Retail Industry Goes Environmental

Studies show that more and more retail landlords are implementing sustainable building practices into their malls and other retail spaces as the U.S. interest in environmentalism and conservation …

Studies show that more and more retail landlords are implementing sustainable building practices into their malls and other retail spaces as the U.S. interest in environmentalism and conservation grows. Cost and the inability to assess a return on investment (ROI) have long been preventative issues for retail property owners, but now more and more are investing in energy-efficient HVAC systems and lighting, solar power and water conservation features. ROI is still elusive, which is why many experts suggest the trend is designed to appeal to customers. For more on this continue reading the following article from National Real Estate Investor.

As sustainable building has become a mainstream movement in the U.S., retail center owners have finally been joining the herd. From energy-efficient lighting fixtures to water conservation features to solar roof panels, mall and shopping center owners have been instituting sustainable features into their properties.

In fact, sustainability has become so important to the retail industry that it is being focused on this week by the International Council of Shopping Centers at the association’s Retail Green Conference, which is being held at JW Marriott Desert Ridge Resort & Spa in Phoenix, Ariz.

For a long time, one of the main reasons retail property owners and developers have held off on sustainability has been money—industry members wanted to see proof that a commitment to a greener planet was financially viable. Figuring out how much money can be saved through sustainable practices is still an ongoing process, according to Larry Kilduff, senior vice president for retail and Chicago/Midwest market lead at commercial real estate services firm Jones Lang LaSalle. But with customers, tenants and mortgage lenders all putting an emphasis on green building and property management, it has become more common.

“I think it’s slowly changing and people are trying to adapt these sustainability practices,” Kilduff notes.

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Sustainability measures that are now most commonly seen at retail properties involve energy conservation, from lighting fixtures to energy-efficient HVAC units, according to Maureen Boyer, senior associate and office director with architecture firm Gensler. Another measure that’s catching on is re-purposing grey water for landscape maintenance.

Historically, owners have been concerned that sustainable practices would cost them more money, she says. But as the green building movement has gained momentum, options for energy-efficient and water-efficient features have expanded, making it easier to stay cost-efficient.

“Especially in lighting, there are so many options and the standards are so greatly improved that there’s more choice in cost,” she says. “When you look at long-term benefits and savings over a number of years, most of these sustainable design practices end up paying for themselves.”

Boyer estimates that at Market Street Place in San Francisco, a shopping center project that Gensler is working on together with developer Cypress Equities, the use of storm water for toilet and urinal flushing will result in a 40 percent reduction in water usage, while the use of LED lighting fixtures will help reduce lighting power demand by approximately 15 percent. The center, which will also feature a naturally ventilated glass atrium space to heat and circulate air through the property’s public spaces, has been designed with LEED Gold certification in mind.

But more important than financial incentives may be the response from customers, Boyer says.  She notes that many shoppers are now invested in patronizing businesses that care about the planet and may be more inclined to visit centers that they know use sustainable features.

In addition to energy and water efficiency, other measures that can be both green and cost-effective include the use of locally sourced or recycled materials for construction. For example, using locally-sourced stone is both a cheaper and more responsible option than flying in stone from Italy.

Meanwhile, the next step in sustainable practices at retail centers will be solar panels on roofs and in parking lots to self-generate energy, according to both Kilduff and Boyer. So far, this has been a practice limited to landlords with very large portfolios [because they can take advantage of economies of scale) or those who are extremely committed to the green movement. But that may change as the industry evolves.

“Everybody, whether it’s a small developer all the way to the REITs, is starting to be well-versed in sustainability,” says Kilduff. “The difficulty is that they are responsible to their shareholders to provide comfort that there is financial viability to it. But I think overtime, more and more sustainable practices will be used in a way that will make sense.”

This article was republished with permission from National Real Estate Investor.


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