February 26, 2025 • Ella Krygiel, BOMA International
The ROI derived from sustainability initiatives has become a central focus in the commercial real estate (CRE) industry, with notable global advancements in recent years. A report by Colliers Netherlands highlights how the integration of circularity is driving real estate value. Circularity refers to the practice of reusing resources, often for the same or similar purposes. According to McKinsey, , since the industrial revolution, our economic model has largely followed a linear process: products are created, consumed, and ultimately discarded. This overconsumption results in an alarming statistic—around $2.6 trillion worth of materials in fast-moving consumer goods (80% of the material value) are wasted and never recovered. This stark reality has led to the evolution of circularity as a key strategy for sustainability.
The Colliers Netherlands report further emphasizes the role of energy efficiency in driving real estate value. Specifically, their findings show that improving a building’s energy performance by just one point on the energy index can lead to an average increase of 75 basis points on the Gross Initial Yield (GIY). These principles of circularity and energy efficiency are being applied across various sectors of industrial real estate. For example, warehouses are incorporating energy-efficient lighting and HVAC systems, installing solar panels and utilizing automated systems to reduce waste and optimize operations. Similarly, data centers are focusing on energy-efficient cooling technologies, transitioning to renewable energy and exploring edge data centers to minimize energy consumption. Below, we’ll explore the steps being taken to reduce carbon emissions in the industrial real estate sector. Insights from the BranchPattern team, a building consultancy dedicated to creating Better Built Environments®, provide a deeper understanding of these evolving practices. Read on to learn more.
- What are the most significant trends and innovations in reducing embodied carbon in industrial real estate?
“We are seeing a growing trend in tracking and transparently disclosing embodied carbon emissions through investor accounting and reporting frameworks like GRESB,” reports the BranchPattern team. “Public disclosure of emissions not only reveals how a company’s performance compares to industry averages, but also helps measure progress toward climate commitments.” This trend highlights the broader movement toward sustainability in the commercial real estate (CRE) sector, where the environmental and financial benefits are increasingly recognized. As noted by the World Business Outlook, “For investors, focusing on sustainable properties not only supports environmental responsibility but also helps protect long-term asset value and ensure durability over time.”
One key area of focus in reducing embodied carbon in industrial real estate is addressing the two largest contributors: concrete and steel. According to the BranchPattern team, “Efforts are being made to reduce the carbon footprint of these materials, with many companies now incorporating reduction targets into specific projects or across their portfolios.” These efforts are an important part of the broader strategy for achieving sustainability goals in CRE.
While the path to reducing embodied carbon can seem daunting, there are several proven steps that CRE developers typically take to incorporate eco-friendly initiatives. Research by the World Business Outlook highlights the following approaches:
- Utilizing sustainable building materials.
- Incorporating alternative energy sources where feasible.
- Applying passive design principles to provide cost-efficient heating and cooling.
Another effective approach for reducing embodied carbon is through certification programs. LEED-certified buildings are becoming more common, offering a structured framework for implementing sustainable practices. Similarly, the BOMA BEST certification provides a comprehensive roadmap for decarbonization, waste reduction, and water conservation—helping organizations take actionable steps toward a more sustainable future. (Click here to read more about BOMA BEST.)
- What are the primary challenges faced by the industrial real estate sector in reducing embodied carbon emissions?
“The industrial real estate sector faces several challenges in reducing embodied carbon emissions, with a major one being the limited availability of alternatives to cement,” shares the BranchPattern team. “The cost and availability of supplementary cementitious materials (SCMs), such as fly ash and slag, can be limiting depending on project location. However, promising alternatives like LC3 (limestone calcined clay cement) are emerging as viable options without significant cost impacts. Type 1L (Portland Limestone Cement) also remains a practical choice in some markets.” The BranchPattern Embodied Carbon Benchmark Study further explores the impact of various materials, identifying concrete, steel, asphalt, insulation and roof membranes as the primary contributors to about 84% of an industrial development’s embodied carbon footprint. These findings emphasize the need to target these materials for effective carbon reduction strategies.
“Looking ahead, investment in bio-based cement products could accelerate market readiness,” suggests BranchPattern. However, the challenge extends beyond cement. Many materials are still produced in regions where energy grids rely on fossil fuels. Additionally, the lack of comprehensive product data can hinder informed decision-making when selecting sustainable materials. In terms of actionable strategies for reducing emissions, BranchPattern suggests five key approaches:
- Renovate
- Reduce
- Reuse
- Replace
- Require
Among these strategies, New York University’s recent renovation provides a good example. Their $7 million project involved converting the former Grosvenor Hotel into student housing, as reported by the New York Times. This retrofitting process is certainly not a walk in the park. “In these retrofits, you’re working with what’s there – doing some site investigation, looking at record documents that exist, and then examining each component,” says Michael Syracuse, FXCollaborative partner. However, this example highlights a critical step for making major changes.
- How does reducing embodied carbon in industrial buildings impact overall sustainability goals and financial performance?
The impact of reducing concrete and steel in industrial buildings is significant. As the BranchPattern Benchmark Study shows, replacing 100% Portland cement with a 50% fly ash/slag cement mix can reduce the carbon footprint by approximately 40%. Furthermore, low-carbon materials often lead to cost savings, as they are produced more efficiently or with lower fuel costs. BranchPattern experts explain: “Targeting embodied carbon reduction in the industrial sector sends strong signals up the value chain, reducing demand for energy- and resource-intensive processes. Requesting or requiring environmental product disclosures (EPDs) also communicates to manufacturers that there is growing market demand for transparency and low-carbon materials.” This strategy not only supports sustainability but also fosters innovation and accountability within the industry.
“Ultimately, embodied and operational carbon are closely linked in the built environment. By optimizing both, the industry can deliver a low-carbon final product that leads to lower operating costs and increased structural resilience.”
Interested in more content like this? Read our recent articles, Data-Driven Approaches to Warehouse Inventory Tracking or Navigating Electrical Service Challenges in Property Management. You can view all this content and more when you click here to sign up for our Industrial newsletter!