Filter by Category

Sustainable Retail – Eco-Friendly Shopping at the Mall

Sustainability experts claim that “a good building- efficiency rating is quickly becoming the real estate equivalent of a motor vehicle’s miles-per-gallon rating and helps bring capital to owners and investors.” The National Real Estate Investor reports that investors and tenants alike prefer retail properties with sustainability measures in place. Studies based on the office market indicate that green office buildings trade at a 13% premium, on average, when compared to non-green buildings, and rental rates are 3% higher, on average, at green buildings than non-green buildings. Though the retail sector has been slower to improve the sustainability of malls and other shopping centers, there are some retail property owners who have taken the lead in the movement toward sustainability.

First Capital Realty Inc., a Canadian owner, developer, and manager of over 150 grocery-anchored urban shopping centers has focused on reducing greenhouse gas emissions and energy consumption at its properties  by using the investigative method of re-commissioning to focus on building operations (rather than retrofitting) to identify ways  to reduce gas emissions and consumption. During a re-commissioning process, a building consultant will evaluate the existing electrical and mechanical systems, analyze utility usage, and implement no- and low-cost changes so the building operates at the highest possible level with the existing equipment. Oxford Properties, an international portfolio manager, has used target sustainability thresholds for each of its properties, and since 2010 has achieved a 20% improvement in energy efficiency on a per square foot basis. Tanger Outlet centers have installed electric vehicle charging stations at 50% of its outlets, and they report that customers appreciate the free charging stations and are attracted to the shopping centers because of this new amenity. Many traditionally office-based property owners such as Boston Properties and the Irvine Company have applied sustainability methods learned from their office properties to their retail holdings as well. Boston Properties, a Boston-based REIT, has focused on LEED certification for its entire portfolio of buildings, and the Irvine Company has invested in Tesla Energy battery systems for its office buildings and plans to expand the hybrid-electric building concept to each of its 41 shopping centers. The batteries will be charged during nonpeak hours and will provide energy to the centers during peak daytime hours for energy cost-savings.

City and State governments are also increasingly concerned about the energy usage of commercial properties, and energy benchmarking laws mandating energy scorecards for commercial buildings have been passed in California and Washington state, Montgomery County, MD, Atlanta, GA, Austin, TX. Berkeley, CA, Boston, MA. Boulder, CO, Cambridge, MA, Chicago, IL, Kansas City, MO, Minneapolis, MN, New York City, NY, Philadelphia, PA, Portland, OR, San Francisco, CA, Seattle, WA, and Washington D.C.   In January 2014, the International Council of Shopping Centers established their own property efficiency scorecard to help retail landlords compare property-efficiency in terms of controllable costs (energy, water, and waste consumption) and green operating practices across their portfolios and to identify shopping centers where energy efficiency could result in cost savings. Since the launch of the ICSC property efficiency scorecard, owners and investors are becoming more thoughtful about the efficiency of their shopping centers.

Many single-brand retailers, such as Ikea, Kohl’s, and Walmart, have already embraced sustainability practices to control energy costs and build their brands as eco-conscious retailers. Now, the sustainability push from shopping center owners, investors, and building managers for whom the brand to sustainable building connection is a bit more attenuated points to a growing realization that environmentally sustainable buildings are both good business and the way of the future. If green buildings have lower operating costs, higher tenant occupancy, better re-sale value, and resonate with eco-friendly shoppers; the only question remaining for many property owners is what do they need to do and how soon can they start?

Related topics: Office, Real Estate, Retail