Responsible property investment

In 2023, the 72,000 sq. ft. industrial and logistics facility, Pasadena Distribution Centre, underwent a significant refurbishment. ESG measures were heavily integrated into the design, including the installation of LED lighting, 10 electric vehicle charging points and a 220 kWp solar photovoltaic (PV) system comprising 544 PV modules. These design features enabled the property to achieve an EPC A+ rating, the highest rating possible. Pasadena Distribution Centre has been let on a long-term lease to Panalux, who cited the property’s ESG credentials as a key driver behind their decision, in keeping with their own sustainability strategy.

The solar PV has also created the opportunity to enter into Royal London Asset Management’s first PPA with Panalux, generating a financial return. We have agreed a 15-year contract at a rate of 20p/kWh (subject to indexation), cheaper than the current energy market rate, creating an appealing offer for the occupier. This is a significant milestone for us, demonstrating how investing in ESG can both attract occupiers and create financial benefits.

Mark Furssedonn, Managing Director of Panalux, commented, “After an extensive search, it was clear that this location ticks all the boxes for our operations and our customers while aligning with our focus on sustainable practices. The site is conveniently positioned within west London’s motion-picture production corridor, and it provides the space to house our complete London operations at a single location, with room to grow moving forward.”

In March 2023, we completed on the development of two industrial units at Springfield Business Park in Chelmsford, totalling 35,871 sq. ft. The development has provided high-quality units boasting strong ESG credentials, with reduced energy use and carbon emissions integrated into the design. Springfield Business Park achieved an embodied carbon figure of 409 kgCO2e/m2, bettering our target of 600 kgCO2e/m2 for industrial buildings.

This is a significant achievement and a testament to our focus on reducing embodied carbon emissions. To maximise the building’s operational efficiency, air-source heat pumps (ASHP) and rooftop solar PV panels were installed, alongside passive design measures. The Energy Use Intensity (EUI) of the building is estimated to be 42.74 kWh/ m2/year, achieving a figure below the Royal London Asset Management target of 60 kWh/m2/year for industrial assets.

Working towards the principles of a circular economy was also a key focus, with the development diverting 96% of waste from landfill, above our target of 95%. Furthermore, the park achieved a reduction in mains water use of more than 50% through incorporating water efficiency measures, exceeding our target of 40%.

By embedding ESG within the design, the development has achieved an EPC rating of A and is targeting BREEAM Excellent. The combination of the development’s strong ESG credentials and its position within an undersupplied local market create a strong marketing angle for this new space.

In 2023, we undertook an occupier survey report across Cambridge Research Park, a 1.7 million sq. ft. science park covering 150 acres, of which Royal London Asset Management owns approximately 230,000 sq. ft. The survey had a particular focus on amenities and events at the park, with the ultimate aim of understanding the wants and needs of our occupiers in order to help shape future outcomes and our strategy for the site.

The survey demonstrated a good level of occupier engagement, with a total of 128 responses representing 36% of the park’s occupiers. As part of the survey, we calculated a Net Promoter Score (NPS), a metric we can use to measure occupier satisfaction and loyalty to our site. We will seek to improve our NPS year-on-year through focusing on initiatives that will deliver a best-in-class customer experience to our occupiers.

A primary focus of the survey was to establish whether occupiers required an increase in the park’s bus shuttle service. From the 16% of respondents who used the bus shuttle service, 67% were interested in its expansion. Responding to these findings, Royal London Asset Management is aiming to introduce a third shuttle bus in 2024, increasing the frequency of bus services for occupiers to approximately every 10 to 20 minutes at peak times.

This expansion also created the opportunity to upgrade our existing fleet to hydrogenated vegetable oil (HVO) shuttle buses next year. These use renewable diesel fuel, eliminating up to 90% of net carbon dioxide (CO2) as well as other pollutants. This initiative demonstrates our focus on addressing the needs of our occupiers, whilst still reducing our environmental impact and working towards our RPI goals. We look forward to further improving occupier experience at Cambridge Research Park in 2024.

Our property managers are dedicated to enhancing the environmental and social performance of our properties, providing mutual benefits to our occupiers and local communities. The Green Apple Environmental Awards recognise, reward and promote environmental best practice. In 2023, we received 24 Green Apple Environmental Awards – up from 14 the previous year. These were awarded for a range of initiatives covering various property types, including the following which achieved a Gold or Silver Green Apple Environmental Award:

• Overton Park, Peterborough – improving habitat. This park presented significant opportunities to enhance biodiversity due to having large areas of open grass, trees and dense native hedge planting. The project enhanced existing wildlife habitats and created new ones, including bird boxes, a bug hotel and log piles.
• 25 Soho Square, London – water-saving technology. To improve water efficiency, we implemented a sustainable alternative to other forms of cleaning: the iMop. Compared to a mop and bucket approach to cleaning, the iMop uses 17 litres less water per day across a 3,000 sq. ft. area. In partnership with global water charity, Made Blue, the water savings at 25 Soho Square have translated to donating more than 3,000 litres of clean drinking water to deprived villages in developing countries.
• 3 Hardman Square, Manchester – cardboard baler initiative. Due to the significant volume of cardboard waste generated onsite, a cardboard baler was installed at this asset. This compresses cardboard waste until it is compact, reducing the space required to install it, along with minimising waste collection requirements. Since installation, over 800 kgCO2e has been saved through reducing collections, thus reducing transportation to the site.