The mid-box and multi-let market need to talk about energy and data

Any development presents challenges. Build cost inflation is the latest big challenge and one we faced when Delancey recently launched Greenlight, a new UK logistics platform, with our joint venture partners Coltham Asset Management.

Greenlight aims to deliver sustainable products for both new construction and refurbishment in the mid-box logistics market. Last month, we received resolution to grant planning permission for a 46,375 sq ft unit in Reading and our aspiration is to deliver the UK’s most sustainable mid-box development.

Surprisingly, we have encountered genuine disinterest from occupiers around the insertion of green lease clauses and the sharing of data. Perhaps we shouldn’t be so surprised though.

I am no psychologist. My learnings on the theory of change are rooted in family life. What I have observed is my daughters challenging what they see as old-school conventions, which they contest with new perspectives generated by fresh thought. The definition of insanity is doing the same thing over and over again and expecting different results – and the industry is too often guilty of that. It is only by having conversations with people with different perspectives that we can sometimes achieve a paradigm shift.

This is what we need in the real estate industry – conversations. They are happening, but not universally and not frequently enough in the mid-box and multi-let market. I see big box press releases of landlord and tenant “net zero” partnerships and new mid-box developments marketed with strong ESG credentials, but then there’s radio silence.

It would appear that old habits die hard, and I appreciate SMEs are facing more immediate economic challenges. However, there are medium-sized companies with a nationwide portfolio that espouse a responsible approach to their products yet don’t communicate this to all their employees.

There is less opportunity to physically make significant impacts because of the scale of the mid-box product. For instance, the power generated on site from photovoltaics on a 50,000 sq ft unit is very less than that generated by a 200,000 sq ft one. This means it is critically important to converse and collaborate on the operational opportunities to make even the smallest of steps and strides towards a lower carbon and sustainable economy.

There is the very real opportunity to lower operating costs and attract and retain talent by pursuing sustainable initiatives both during fit-out and in occupation. This should be valuable to the tenant. Further, we want to be producing energy efficient assets, not only to achieve lettings, but because our tenants’ operational emissions are also our clients’ Scope 3 greenhouse gas emissions. So it is imperative that our interests are aligned.

At Greenlight, we see a major opportunity in this regard for both landlords and tenants, and we hope to find collaborators with whom we can have those all-important conversations about energy and data in the sector.