we have been changing heating systems from gas to heat pumps. Through these, and other changes, we can make a significant difference.

Case studies: UK and Poland

Nick Cripps: The Panattoni Park at Aylesford outside London uses a number of new features to support its green credentials. This is a development of six BREEAM ‘excellent’ buildings on a 90-acre brownfield site providing a large-scale distribution park.

We are committed to achieving a 10 percent biodiversity net gain by maintaining mature trees, enhancing the public areas with new landscaping, plus introducing beehives and bug hotels, whilst also partnering with Kent Wildlife Trust to invest in local offsite amenity projects, bringing beneficial green space to the local community. We have also considered employee wellbeing with external amenity space being provided for employees in the newly landscaped areas. 

Emilia Dębowska: We have also undertaken a major development in Poland for Danish energy-saving company Danfoss. We have constructed the building so that it has excellent heat recovery from technology devices, so that 80 percent of the heat used on site comes from what has been generated on the production line.

This means we have no need for gas heating at all. Any other energy needs are met by real green energy.

Biodiversity has also been taken into consideration there and we have checked with ecologists to ensure that we have planned things carefully. Employee wellbeing has also been taken into account with significant recreation spaces and other employee-friendly features. Naturally there are also several EV charging points.

This is the first net-zero building that has been developed for that company anywhere in the world, and one of the first for anyone in continental Europe. It is an icon for us.