The Economic Feasibility of Sustainable Logistic Real Estate

Climate change, globalization and the increasing energy prices have become important subjects that determine the socio-economic condition. To cope with those changes we need to invest in a more sustainable economy. Priority should be given to the transport and real estate sector, as unlike some other sectors, they have an increasing share in the emission of greenhouse gasses. In this paper we will focus on the impact of sustainable measures in logistic real estate. Nowadays investors hesitate to invest in sustainable measures for real estate because they still have the idea that green investments equal higher costs. Next to the investors, all the other stakeholders ñ users, builders and developers - are also driven by demand, supply and cost uncertainty of green measures. This is referred to as the vicious circle of blame versus responsibility. The aim of this paper is to give a clear financial valuation for a traditional as well as a sustainable logistic warehouse. The paper will take different scenarios of a sustainable warehouse into consideration, depending on their level of sustainability. Based on specific literature it is possible to describe all the typical characteristics of a traditional warehouse on the one hand and a sustainable logistic warehouse on the other hand. The analysis is based on fictive examples because in reality it is very difficult to find traditional and sustainable warehouses with very similar attributes needed to be able to compare them. The financial valuation will be based on the principles and methods used by Lusht concerning Real Estate Valuation (2001). As a conclusion we hope to revise the negative attitude towards sustainable measures in logistic real estate. The positive financial valuation of the sustainable warehouse could be an important factor to convince investors and to increase the supply of sustainable warehouses and lower the impact of buildings on the environment. It also provides a basis for the introduction of green certificates for logistic real estate.