The green agenda in industrial real estate is primarily driven by occupiers within the Johor-Singapore Special Economic Zone (JS-SEZ), creating more advanced requirements for spaces such as warehouses and manufacturing plants to meet.

Based on a recent JLL report “Powering Operational Excellence”, Yulia Nikulicheva, head of research and consultancy at JLL Malaysia, notes that industrial users are increasingly driven by power concerns and by the need to turn sustainability commitments into tangible progress.

“Spaces that deliver broader solutions — particularly around energy management, resilience and sustainability — will gain competitive advantage in the coming years,” she says.

Through this progress, demand is moving from purely functional design requirements to spaces that can offer comprehensive solutions. However, occupiers must be prepared to partner with owners to achieve such solutions.

As energy consumption is high in the industrial real estate class, new developments are prioritising carbon reduction measures and improving energy efficiency.

This includes having clean power through solar panels and other renewable energy sources, expanding the use of electric vehicle (EV) fleets, and integrating green design principles.

Examples of green designs consist of natural lighting, heating, ventilation and air-conditioning systems, sustainable building materials, as well as features that enhance working conditions such as natural lighting and access to green spaces.

On the other hand, ageing industrial buildings pose a challenge, as many were built at a time when the adoption of green building principles was not yet widespread.

However, this also presents an opportunity for Malaysia to modernise its manufacturing infrastructure while maintaining its value and competitive position.

As Malaysia’s manufacturing sector is integrated into global supply chains, many multinational corporations now require local suppliers to adopt sustainability targets and green features, extending the green mandate far beyond the MNCs’ own corporate facilities.

“This trend is creating increased pressure on Malaysian manufacturers to upgrade their facilities to meet international environmental standards. Companies that fail to demonstrate green credentials risk losing contracts with major multinational clients who prioritise sustainability in their procurement decisions,” says Nikulicheva.

Financing for these features is being spurred by initiatives in the government’s recent budgets, including green investment incentives, solar energy acceleration measures and specialised green financing options from banks.

“These include Bank Negara Malaysia’s policy to stimulate green financing initiatives. Following this announcement, all major banks have launched their own programmes to adopt green financing principles. We expect the real estate segment to benefit from these developments as well,” says Nikulicheva.

In the Malaysian market, Green RE and the Green Building Index are the most commonly used green certification systems due to their strong local presence and streamlined application processes.

Johor is positioning its sustainable developments for national recognition. Sunway City Iskandar Puteri’s (SCIP) recent Platinum Award under PlanMalaysia’s Smart Township Awards exemplifies this ambition and reinforces the state’s commitment to environmental stewardship.

The progress of SCIP is supported by strong partnerships with Johor-based government and corporate agencies, academic institutions and non-profit organisations.

SCIP’s collaborations have already delivered tangible outcomes, such as the recently awarded Gold sustainability grading by the Malaysian Rating Corp Bhd (MARC) and the joint certification of a low-carbon city with Majlis Bandaraya Iskandar Puteri.

“We are working closely with Alliance Bank and MARC to continuously apply our green policies, undergo transparent annual reporting and improve upon our sustainable commitments,” says Gerard Soosay, CEO of Sunway Property (Southern Region) (KL:SUNWAY).

“This framework is our blueprint for issuing sustainable financing instruments. It plays an important role as SCIP enters its next chapter of growth by providing a disciplined, transparent and future-ready structure to fund upcoming phases.”

Under Johor’s Iskandar Puteri Low Carbon Grant 2.0, Sunway Property built Johor’s first recycling centre within a high-rise strata development, followed by seven more across the township, with plans to integrate one into every future development in the state.

“As Johor continues to rapidly urbanise and attract investment, these initiatives help ensure we build not just greener townships, but stronger, more inclusive communities for generations to come,” says Soosay.

To date, the SCIP has installed solar photovoltaic systems across five developments, generating thousands of megawatt-hours of clean energy annually, complemented by township-wide efficient lighting that reduces electricity intensity.

On the environmental front, the development has introduced over 500,000 plants and trees, and released over 67,000 fish into rivers to strengthen biodiversity.

Waste management is also covered, with more than 388,000kg of recyclables diverted from landfills, avoiding over 120 tonnes of carbon-dioxide equivalents.

In the future, Sunway Property aims to maintain SCIP’s green status, anchored in its identity as a master community developer (MCD), and to ensure the township remains sustainable and communitydriven.

This will be carried out by ensuring long-term operational efficiencies of all systems, which include optimising resource flows and maintaining the health of the township’s natural ecosystems.

“As the township’s largest stakeholder, Sunway will continue to co-invest in its growth, not only through infrastructure, but through the everyday culture, experiences and values that shape how people live here,” says Soosay.

After Sireh Park, a 343-acre project in Iskandar Puteri, was opened in 2017, UEM Sunrise Bhd (KL:UEMS) plans to continually maintain the land to function as both an arboretum and conservation site for Johor’s ecological heritage.

Built on a former agricultural plantation, Sireh Park has progressed from stabilisation works to habitat restoration, and now to biodiversity enrichment.

The native ecology has shaped the way UEM Sunrise approaches restoration and reforestation through sustainable land-management initiatives. This includes sourcing seeds and saplings from endangered and Johor-native species, hosting an in-house composting programme, soil rehabilitation and slope stabilisation.

Nik Faizah Nik Mahmood, head of sustainability at UEM Sunrise, adds that the developer also applies methods that go beyond standard reforestation practices.

Each tree is individually tagged and GPS mapped through UEM Sunrise’s GeoTrees system for long-term monitoring, while higher planting densities help recreate the microclimates needed for sensitive species to establish and mature.

Given Johor’s intense monsoon cycles and agricultural properties, Sireh Park has also been tailored to the state’s ecology to bring the park to life.

A key innovation in the park is the wetland system, designed as a nature-based alternative to conventional storm water infrastructure. The swales, ponds and restored lake edges slow water movement and increase infiltration, while deep-rooted vegetation stabilises slopes.

During heavy rainfall, the bodies of water act as retention basins to temporarily hold excess storm water and release it gradually to prevent downstream flooding.

“These efforts, combined with the park’s recognition by the Malaysia Book of Records as the country’s largest urban community green recreational park, reflect how far the restoration has come, while reminding us that this remains a long-term journey grounded in ecological care and collaboration,” says Nik Faizah.

Sireh Park is aiming to sequester 300,000kg of CO2 annually by 2050. Currently, the park will focus on strengthening its ecological foundation through tree planting initiatives and support UEM Sunrise’s projection of carbon sequestration upon maturity.

“A detailed feasibility study will guide our next steps. For now, our priority remains reducing operational Scope 1 and Scope 2 emissions. Over time, the carbon sink function of Sireh Park will complement these efforts and contribute to our long-term ambition of achieving carbon neutrality by 2050,” says Nik Faizah.

The park’s sustainability initiatives reinforce UEM Sunrise’s ESG performance in quantifiable ways, strengthening investor confidence and long-term business resilience.