Infill industrial locations can generate up to 30 percent fewer greenhouse gas (GHG) emissions compared to greenfield locations, according to new research by AMB Property Corporation. Infill sites also experience 23 percent lower carbon emissions, 22 percent lower average supply chain mileage and 21 percent cost savings over their greenfield counterparts, according to the report.
AMB examined 10 embedded costs across the categories of airborne and carbon emissions, infrastructure costs such as roadway maintenance and expansion, and environmental costs.
The report examines the variables that define the two main types of industrial real estate sites (infill and greenfield) and concludes that a property owner having a long-term infill strategy enjoys superior occupancy, rental growth, financial returns, and supply chain operational efficiencies. The study also shows that infill locations enable more transportation-efficient and sustainable supply chain operations.
The study also found that infill markets have outperformed greenfield markets by more than 300 basis points over the last 10 years. As environmental and social costs are increasingly priced into real estate transaction, infill markets are expected to outperform greenfields to an even greater extent. These embedded costs are also becoming factored into supply chain costs, as companies like Wal-Mart, FedEx and DHL seek to reduce freight transportation costs and increase the efficiency of their transportation networks.
According to the report, an infill strategy can help resolve traffic and airborne health issues by reducing truck traffic. The study examined four supply chain profiles, finding a savings of 49 million miles and 6.9 million gallons of diesel fuel as the result of infield strategy, equivalent to 9 gallons of fuel for every square foot of industrial space. Airborne emissions from infield strategies were 23 percent less, the equivalent of 76,000 tons of carbon dioxide.
AMB valued each ton of carbon saved at $15 in anticipation of a future climate tax and legislation, which could result in annual transportation savings of $1.60 per square foot of industrial space. The study calculated that a 5 percent shift from greenfield to infield sites sites in the L.A. basin would result in cost savings of between $127 million to $2.05 billion for society and the environment, with supply chain fuel savings approaching 1 billion gallons a year.
A recent study by the EPA found 16 to 20 percent of emissions are associated with land management policies, which includes emissions from passenger transportation, construction, and lost vegetation when greenfields are cleared for development.