Leading the way to well-being

Warehouse developers in Poland have recently been waking up to the importance of ensuring that people are happy to work in their facilities. and the need for such measures has now become even more pressing as the EU enforces sustainability reporting

The wave of green certification first hit Poland in 2010, when the first office buildings were awarded LEED and BREEAM certificates. And while office buildings continue to lead the way in this regard, according to last year’s annual report by the Polish Green Building Council (PLGBC), logistics and industrial buildings have made substantial strides in catching up, going in one year from 21 pct of the total of certified buildings to 29.3 pct, with office buildings for the first time experiencing a shrinkage in its share (from 54 pct to 47.5 pct). Where the Polish warehouse market still lags behind, however, is in the adoption of any well-being certificates, despite the fact that in Western countries several logistics complexes have received certification from the International Well Building Institute, such as Prologis DC5 in Tilburg in The Netherlands in 2019. Around the same time, the first Polish office building obtained a Well Core & Shell certificate and by the time of the PLGBC 2022 report, 13 office buildings in the country had achieved this accreditation, whereas the figure for warehouses in Poland was and remains zero. But for several reasons, this now looks set to change.

“Well-being in the Polish warehouse sector is generally lagging behind what’s been happening with offices,” agrees Hadley Dean, the founder of Polish warehouse developer MDC2. “But,” as he goes on to add, “companies are now waking up to the question: how do we keep our staff? Well, by offering them better facilities and showing that you care about them. Each of our tenants seems to have a strong ESG policy – and it’s remarkable how strong they are. So, the warehouse market has been learning a lot from the office market. You can see this by looking at the older generation of warehouses, which were not appealing places, often with barbed wire around the perimeters. In contrast, at MDC2 we place stress on the internal and external aesthetics of our buildings.”

Keeping and holding on to employees

The issue of how to attract and retain personnel has become particularly pressing for the office market since the pandemic, due to the switch to home office working. The industrial sector doesn’t face exactly the same problem, since those employed in it generally have to be on-site, but still, as it continues to expand, the sector has been having to contend with the labour shortages that have recently been endemic in Poland. This was also an issue prior to the pandemic, as Renata Osiecka, the managing partner of Axi Immo Group, which specialises in leasing and other services for the logistics and industrial sector, explains: “Even during the pre-Covid boom period, tenants were appreciating the importance of well-being as a means to achieve lower employee turnover, greater productivity, higher engagement and stronger brand reliability,” she says, while pointing out some of the obvious benefits for industrial real estate tenants of ensuring employee well-being, such as the shorter time needed for optimising the work and the reduction in sick leave. And, as she emphasises: “Having happy employees is also a crucial advantage in recruitment processes.”

But initiatives aimed at employee well-being do not simply stem from the industry’s need to solve recruitment issues. In January, the EU brought into force its EU Corporate Sustainability Reporting Directive (CSRD), which obligates large companies to submit regular social and environmental impact reports – with ‘large’ meaning those that fulfil two of the following three conditions: more than 250 employees, EUR 40 mln in net annual turnover and EUR 20 mln in total assets. Small and medium enterprises (SMEs), as long as they don’t have listed securities on regulated markets, are currently exempt from CSRD reporting.

Three little letters

The need to address the environmental impact of buildings has historically been the main impulse behind such measures, as can be seen by the fact that BREEAM and later LEED certification were both established in the 1990s, whereas Well Building certificates only became available in 2014. But the latter reflected the fact that an additional component was increasingly being brought into focus in terms of the non-business activities of companies – the social sphere, that is, how development affects both the wider community and those employed in such buildings. All this is expressed in the three letters ESG – environmental, social and (corporate) governance. The ‘G’ mainly covers the transparency of operations and business ethics, which needed to be emphasised following the financial series of 2007/8 and a series of corporate scandals. And while paying attention to the ‘E’ is obviously of crucial importance given not just global warming but also the need to avoid industry-related environmental disasters, the ‘S’ often seems to be something of an afterthought. Financing institutions certainly need to be confident that ‘E’ and ‘G’ are treated with the necessary respect, but the social aspect is surely what economic activity should be all about – to improve the quality of life of the general population.

“Five years ago, ESG was just a bit of a marketing exercise. Now investors and financing banks are paying a lot of attention to ESG issues and the ‘S’ that forms part of it,” claims Jarosław Czechowicz, the country manager for Poland of warehouse developer GLP, who goes on to describe the less than adequate approach to such issues back then: “Around 5–10 years ago, it was enough to just include office and social areas in a warehouse development – no one paid much attention to the quality of the space and the materials used to build it.” However, as Renata Osiecka relates, there has been something of a sea-change since then: “There has been a significant change in warehouse design over the last five years. We have observed a push towards optimising costs, but also more emphasis on the ‘S’ in ESG, that is, the social aspect. And the two have often gone together. For instance, warehouses have been designed with better heat retention in mind and with an improved standard of working conditions. This also applies to the office sections of warehouses, where solutions have been adopted from the class A office market. The greater focus on the social aspect of ESG has accelerated the well-being agenda,” she says.

Maciej Madejak, the chief development officer at MDC2, is also in broad agreement with all this, and believes that in our part of the world we still need to catch up with the West: “I think that Poland needs to change in terms of sustainability and ESG – the focus up to now has been on the ‘E’ rather than the ‘S’ and ‘G’, which we at MDC2 think is wrong. Things are changing, however. When we’ve spoken to investors, it turns out that they want the social aspect treated with the same importance as the other letters and to be properly implemented in Poland. When you build a warehouse from scratch, you can actually focus on all the letters, which is good for tenants, their employees, the local community and area, as well as the world.”

He goes on to list some of the well-being measures MDC2 has introduced, which include: “An additional week off work at the same time in the summer for all our employees to ensure that everyone gets a proper rest. We also provide more time off work for maternity and paternity leave than is legally required. We want to be a leader in changing the approach of the market in this way,” he insists. Hadley Dean adds to this that: “We have built ESG into how we run the company, but Poland is now going to have to go through the same process. The continental supply chain needs more production and light assembly facilities, and much of this is all going to come our way. We think Poland will become the most important location for this. What we don’t want to bring to Poland are the kinds of unpleasant, dirty facilities in the Far East, with fume-spewing chimneys. But you have to mean what you say: net-zero declarations cannot be just paying lip service.” But while concern for employees and the need to attract and retain the best of them is one driver for developers to improve in this regard, and EU legislation is another, some prompting from those who finance such projects is also crucial: “About five years ago, pressure was coming from the stock markets and financial institutions on company boards to improve ESG. At the same time, climate change campaign groups were also adding to this pressure and governmental bodies then acted. The EU has since spent billions on this issue and issued directives, so now the pressure on investors to be more ESG compliant is coming from the banks again,” relates Hadley Dean. “From the investors’ point of view,” adds Maciej Madejak, “they expect that every project they buy should be exceptional, well-designed and future-proof – and that they will still be able to lease it in the future. They are prepared to spend a bit more time and money making sure that we are delivering the right product for them. So this would involve ensuring natural daylight levels, water pumps, watering the greenery, and so on.”

Let the sunshine in

As Jarosław Czechowicz has already stated, improvements in employee well-being in logistics facilities require a better standard of building, so it is necessary to use a higher quality of materials and fittings in the construction of both the loading and storage areas and in the additional office and social space. He provides as an example the GLP Warsaw II Logistics Centre in Janki on Warsaw’s southwestern outskirts, which was completed in 2020: “The quality of the materials used in its construction are a significant improvement on what was typically used for warehouses back in 2010. It also features much more glazing, allowing more natural light in. This not only improves the space for those working there, but also reduces electricity costs and the need for artificial lighting. Renata Osiecka of Axi Immo also stresses the importance of natural light and glazing in the office areas and how this is currently influencing their design: “Now there is also more extensive glazing and access to natural light, better ventilation and social space – in this way they are increasingly resembling class A office buildings. But this mainly applies to SBUs and urban warehouses. With 3PL and big box warehouses, there is still room for improvement,” she says. To this she adds that: “Originally, the office sections of warehouses were more basic – they were treated as technical space. But as the market evolved, there has been more emphasis from funds and owners on the quality of the office and social space.” Jarosław Czechowicz, however, admits that current warehouse design cannot be compared to that of the spectacular office developments that have transformed the centres of big cities in the region: “They have different uses and users. Comparing a warehouse in Grodzisk Mazowiecki to an office building in Warsaw is just not possible.”

MDC2 has a four-fold approach when it comes to well-being. The first anchor to this is its ‘Rest&Move’ concept, which give workers a chance to get out of the warehouse and use a gym or a multi-court sports hall. Such amenities are being provided in all MDC2’s facilities. Hadley Dean also lists the other aspects of the developer’s approach: “The second big plank is to create a welcoming environment around the buildings. Typically, a warehouse park needs a water retention tank, which is basically a big pond. So why not make into an actual pond, with grassy areas and picnic tables around it?” The third part of MDC2’s approach is to collaborate with the Truckers Life Foundation to improve the working condition of lorry drivers, who are not actually employees working in the park. to create safe and pleasant environments for them. Jarosław Czechowicz of GLP agrees that “one of the issues that has been problematic for warehouse parks has been to provide separate space for the truck drivers, who need a rest after hours and hours of driving. So, we are now including 24-hour toilets with showers and kitchen facilities for them in our parks.” And the fourth part of MDC2’s wellness approach is not so much to include the wild flower meadows and beehives that are often highlighted in industrial developers’ press releases, but to ensure that warehouses aren’t a barrier to nature. “Wildlife should be able to get in and out of warehouse parks. But what we are doing is working with the Forest Forever Foundation by providing them with the funds to buy a square metre of clear-felled or soon-to-be felled forest for each square metre of warehousing we build. They can then rejuvenate this forest land. So we are linking the park with a forest and helping to rejuvenate it. CTP has been doing something similar in the Czech Republic and we took this idea from them – professional forestry with a proper foundation that is well-financed and thought-through,” reveals Hadley Dean, who also believes that such initiatives shouldn’t be about beating the competition: “We should be able to work together with them and to praise them when they develop brilliant buildings.”

According to Renata Osiecka, such approaches can now be seen across the warehousing sector: “We are seeing that investors and developers are implementing well-being solutions in new and refitted parks. These include the outdoor areas, where outdoor gyms and sports facilities are being provided, as well as bikes racks and outdoor furniture and hammocks to relax on in the summer. Good access to public transport also enhances employee well-being, especially in rural areas, where shuttle bus services are provided, which is both a green and a well-being initiative,” she says, while stressing once again that such an approach is especially the case for the new generation of city warehouses: “Developers who build in urban areas are also attempting to transform warehouses into places for spending free time. One has recently installed a climbing wall in one project, while another has built a skate park. However, this kind of activity generates security issues and needs to be monitored, requiring the installation of cameras in parks. The projects in cities have more functions than big boxes. They can be used as headquarters or showrooms. SBU/urban projects more often have better fit-outs and improved public transport to increase their attractiveness, while the general trend is to develop projects in more sustainable locations, which also means sustainable in terms of employees,’ she explains.

Campus life

The current trend in such markets as the US, the UK and The Netherlands is for community-focused campus-style parks, which are master-planned with large central buildings. “The amenities in these central buildings are aimed at helping to create a community in the park,” explains Hadley Dean, who gives as an example CBRE Investment Management, which lays on a different food truck every week in its parks to provide a sense of change. As he goes on: “Sports facilities and gyms are also provided. The campus concept is rather like what WeWork was trying to do for offices, to create space for a community. And this is now what’s happening globally with warehouse development – and honestly, it’s about time. Again, the idea is to make parks nicer, safer places to be, with pleasant landscaping. GLP is one of the developers that has already embraced this approach, as Jarosław Czechowicz confirms: “While there are no plans to build golf courses in our logistics parks, we are planting trees and creating meadows, which is not only environmentally responsible but has a positive impact on people spending their days in our centres. A few times a year we hold small events for employees – this could be an ice-cream or coffee van – and this is much welcomed by our customers,” he says.

And after all, as Maciej Madejak of MDC2 concludes: “We know that employees have to be looked after – they are the biggest asset that a company has. So, we try to help our tenants keep their employees and as much as we can to ensure their productivity. If they’re not healthy, they are not happy and not productive. When developing warehouses, we ask ourselves if we would like working there.”