New Government legislation on the energy efficiency of buildings will have a significant effect on warehouses and could leave warehouse operators with premises that can’t be used or let and are diminishing in value, according to experts at national commercial property consultancy Lambert Smith Hampton (LSH).
The Energy Act 2011, which has received Royal Assent, will make it unlawful to let buildings with F and G rated Energy Performance Certificates after April 2018. This means warehouse operators need to act now to avoid significant improvement costs in the future.
LSH Director Darron Owen said the degree of risk attached to F and G rated warehouses was high and would get higher as the 2018 deadline approached.
“Warehouse operators who are on the ball should, even now, be identifying which properties are at risk of falling foul of this new legislation and be putting a plan in place to improve the future environmental performance of their warehouses,” he said.
“Owners and operators need to have a plan to improve the energy and environmental rating of their warehouses and stores. They should be looking at things such as the installation of solar panels, rain water capture and recycling, grey water facilities, low-use flush toilets, energy efficient lighting and heating and air induction systems. Power generation through wind turbines may also be an option. The very least they should do is get expert advice. Doing nothing could be an expensive mistake in the long run,” he added.
“This legislation could have a significant impact on the marketability and value of warehouse stock over the next five years and beyond. Operators are already under a huge amount of pressure in the current climate. Additional expenditure will undoubtedly impact the market, particularly for secondary stock where we are already seeing the effect of physical obsolescence on pricing and marketability,” he said.
Government figures suggest that as much as 18 per cent of buildings with an Energy Performance Certificate fall into the bottom two categories spread across all asset classes.
Darron Owen added, “Statutory compliance costs could be very high if work isn’t done to improve environmental performance. Far better to identify the reasons for poor performance and carry out efficiency improvements during routine maintenance or periodic refits. “
“It’s also important that operators in D and E rated buildings don’t get complacent. Falling values will affect them too over time as regulations get more stringent. Landlords should act now to secure the highest possible energy rating and by taking specialist advice, can consider a number of possible solutions to make significant improvements to their stock.”
With lighting being the largest single energy use in many warehouses, accounting for up to three quarters of the total operational carbon emissions, significant improvements can be made with items such as optimum roof light design, the incorporation of occupancy sensors and daylight dimming. By increasing the area of roof lights, energy use through lighting is reduced, however it is also necessary to consider a possible increase in the requirement for space heating, as they allow more heat to escape than modern roof cladding elements.
Specialists can consider options that are available and can balance items such as heating and lighting factors associated with roof lights, alongside the specific requirements of the client on a project specific basis.
Other items which can be considered include;
– Wind turbines, which are dependant upon the location of the building and associated wind patterns
– Photo voltaic panels – with reducing capital costs as technology and manufacturing methods advance. These are silent in use and are suitable for the majority of buildings, with the potential to obtain feed in tariffs for low carbon electricity generation or so called ”clean energy cashback”
– Improved thermal insulation and improvement of construction details to minimise cold bridging and improve air tightness
– Improved and optimised wall and roof insulation, through the upgrade of existing elements or the replacement of the existing building fabric, such as old asbestos roofs or poorly insulated walls
– The installation of high efficiency lamps and luminaries
– Improved glazing insulation characteristics
– Replacement of existing gas fired heating systems with new more efficient heating using heat recovery and /or renewable sources such as Biogas heating, which uses organic waste, particularly if sufficient local supply available
Alex Carr of LSH’s Industrial and Logistics team said, “On the transactional side we have seen increased demand from occupiers looking to secure grade A and quality refurbished grade B industrial accommodation, particularly along the M42 and A38 corridors.
“Landlords who have invested in quality refurbishments to include new roof lights, energy efficient lighting, improved insulation and heating systems have secured tenants, and on occasions within three to six months of practical completion of the refurbishment. Institutional lease terms and strong rents have also been achieved on the back of this. Landlords who have not invested, or who have undertaken poor refurbishments have struggled to secure strong rents or even attract tenants. We are finding that more and more occupiers are paying closer attention to EPC ratings, corporate social responsibility and sustainability. If a warehouse is able to provide savings through energy efficiency we have found this useful in securing disposals.”