Logistics real estate investors are paying an average of 19% more for European warehouses with high sustainability credentials, according to a new analysis by Cushman & Wakefield. The study, which examined over 1,500 transactions involving more than 1,800 buildings of 10,000 square meters or more, found a significant pricing difference for warehouses rated BREEAM Very Good or higher compared to those with lower sustainability ratings.
The price premium for high-sustainability warehouses is even more pronounced in locations outside of prime areas, where the premium increases to 24%. This trend suggests that sustainability features are becoming increasingly important, even in markets where the quality of the asset is a primary factor in attracting and retaining tenants.
Cushman & Wakefield’s “Sustainable Logistics – Navigating Change in European Logistics Real Estate” report outlines the growing impact of sustainability on the logistics sector, including building design, supply chain management, and financing. The analysis shows that logistics buildings with high sustainability ratings are commanding rental premiums of 10-30% compared to lower-quality assets.
James Chapman, Head of EMEA Capital Markets at Cushman & Wakefield, commented, “For many investors, the sustainability credentials of a property are a top priority when assessing an acquisition. Highly rated buildings are viewed as more likely to secure tenants and provide stable rental income, while also offering greater potential for long-term value retention.”
As sustainability becomes a more critical factor in the logistics real estate market, owners of older, less sustainable buildings may face increasing pressure. These properties may struggle to meet evolving market expectations and could see their value decline if they fail to upgrade their sustainability features.
Tim Crighton, Head of EMEA Logistics & Industrial at Cushman & Wakefield, emphasized the challenges for investors and asset managers. “Improving the sustainability credentials of existing buildings is becoming more complex, and understanding the return on these investments—both in terms of reduced carbon emissions and financial returns—is crucial,” he said.
Cushman & Wakefield’s analysis also examined the potential benefits of upgrading logistics buildings to meet higher sustainability standards. For example, every €10 per square meter invested in sustainability improvements could reduce CO2 emissions by 2.2 kg per year. Additionally, an average investment of €113 per square meter could result in energy savings of €15 per square meter annually, with a payback period of approximately 7.5 years.
The growing importance of sustainability is also affecting the financing of logistics real estate. Lenders are increasingly prioritizing sustainability when providing financing for acquisitions and improvements, with more favorable loan terms available for buildings with higher sustainability ratings.
As regulations around sustainability continue to evolve, including the EU’s Energy Performance of Buildings Directive and the UK’s Minimum Energy Efficiency Standards, investors are taking steps to ensure their assets remain compliant and valuable in the long term.
The findings highlight the ongoing shift in European logistics, where sustainability is playing an increasingly significant role in investment decisions and market trends.
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