The Key Spec 1, Keysborough VIC

To a large extent, the industrial market is still about tin sheds on concrete slabs. Despite the potential to increase operational efficiencies, cut costs and reduce the environmental footprint of facilities - not to mention reduce worker injuries and boost employee satisfaction and performance - the industrial sector has been slow to capitalise on the benefits of green building.

While just 38 per cent of companies surveyed in Jones Lang LaSalle's Industrial Investor Survey 2011 reported that sustainability initiatives were part of their investment strategy, organisations like Australand have recognised that a Green Star rating represents a future-proofed investment and is advantageous when securing tenants. Australand achieved a 5 Star Green Star - Industrial v1 rating for The Key Spec 1 building near Melbourne in 2012, an achievement that is all the more significant as it was a speculative development.

“For Australand, the main driver for achieving a Green Star rating – even when we’re undertaking a speculative development – is the advantage it can provide in securing tenants. A Green Star rating gives us an extra edge in our marketing, as it provides credible, third party assurance,” says Australand’s Sustainability Manager, Paolo Bevilacqua. 

The Key Spec 1, which comprises two large warehouses and offices inside one 27,000m2 building, incorporates sustainable features such as efficient lighting on a sensor system, solar hot water, certified sustainable timber, and rainwater recycling systems to provide water for irrigation and toilet-flushing.

Bevilacqua says that the inclusion of sustainable features assures Australand that its asset will be high-performing over time. “In the past, when we’ve sold assets, a Green Star rating has provided another incentive for the purchaser. In the case of The Key Spec 1, which Australand owns, Green Star certification gives us assurance that we’re ‘future-proofing’ our investment. When combined with the fact that it will reduce occupancy costs for our customers, we believe the Green Star rating gives both Australand and our customers a competitive edge in the market as utility costs continue to rise.”

Construction costs on average represent only 11 per cent of the total cost to build, operate and maintain an industrial facility over a typical 40-year life cycle. Yet decisions made in the construction phase, often based on the lowest bid, can significantly increase operating costs over the life of the building - costs that are borne by the building’s tenants for many years to come.

Bevilacqua says there was a significant additional investment, of around $750,000, in green features at the facility amounting to a green premium of around six or seven per cent of design and construction costs. “Since building The Key Spec 1 project, we’ve revised our design approach, costs have come down, and we think a 4 Star Green Star rating requires an additional investment of two to three per cent on our base design, which will comfortably provide a return on investment within a few years. We learnt a lot from this project, which will inform future projects and we expect additional investment for a 5 Star Green Star project to reduce to around four to five per cent.”

The Key Spec 1 project was fully leased prior to completion, demonstrating Australand’s ability to deliver environmentally sustainable, highly-competitive projects that will provide benefits to tenants well into the future.

What the Key Spec 1 achieved


While many organisations that operate from large warehouses, particularly logistics management companies, have corporate sustainability strategies which aim to reduce the impact of their properties and distribution centres, until now the focus of such strategies has largely been on transport emissions. “Reducing emissions from properties is likely to be far more cost-effective from a dollar per tonne point of view than reducing emissions from transport. Building upgrades to lighting, insulation and HVAC, for example, may provide a better return,” Bevilacqua explains.

At The Key Spec 1, passive design strategies have minimised the need for artificial lighting and mechanical systems. Highly efficient lighting systems, incorporating T5 lighting with dimmable ballasts, and daylight and motion sensors, are expected to cut lighting energy consumption by 90 per cent compared to standard lighting schemes. Solar hot water panels provide a renewable source of energy to heat water, while sub-metering of energy allows for improved monitoring and management.

Tyres 4 U, one of the tenants at the facility, has reduced electricity usage on a per square metre basis by 55 per cent, when compared to their previous facility. This has also resulted in a total saving in electricity costs, despite more than doubling the size of their warehouse. Jeremy Lane, Branch Manager for Tyres 4 U, says “we have noticed about a 40 per cent decrease in our total electricity bills. The previous warehouse was 4,362 square metres compared to the new facility of 10,060 square metres.”

Analysis suggests that electricity and maintenance savings from the efficient lighting system installed in the facility will be in the order of $325,000 over the first 10 years of operation.

Sub-metering systems are also being included in planning for future developments. “It sets a benchmark, so we know that if we incorporate these initiatives we’re going to get certain savings. Rather than relying on modelling, we can now verify the savings using metered data,” Bevilacqua explains.

The energy efficiency and solar hot water generation are expected to reduce total greenhouse gas emissions by 90 per cent, when compared to a standard practice development that simply complies with the Building Code of Australia (BCA) requirements. This represents a saving of 1,760 tonnes of carbon each year, equivalent to the annual emissions of 220 average Melbourne homes.


Rainwater collection tanks provide water for irrigation and toilet flushing. Combined with water-wise 3 and 4 star WELS fixtures, potable water consumption is expected to be half that of a standard industrial facility.  In addition, a fire test water recycling system will ensure more than 80 per cent of all fire system test water is captured and available for reuse.


As would be expected in such a leading project, the use of low off-gassing materials, such as low-VOC paints, carpets, adhesives and sealants and low-emission formaldehyde composite wood products, was specified, as was sustainably-sourced, certified timber.

However the main improvement in IEQ is through the high levels of daylight achieved, with 10 per cent of the warehouse roof being translucent sheeting and around half of the office façade areas glazed. This provides high levels of natural lighting in both the office and warehouse spaces during most operational hours, minimising the need for artificial light and providing a more comfortable and productive work space.

Tyres 4 U’s Jeremy Lane says that the “picking errors have been reduced as a result of the high-performance lighting, and stock takes are now more efficient as the tyres are easier to identify when counting.  No lights are left on when they aren’t needed, as they switch off automatically after twenty minutes without movement.  This has also reduced our costs.  The amount of natural light from the roof has substantially increased, and with it staff morale.”


While the Green Star - Industrial v1 rating tool addresses the challenge of sustainability in new and newly-refurbished facilities, it does not address the performance of the vast number of existing industrial buildings, many of which operate well below best practice benchmarks. Australand is a principal sponsor of the Green Star - Performance rating tool, which will assess the operational performance of existing buildings. This will enable building owners to measure ongoing performance and establish benchmarks before embarking on sustainable building upgrades. 

“It will also enable us to verify our claims regarding sustainability, and give our customers more confidence that their buildings are environmentally efficient and cost effective,” says Bevilacqua. “Sustainability can be a simple way to deliver cost-savings in the warehouse. It is certainly the low-hanging fruit in the industrial industry which is yet to be picked.”