Why More Industrial Developers Are Adopting Green Building Practices

Green building standards are growing in industrial development—an asset class that is traditionally linked with dirt and pollution. Today’s industrial buildings are much different, and they are rapidly evolving. There are a number of forces driving industrial developers toward green policies, starting with institutional capital, which has deeply penetrated the industrial market this cycle, often has environmental, social and governance requirements that industrial developers must follow and fortune 500 companies, which are largely looking to reduce carbon emissions and achieve environmental goals.

“Institutional capital sources throughout the world are mindful of ESG goals, which are arguably more prevalent outside of the U.S. than they are domestically right now. Given the flood of real estate capital to the U.S. – whether that is in industrial, office, retail or multi-family—the greater push toward green buildings is really no surprise,” Jon Pharris, president of CapRock Partners, tells GlobeSt.com. “Fortune 1000-caliber companies often have explicit shareholder goals to reduce their carbon footprint. Many of the largest companies have multiple distribution centers throughout the nation and world and see green building as a tool to achieve company-wide environmental goals. Some companies will only occupy LEED Certified industrial buildings, although this is still rare.”

In addition to regulations implemented by corporate and institutional capital sources, government programs, like CalGreen and LEED certification, has also encouraged and required more green building. “Here in California, new developments must comply with the California Green Building Code, commonly referred to as CalGreen. CalGreen is amongst the strictest environmental standards in the country and includes items such as mandatory electric vehicle charging stations, bicycle parking areas, light pollution deterrents and recycled irrigation water,” says Pharris.