The move toward more sustainable development in the warehouse and industrial sector is rooted in evolving good business practices. “You have an investor appetite, especially if you go into Canadian or European funds, where for every dollar that you receive, there’s an expectation of the sustainable transition or approach in some way, shape, or form of doing things better, more responsible investing,” Hullum says.
Warehouses are the next logical space for mass timber development. “We saw a lot of mass timber momentum in office development, [from] 2009 through 2020 or so,” Hullum says. Whereas office development has slowed amidst a sluggish return to work, the boom in e-commerce during the pandemic has only driven demand for logistics spaces higher.
On the horizon, Affinius plans a project similar in scope to Southfield 4 in Northern California. The developer is currently working on a white paper to share with investors and the marketplace that demonstrates how the firm achieved a 43% reduction of embodied carbon at Southfield 4. “Roughly half of that was what we achieved through timber and the biogenic carbon enhancement,” Hullum says. “The other half was through the concrete technology.”
Information sharing like the Southfield 4 white paper could help provide assurance through real-world case studies of mass timber project successes. “It’s not, ‘I have the secret formula to Coca-Cola and I’m going to keep it to myself,’” he says. “If we’re really going to make a difference, there’s an unspoken initiative that we’re going to [have to] be open and collaborative.”
Hullum notes that it’s still early in the development of mass timber within the industrial sector. “If it’s perceived to be of value in the marketplace, especially by tenants and the willingness to pay a slight premium, and we could be more efficient with its implementation and construction, I think there’s a solid percentage base in the class A marketplace for it,” he says.
But Hullum believes there are limits, “It will never be the majority, candidly,” he says. “I do think it’s going to take a lot of appetite and demand from the market to really drive that.”
Hullum notes that value used to be driven solely by financial metrics. “But now, you’re having a demand where value means more than just the financial return,” he says. “That’s an undervalued aspect of timber and what it can provide.”
Beyond carbon, Hullum sees other, more qualitative advantages to the increasing use of timber in warehouses. “A lot of the traction and feedback we receive on Southfield 4 is, ‘This is beautiful,’” Hullum says. “People want to be here; they like this environment.”