German logistics real estate developer Log4Real is incorporating global industrial energy management systems into its recently launched European expansion programme, with new sustainable technologies aimed at transforming the market's traditional tenant and investment model.
The company is going far beyond using sustainable power sources, such as solar panels and geothermal energy, by including the entire energy management process in its projects, the company's CEO Christian Bischoff said.
'Tenants will be able to achieve large savings on their energy bills, which can be a big component of overall costs, and so also gain lower effective net rents. Investors will benefit from what are both renewable energy and real estate investments on long-term leases underpinned by potentially higher headline rents.'
He added that Log4Real was able to achieve the seemingly incompatible goals of providing better deals for the tenant, investor and environment by intensely focusing on savings in 'side costs', which are mainly incurred through energy use in heating and cooling within its warehouses. In energy-intensive industries such as food processing, these process management and technology systems can produce average cost savings of between 30% to 40%.
In order to maximise the energy efficiency of the building, Log4Real will use a 3D design and construction system called the Building Information Model (BIM) to produce a digital prototype of the entire structure and interior. It also partners with the leading companies in the field of sustainable technology such as AstraCockpit for tracking energy consumption, Siemens, Viessmann and ROM Technik.
Log4Real claims the technology and systems it uses can help reduce the net effective rent paid by tenants, even though the headline rent used to calculate income yields by investors may be around market levels or higher. The developer refers to this equation as the ‘warm rent,’ because energy costs and savings are included in it.
'The traditional industrial/logistics development approach is to focus on the highest achievable net market rent and then leave tenants to switch on the lights with little further support,' Bischoff pointed out. 'We think this wastes energy and money and is not a truly sustainable model. Log4Real looks holistically at the entire investment proposition from development, to tenant needs, and investor requirements for low risk and long-term stable and sustainable rental income streams.'
