Over-engineering can be key to anticipating ESG needs: P3

One of the current challenges created by ESG for long-term investors such as P3 Logistic Parks is that tenants, who are usually corporates, are still in the process of defining their own ESG agendas. These, nevertheless, have to be anticipated in the design and specification of buildings being provided for them.

“We expect restrictive ESG baselines and that means we have to be ahead of that game. So, we are quite rigid in defining our own ESG strategy and how we build our buildings to make sure that they’re future proof and in 10, 20, 30, 40 years tenants might still want to rent them,” said Jens Thale, P3’s head of construction.

Some of the measures are fairly obvious such as insulation, Thale said. “Back in the 2000s we would not have used much insulation on warehouses. This has changed drastically. These days, more is better so we’re going for that.”

Thale said that the key factor is to have a resilient building that does not need major repair works over a long period which means adjusting the specification accordingly.

Thicker membranes on roofs that will stay leak-proof for longer are an example. “We don’t know exactly what’s coming in the next decades, we want to be prepared for the unknown so we simply over-engineer a lot of things,” Thale said.

The need for climate resilience has also brought changes in thinking.

Drainage is one area where policy has changed and as little as five years ago rainwater from warehouse roofs would have drained into the public system. “These days, draining on site is more relevant. We had a major flood only a couple of years back which made public opinion more sensitive about this matter.”

The current focus is on development using brownfield land and this too presents challenges.  “Brownfields are complex because of the way we have to orchestrate a solution with a municipality,” Thale said. The ground is frequently contaminated from processes that went on there between the 1950s and 1970s. “It was different times then and there was not as much focus on keeping contamination out of the ground,” Thale said.

The key now is to keep as much out of the ground as possible and to seal it off so that it will not harm anyone in the future, he added. However, the timeline can then be the problem because agreements on remedial works often have to be made with municipalities after the site has been acquired so it can be difficult to pinpoint when the return on investment will begin, Thale explained.