Green Warehouse and Factory Buildings

In the past year, I’ve talked with commercial real estate professionals in three North American markets; they said brisk demand for warehousing and factory buildings continues. It seems driven by more e-commerce, clean energy and semiconductor manufacturing.

According to the U.S. Department of Commerce, online purchases accounted for 15.1% of total U.S. retail sales in Q1 2023, up from 14.8% in the prior quarter and up from 14.5% in Q1 2022 (https://bit.ly/44rCvVk). 

eMarketer/Insider Intelligence predicts total online sales in the United States will exceed a trillion dollars this year, an all-time high (https://bit.ly/3reBrpv). They may reach $1.2 trillion next year. Online sales doubled in the past five years and are expected to increase by about 50% in the next five.

Data from the U.S. Census Bureau showed that for April 2023, construction spending by U.S. manufacturers was more than double the previous year, hitting nearly $190 billion, compared with $90 billion in mid-2022 (https://bit.ly/3XEZOsC). This follows the passage of the CHIPS and Science Act in July 2022 and the Inflation Reduction Act in August 2022. 

Kearney’s 2022 Reshoring Index notes that 96% of American companies have shifted production to the United States or are evaluating reshoring operations (https://bit.ly/3XzIaX0).

Although many of these new and renovated industrial facilities are adding solar on rooftops and other green features, clean systems are only getting started in the sector. However, numerous influences combined to make it a promising, immediate opportunity for engineers and construction professionals. 

They are not well-publicized, yet many case examples are available of green systems installed in industrial buildings, and most of the technology is well-proven. For renovators, developers and end-users, the benefits of cleaner systems are many, material and multiplying.

New Jersey Warehouse

For this project, I can provide a good level of technical detail, but because I worked on the project as a consultant, I will not name the parties involved. The building was new and the client was the end-user and lessee: a rapidly growing west coast e-commerce company that is adding distribution hubs around the world while expanding and renovating some of them. 

The building consisted of about 100,000 square feet of warehousing and 35,000 square feet of offices and common rooms. About 200 employees would work on-site in shifts, meaning it will be populated to some extent for approximately 16 hours each day. Its operations would not be described as heavy industry. It is mostly an inspection and distribution facility, with frequent product shipments coming and going. 

For corporate consulting, to some extent, we’re expected to take off our environmentalist hats and talk pragmatically, meaning quick wins, fast paybacks and proposals with business cases likely to interest senior people in the boardroom. 

For this reason, we may rank our recommendations beginning with initiatives that pay for themselves within three years or less, although many corporations are becoming long-term thinkers. In New Jersey, there was no progressive HVAC engineer yet (which became a recommendation), so we identified obvious wins such as stratification fans, loading door air curtains, HVAC commissioning and electric forklifts. These all pay out in a couple of years.

We provided modern HVAC engineering contacts who have done green warehouses and suggested adding a corporate intern to help the company study or prepare business cases for heat pumps, energy recovery, increasing levels of insulation, solar, batteries, electric car chargers, virtual power plant and other demand response programs. 

A new study led by Northeastern University researchers and released in 2023 says up to 35% of U.S. manufacturing sites could completely fulfill their electricity requirements with rooftop solar (https://bit.ly/448dfDP). Some projects also should consider wastewater heat recovery, rainwater harvesting and heat pump water heaters, but they were not strong options for this building.

We recommended expanding the use of LED lighting, which was already used in most areas. The building already included some green features that are generally state and municipal requirements or preferences of the human resources department. 

Examples include low-flow and electronically sensored plumbing, programmed lighting using sensors, Energy Star-rated appliances, window tinting and blinds, a water bottle refill station, double-pane windows in the office area, and some insulation improvements for the same section.

We made this statement in our report: “The structure is a typical modern U.S. steel and concrete warehouse, which is not well-designed from an energy standpoint. It is also not ideal for employees. Uninsulated buildings with high ceilings are the accepted form for warehouses based on the assumption that the economics of most industrial business enterprises are optimized when large amounts of inventory can be stored within a relatively small building footprint by stacking it higher (to a point), thus better amortizing high-value real estate. This warehouse model may evolve differently in the coming decades ...”

The director of real estate for this company was interested in looking beyond the property in question and imagining the future. We discussed usage and location concepts that could forego high ceilings and large wide-open spaces; the difference between warehousing and inspection functions; the entry of robotics into future operations; the ease with which energy savings might be found within smaller, healthier spaces; and so on. 

On its current growth trajectory, it is possible the company may at some time buy or build rather than lease and renovate.

Destratification Fans Reduce Gas Use

As most of our readers know, more efficient heating and cooling in high-ceiling environments can be achieved with the help of large destratification fans. Stratification can be mitigated using large fans in wide open spaces and smaller fans for tighter situations. Airius is a manufacturer of smaller fans and provided some case studies for us to demonstrate the specifics.

In one case, it installed fans in a Canadian Tire store in southern Ontario. Canadian Tire is a Canada-wide chain with retail operations similar in form to a Home Depot store.

The case study notes: “The primary difference in floor air temperatures occurred during the nighttime setback periods. The floor temperature showed an increase in temperature by [more than] 0.5 C (32.9 F) during nighttime periods when the destratification fans were operating. This contrasts with floor temperatures dropping by more than 0.5 C (32.9 F) during the night when the fans were not operating.

“A large spike in ceiling temperatures occurred when the heating setpoint was increased to the daytime temperature setpoint. This increase was up to 3.0 C (37.4 F) when the fans were operating and 7.0 C (44.6 F) when the fans were not operating. Daytime ceiling temperatures (after the spike) were generally 0.5 C to 1.0 C (32.9 F to 33.8 F) lower when fans were operating than without. 

“The ceiling generally remained 1.0 C (33.8 F) warmer than thermostat-level temperatures during daytime destratification. Nighttime destratification periods showed ceiling temperatures within 0.5 C (32.9 F) of those at thermostat level.”

Fans were estimated to provide an annual gas savings of 12,960 cubic meters (457,678 cubic feet) for a normal year in the area where the measurements were taken. Assuming the destratification fans operated for 180 days of the year for heating season destratification, the 50 fans at 35 watts/fan would consume 7,560 kWh/year.

The preceding figures demonstrate how energy can be saved and greenhouse gas emissions reduced with fans that pay for themselves within a few years. Employee health and comfort are also major motivations for many companies, especially those already facing workforce shortages. 

Airius shared another example, this one relating to a client with product quality concerns. A pharmaceutical company built a new 49,200-square-foot warehouse in Louisville, Ky. However, it failed the U.S. Food and Drug Administration’s temperature validation tests because the new HVAC system was exposing the top levels of racking to 73 F air. 

The company needed to start work at the facility urgently and brought in a new engineer to solve the problem, Michael Simpson from Eichleay Engineers. Simpson used computational fluid dynamics software and 50 Air Pear Model 25 Airius fans to mix the air more effectively, later stating: “The new HVAC system has been up and running for about 18 months; since then, the temperature alarms have not shown any excursions.” 

Other Green Warehouses and Factories

One of the most significant green trends for warehouses and factories is the on-site generation of energy, usually with solar panels on roofs or carports, increasingly supplemented by batteries or other kinds of electricity storage. The cost of both solar and storage has dropped significantly, and incentives improve business cases further.

Not surprisingly, many plants in California use electric heat pumps powered by self-generation. Cooling is a significant need, but heating is also required, especially in the northern parts of the state. 

One of the greenest factories we’ve heard of is the Delta Electronics Americas net-zero head office in Fremont, Calif. (LEED Zero Energy Certificate), which employs geothermal cooling and heating, 1.4 million annual kW of photovoltaic solar and a 330-kWh energy storage system. A dedicated economizer and DC brushless, electronically commutated fans and variable-frequency drives for HVAC have reduced the power usage effectiveness of the data center from 1.5 to 1.25. 

The complex incorporates LED lighting indoors and outside, rainwater harvesting for irrigation, and electric vehicle charging in the parking lot. It is all controlled by Delta’s own SCADA system and building control platform.

From 60% to 100% of electricity needs are also self-generated at plants operated by Annabelle Candy, Rivermaid fruit, North Face apparel and JSS Almonds, all in California. This also happens at Packsize Packaging in St. Paul, Minn.

Meanwhile, food companies in more northern areas are saving energy and reducing emissions by recovering heat from refrigeration systems and channeling it back into employee areas. Angelic Bakehouse in Wisconsin uses a modern CO₂ transcritical system that paid for itself in only three years. Similar technology was added to the world’s largest bologna plant (at the time) in Ohio by the Kraft/Oscar Mayer group. 

At Summer Garden Foods, also in Ohio, an integrated process cooling and HVAC system uses heat recovery, newly added insulation and an evaporative-free cooler to dramatically reduce electricity. It recaptures some 300 to 500 BTUs/hour from the pasteurization and cooling processes. By changing a pasteurizer cooler spray nozzle, the pressure reduced by one-third. 

The savings had business implications, too, as the CEO was quoted as saying they were key to being able to price products low enough to acquire the Costco account. 

Gas Has Peaked

It looks as if gas usage peaked in 2019, and its use in U.S. homes, vehicles and power plants is now declining, according to data from the Energy Information Administration (www.eia.gov). This is good news, but the building sector must transition more quickly. About half of all new projects include heat pumps, but the other half generally install gas-burning devices. 

This is an irresponsible choice, not only in terms of climate change and the threats to our species, economy and property but also if construction professionals do not provide better advice to protect investors and end-users from stranded equipment assets, carbon penalty costs, high energy costs, health costs, insurance costs and fossil-fuel phaseouts, which are likely to increase in most places here and globally.

As online sales grow and the reshoring of semiconductor production and clean energy continues in the United States, the factory and warehouse market could be a key opportunity for the clean energy systems of tomorrow.