Sustainable Retail Development: New Success Strategies

Sustainable Retail Development Jerry Yudelson Sustainable Retail Development New Success Strategies 123 ISBN 978-...

Author: Jerry Yudelson

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Sustainable Retail Development

Jerry Yudelson

Sustainable Retail Development New Success Strategies

123

ISBN 978-90-481-2781-8 e-ISBN 978-90-481-2782-5 DOI 10.1007/978-90-481-2782-5 Springer Dordrecht Heidelberg London New York Library of Congress Control Number: 2009929302 Copyright © 2009 by the International Council of Shopping Centers No part of this work may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording or otherwise, without written permission from the Publisher, with the exception of any material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

Foreword

For good reason, sustainability is a word on everyone’s lips these days. Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their own needs.1 As such, it is an issue that will not go away, and it has consequences for every area of human endeavor, including the design, construction and operation of shopping centers and retail stores. We now know that human activities of all kinds have had a negative impact on this fragile yet remarkable planet that we call home—an impact that could challenge or even imperil the well-being of future generations. Sustainability is therefore not an issue that any of us involved in the shopping center and retail industries can afford to ignore, even during difficult business conditions. The International Council of Shopping Centers (ICSC) has responded to this challenge through a variety of green initiatives and by adding green components to many of our regular meetings and conferences. Our objective is to build awareness of the importance of sustainability among our 70,000 members and to help them to create and implement their own sustainability programs. Some highlights of ICSC’s green efforts include the Sustainable Energy and Environmental Design (SEED) initiative to survey and support green construction practices; ICSC RetailGreen, a conference and trade exposition focusing solely on sustainability; various CentreBuild conferences on the challenge of sustainability; the Green Zone and Green Pavilion, showcasing product and service providers committed to the environment, at RECon, ICSC’s global retail real estate convention in Las Vegas; and publication of The RetailGreen Agenda. Additionally, the ICSC Environmental Sub-Committee, the European Sustainability Working Group and other committees perform sterling service in identifying how green policies and practices impact the shopping center industry. Another very important step in helping our members on their journey to a more sustainable future was the September 2007 appointment of Jerry Yudelson, a highly regarded expert in the field of green buildings and marketing, as Research Scholar 1 Definition coined by the United Nations Brundtland Commission. See Report of the World Com-

mission on Environment and Development (The Brundtland Commission), Our Common Future (London: Oxford University Press, 1987). Definition is also available at http://habitat.igc.org/opengates/ocf-02.htm#I, retrieved February 11, 2009.

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for Retail Real Estate Sustainability. As part of this research scholarship, Jerry has written Sustainable Retail Development, a comprehensive and practical guide for all those involved in conceptualizing and executing an agenda for developing and operating sustainable shopping centers and retail stores. Jerry has provided a wealth of detail about the sustainability programs and current best practices of those shopping center developers and retailers worldwide that are today’s leaders in green retail buildings. Even more importantly, Sustainable Retail Development also provides a ten-point program that any company in these industries—big or small—can follow. This is a book for all professionals involved in retail real estate design, construction and operations, as well as investors in the industry. As you will see as you turn the pages, Jerry has thrown down the gauntlet and is challenging the retail real estate and retail industries to do more to tread lightly on this fair Earth by increasing their commitment to developing and operating green shopping centers and retail stores. I encourage you to take up this challenge. I believe that Jerry’s book provides you with an invaluable reference that will help you to succeed in designing, constructing and operating high-performance, sustainable shopping centers and stores. Michael P. Kercheval President and Chief Executive Officer International Council of Shopping Centers

Preface

Throughout the early part of this decade, as interest in green buildings began to grow dramatically in the United States, Canada, Australia, the United Kingdom and other countries, especially in public buildings and commercial offices, on university campuses and the nonprofit sector, I wondered when the retail sector would catch on to the trend toward sustainable design and development. After all, the retail sector is closest to the consumer, and the consumer in these countries has been environmentally conscious for a long time. The International Council of Shopping Centers (ICSC) gave me a two-year appointment in 2007 as its Research Scholar for Real Estate Sustainability. In addition to preparing research reports and speaking at ICSC events, I benefited from introductions to many of the leaders in this very large and important industry. After all, in 2007 retail development was the second-largest commercial building sector in the U.S., behind only office construction. In the U.S., the leading green building and green development rating system is LEED, the Leadership in Energy and Environmental Design program introduced in 2000 by the U.S. Green Building Council. In the U.K., the BREEAM system (Building Research Establishment Environmental Assessment Method) has been certifying buildings since the mid-1990s. By the end of 2008, the number of non-residential buildings certified by both systems totaled more than 3,000, yet the number of retail buildings certified was less than 100 and most of those had come from the “volume certification” of a handful of retailers, including one bank and one grocery chain. There were also a few shopping centers certified by the end of 2008, mostly developer-controlled smaller buildings (“in-line shops”) housing multiple retailers. Why has the retail sector been relatively slow to adopt sustainability measures and to embrace the worldwide movement toward green buildings and sustainable development? There are several reasons. First, there is the split in incentives between developers and retailers. In many enclosed shopping centers with a central power supply, the developer pays most of the up-front capital costs, while operating cost savings accrue primarily to the tenants. To date, developers have not been able to recover these investments through higher rents. The same situation prevails in openair or “lifestyle” centers, where the individual large retailer is responsible for most of the design and construction activity.

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There is a third actor in this drama, the consumer. While people have been willing to pay more for “green” products and there are a number of retailers with such offerings, there is little empirical evidence that “green” shopping centers or “green” retailers will attract greater numbers of shoppers. Without some evidence for increased consumer demand, there is little direct incentive for developers and retailers to invest extra money in green measures. Yet, sustainable retail development is happening all over the world. What’s going on? That is precisely what this book seeks to answer. What are the business reasons for retailers and developers going green? What are the difficulties? Which companies are showing the way? What are they learning as they pursue sustainability initiatives? What’s the upshot? What can you learn from some of the early experiments with green design and corporate sustainability? One takeaway lesson is that the retail sector has been late responding to developments in green building design and sustainable development. There is a worldwide tidal wave of concern about global warming and other ecological issues that retailers ignore at the peril of their long-term business interests. In the near future, it is likely that governments worldwide will be pushing everyone in commercial building development and operations to lower the environmental impact of their projects, beginning with reductions in direct and indirect carbon dioxide generation. In this sense, the future will be dramatically different from the present—especially with respect to carbon emissions. Starting with zero-net carbon emissions as the goal will radically change retail building design and construction, as well as product and technology selection, and that is one key lesson to learn from this book. Throughout this book, you’ll see interviews with various leaders in retail sustainability and profiles of successful projects. This group of people and projects was chosen to be representative, not exhaustive, and to cover a wide range of green development and sustainability initiatives. I have tried to avoid being too “U.S.— centric” in my approach and examples, recognizing that my experience has been mostly in the U.S. and Canada. I can only ask for the reader’s tender mercy in this regard. Instead, I hope you will focus instead on the broader message of this book— sustainability matters—and that you will be encouraged to duplicate and extend the many good examples profiled in this book. My goal is to get you started down the path toward sustainable retail development, by helping you learn from those leading the way and by introducing a tenpoint framework that any company can adopt to dramatically reorient its business toward long-term sustainability. At the global level, we’re all in this together. Why not get good at it? I truly hope that this book will help you in that endeavor. Tucson, Arizona June 2009

Jerry Yudelson

Acknowledgments

I want to acknowledge all of the architects, engineers, planners and developers who met with me and who provided information for this book. I’m especially thankful to Michael Kercheval, President and CEO of ICSC, for writing the Foreword and to Michael Niemira, Director of Research for ICSC, for sponsoring this work. Thanks also to Angela Jameson of ICSC for her multifaceted assistance with this book. Thanks are due to Ermine Amies, Managing Director of the ICSC Europe office in the U.K. and operations in India, for assisting with the research effort and for inviting me to speak to the inaugural CentreBuild Europe conference in London in 2008. Thanks to Arco Rehorst of the Netherlands’ Multi Development for arranging a guided tour of Multi’s BREEAM-certified shopping center in Duisburg, Germany (with the company’s CEO for Germany, Alex Funke), to Alexander Otto of ECE for sponsoring my presentation to the ULI Germany in 2008 and to the many developers and retailers in the U.K., Germany, the Netherlands, Portugal and Austria who shared an hour or more of their precious time, along with expertise and insights, in providing interviews and responding to email surveys. Those design and development professionals in the U.S., Australia, Canada, Japan, Europe and the Middle East who agreed to be interviewed for this book also deserve special thanks. A special thanks to Thomas Saunders of the U.K.’s BRE Trust for keeping me up to date on the progress of the BREEAM program. I owe a special recognition to Jaimie Galayda, research director at Yudelson Associates, who prepared the Appendix comparing various international green building rating systems and also provided research and writing for some of the case studies. Thanks to Cyrus KhoshChasm for additional case study research. I would also like to thank the reviewers of the manuscript: Filipa Fernandes, Thomas Saunders and Amber d’Este-Hoare of BRE, Joyce Kelly, Erik Ring, Lauren Yarmuth, and Justin Doak. Thanks also to ICSC for permission to use material that previously appeared in Research Review. Many thanks also to Gretel Hakanson, my editorial associate and chief interviewer. This is our seventh green building book together in the past three years, and her contribution grows with each project. Thanks also to my wife, Jessica, for putting up with all my globetrotting to put this book together.

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Thanks to Heidi Ziegler-Voll of Creative Tornado for providing illustrations for this book and to Professor Ulf Meyer for providing a critical review of the draft manuscript. I owe a final thanks to the many people who participated in interviews, provided expert guidance, helped with arranging project visits and provided photos and renderings for this book, as well as those who served as reviewers and critics. Though this work is sponsored by the ICSC, the opinions in this book are mine alone, but without the help of many thoughtful and sharing colleagues, I wouldn’t have known where to start and, more importantly, how to finish this book.

Contents

List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii 1 Sustainability Matters . . . . . . . . . . . . . . . . . . . . 1.1 Multi Development . . . . . . . . . . . . . . . . . . . 1.1.1 Multi’s Sustainability Principles . . . . . . . 1.1.2 Turning Principles into Development Activity 1.1.3 Getting the Company on Board . . . . . . . . 1.1.4 Getting the Customers on Board . . . . . . . 1.2 Sonae Sierra . . . . . . . . . . . . . . . . . . . . . . 1.2.1 Sustainability . . . . . . . . . . . . . . . . . 1.2.2 Implementation Issues . . . . . . . . . . . . 1.3 Marks and Spencer . . . . . . . . . . . . . . . . . . . 1.3.1 Beyond Environmentalism . . . . . . . . . . 1.3.2 2008 Plan A Update . . . . . . . . . . . . . . 1.4 Regency Centers . . . . . . . . . . . . . . . . . . . . 1.4.1 Branding . . . . . . . . . . . . . . . . . . . . 1.4.2 Training . . . . . . . . . . . . . . . . . . . . 1.4.3 Capital Allocation . . . . . . . . . . . . . . . 1.4.4 Developing a Sustainability Program . . . . . 1.4.5 Taking a Larger Perspective . . . . . . . . . . 1.4.6 Progress . . . . . . . . . . . . . . . . . . . . 1.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . .

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2 Green Buildings Around the World . 2.1 Why Retail Should Go Green . 2.2 North American Case Studies . 2.2.1 Developer Case Studies 2.2.2 Retailer Case Studies . 2.3 United Kingdom (U.K.) . . . . 2.3.1 Cabot Circus . . . . . .

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2.4 2.5 2.6 2.7 2.8 2.9

Austria . . . . . . . . Japan . . . . . . . . . Australia . . . . . . . Turkey . . . . . . . . Singapore . . . . . . . China . . . . . . . . . 2.9.1 LeSong Mall . 2.9.2 Central Walk 2.10 Summary . . . . . . . References . . . . . . . . . .

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3 What Is a Green Building? . . . . . . . . . . . . . . . . . . 3.1 Green Buildings Since 2000 . . . . . . . . . . . . . . 3.2 High-Performance Building Characteristics . . . . . . 3.3 Green Building Practices . . . . . . . . . . . . . . . . 3.4 The LEED Rating Systems . . . . . . . . . . . . . . . 3.4.1 LEED for New Construction . . . . . . . . . 3.4.2 LEED for Core and Shell Buildings . . . . . 3.4.3 LEED for Commercial Interiors . . . . . . . 3.4.4 LEED for Existing Buildings: Operations and Maintenance . . . . . . . . . . . . . . . . . . 3.4.5 LEED for Neighborhood Development . . . . 3.5 Typical Green Building Measures . . . . . . . . . . . 3.6 To LEED or to Lead? . . . . . . . . . . . . . . . . . . 3.6.1 Building Commissioning . . . . . . . . . . . 3.6.2 Low-Toxicity Finishes . . . . . . . . . . . . 3.7 LEED for Retail . . . . . . . . . . . . . . . . . . . . 3.8 The Future of High-Performance Buildings in the U.S. 3.9 Non-U.S. Green Building Rating Systems . . . . . . . 3.9.1 BREEAM . . . . . . . . . . . . . . . . . . . 3.10 Summary . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . .

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4 The Business Case for Green Retail . . . . . . . . . . . 4.1 Who Benefits and Who Pays? . . . . . . . . . . . 4.2 The Developer’s Perspective . . . . . . . . . . . . 4.2.1 The Entitlement Process . . . . . . . . . 4.2.2 Cost Offsets . . . . . . . . . . . . . . . . 4.2.3 Tax and Other Incentives in the U.S. . . . 4.2.4 Renewable Energy Incentives in the U.S. . 4.3 Branding and Marketing . . . . . . . . . . . . . . 4.4 Case Study—First Capital Realty, Toronto, Canada 4.4.1 Business Case Factors . . . . . . . . . . . 4.4.2 Financial and Nonfinancial Incentives . . 4.4.3 Challenges . . . . . . . . . . . . . . . . .

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The Retailer’s Perspective . . . . . . . . . 4.5.1 Reputation Capital . . . . . . . . 4.5.2 CFOs Going Green . . . . . . . . 4.6 Six Key Areas of Focus for Green Retailing 4.7 Consumer Demand . . . . . . . . . . . . . 4.8 Challenges for Greening the Retail Sector . 4.8.1 Tenant Guidelines . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . .

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5 Costs of Greening Buildings and Developments . 5.1 Barriers to Green Building Growth . . . . . . 5.2 Hard and Soft Cost Elements . . . . . . . . . 5.3 Cost Drivers . . . . . . . . . . . . . . . . . 5.3.1 Design Team Capabilities . . . . . . 5.3.2 Design Process and Scope . . . . . 5.4 The Cost of Learning to Be Green . . . . . . 5.5 Cost of a Developer’s Sustainability Initiative 5.6 Summary . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . .

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6 Solar Power . . . . . . . . . . . . . . . . . 6.1 The Solar Power Movement . . . . . 6.2 Solar Technology . . . . . . . . . . . 6.3 The Current Market . . . . . . . . . . 6.4 Economics of PV Solar Power . . . . 6.5 Financial Benefits of PV Solar Power 6.6 Noneconomic Benefits of Solar Power 6.7 The Solar Services Model . . . . . . 6.8 Summary . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . .

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7 Greening Shopping Centers . . . . . . . . . . . . . . . . . . 7.1 European Green Building Programs . . . . . . . . . . . 7.1.1 SES SPAR European Shopping Centers, Austria 7.1.2 Forum Duisburg, Germany . . . . . . . . . . . 7.1.3 ECE, Germany . . . . . . . . . . . . . . . . . 7.1.4 PRUPIM, U.K. . . . . . . . . . . . . . . . . . 7.1.5 Redevco, U.K. . . . . . . . . . . . . . . . . . . 7.2 North America . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Uptown Monterey Shopping Center, Monterey, California . . . . . . . . . . . . . . . . . . . . 7.2.2 Green Circle Shopping Center, Springfield, Missouri . . . . . . . . . . . . . . . . . . . . . 7.2.3 Station Park Green, San Mateo, California . . . 7.2.4 Northgate Mall Redevelopment, San Rafael, California . . . . . . . . . . . . . . . . . . . .

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7.2.5

Tanger Outlet Center at the Arches, Deer Park, New York . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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8 Greening Retail Buildings . . . . . . . . . . . . . . . . . . . . . 8.1 Wal-Mart Case Study . . . . . . . . . . . . . . . . . . . . . 8.2 LEED Certification for New and Renovated Retail Buildings 8.2.1 Sustainable Site Features . . . . . . . . . . . . . . 8.2.2 Water Efficiency . . . . . . . . . . . . . . . . . . . 8.2.3 Energy Efficiency . . . . . . . . . . . . . . . . . . 8.2.4 Materials and Resource Conservation . . . . . . . . 8.2.5 Indoor Environmental Quality . . . . . . . . . . . 8.2.6 Daylighting and Retail Sales . . . . . . . . . . . . 8.2.7 LEED Project Results . . . . . . . . . . . . . . . . 8.3 Case Study—Target, McKinley Park, Chicago . . . . . . . . 8.4 Case Study—Kohl’s . . . . . . . . . . . . . . . . . . . . . 8.5 Case Study—SUBWAY . . . . . . . . . . . . . . . . . . . 8.6 Case Study—ASDA . . . . . . . . . . . . . . . . . . . . . 8.7 Case Study—The John Lewis Partnership . . . . . . . . . . 8.8 Case Study—Tesco . . . . . . . . . . . . . . . . . . . . . . 8.8.1 Sustainability Initiatives . . . . . . . . . . . . . . . 8.8.2 Cutting Carbon Dioxide Emissions . . . . . . . . . 8.9 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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9 Greening Retail Interiors . . . . . . . . . . . . . . 9.1 LEED for Commercial Interiors . . . . . . . . 9.1.1 Sustainable Site Features . . . . . . . 9.1.2 Water Efficiency . . . . . . . . . . . . 9.1.3 Energy Efficiency . . . . . . . . . . . 9.1.4 Materials and Resource Conservation . 9.1.5 Indoor Environmental Quality . . . . 9.2 Wachovia Bank . . . . . . . . . . . . . . . . . 9.3 Grocery Store Remodel . . . . . . . . . . . . . 9.4 Summary . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . 10

Operating Green Retail Spaces . . . . . . . . . . 10.1 Sustainable Site Management . . . . . . . . 10.1.1 Exterior and Site Maintenance . . . 10.1.2 Reducing Single-Occupant Auto Use 10.1.3 Open Space . . . . . . . . . . . . . 10.1.4 Stormwater Management . . . . . . 10.1.5 Urban Heat Island Effect . . . . . . 10.1.6 Light Pollution Reduction . . . . . .

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Water Conservation . . . . . . . . . . . . . . . . . . . . . . . . 10.2.1 Indoor Water Conservation . . . . . . . . . . . . . . . 10.2.2 Water Metering . . . . . . . . . . . . . . . . . . . . . 10.2.3 Water-Efficient Landscaping . . . . . . . . . . . . . . 10.2.4 Cooling Tower Water Conservation . . . . . . . . . . . 10.3 Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.1 Reducing Energy Consumption . . . . . . . . . . . . . 10.3.2 Building Commissioning . . . . . . . . . . . . . . . . 10.3.3 Renewable Energy Systems . . . . . . . . . . . . . . . 10.3.4 Emission Reduction Reporting . . . . . . . . . . . . . 10.4 Materials and Resources Conservation . . . . . . . . . . . . . . 10.4.1 Sustainable Purchasing . . . . . . . . . . . . . . . . . 10.4.2 Purchasing Consumables . . . . . . . . . . . . . . . . 10.4.3 Purchasing Durable Goods and Facility Alterations . . 10.4.4 Low-Mercury Lamps . . . . . . . . . . . . . . . . . . 10.4.5 Responsible Waste Disposal . . . . . . . . . . . . . . 10.4.6 The Waste Stream Audit . . . . . . . . . . . . . . . . 10.4.7 Ongoing Consumables . . . . . . . . . . . . . . . . . 10.4.8 Durable Goods Recycling . . . . . . . . . . . . . . . . 10.4.9 Waste Disposal from Tenant Improvements and Store Remodels . . . . . . . . . . . . . . . . . . . . . 10.5 Indoor Environment . . . . . . . . . . . . . . . . . . . . . . . 10.5.1 Green Cleaning . . . . . . . . . . . . . . . . . . . . . 10.5.2 Maintaining Air Quality During Construction . . . . . 10.5.3 Occupant Comfort . . . . . . . . . . . . . . . . . . . . 10.6 Case Study—Stop & Shop . . . . . . . . . . . . . . . . . . . . 10.6.1 The Business Case for Ahold/Stop & Shop . . . . . . . 10.6.2 What Did Stop & Shop Do for LEED-EB Certification? 10.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

142 142 142 142 143 143 144 145 145 145 146 146 146 147 147 147 148 148 148

Marketing Sustainable Retail Development . . . . . 11.1 Four Key Marketing Steps for Sustainable Retail 11.1.1 Differentiation . . . . . . . . . . . . . . 11.1.2 Become a Low-cost Provider of Green Developments and Green Retail Stores . 11.1.3 Focused Differentiation . . . . . . . . . 11.1.4 Name It and Claim It . . . . . . . . . . 11.2 Build a Brand Image . . . . . . . . . . . . . . . 11.2.1 Green Power . . . . . . . . . . . . . . . 11.3 Sustainability Marketing as an Evolving Strategy References . . . . . . . . . . . . . . . . . . . . . . . .

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157 158 158

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159 160 161 161 163 164 165

Sustainable Retail Organizations . . . . . . . . . . . . . . . . . . . 12.1 CEO Leadership . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 Communications . . . . . . . . . . . . . . . . . . . . . . . . .

167 167 167

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148 149 149 150 150 150 152 152 154 154

xvi

Contents

12.3 Education and Training . . . . . . . . . . . . . . . . 12.4 Knowledge Management . . . . . . . . . . . . . . . 12.5 Corporate Operations . . . . . . . . . . . . . . . . . 12.6 Case Study—SES Spar European Shopping Centers 12.7 The Sustainability Report . . . . . . . . . . . . . . 12.8 The Long-Term Benefit . . . . . . . . . . . . . . . . 12.9 Creating a Sustainability Program . . . . . . . . . . 12.10 Summary . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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169 170 171 172 173 174 174 176 177

The Ten-Point Program for Retail Sustainability . . . . . . . . . . 13.1 Looking to the Future . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179 185 187

Appendix A: Green Building Rating Systems Around the World A.1 Australia . . . . . . . . . . . . . . . . . . . . . . . . . A.2 Canada . . . . . . . . . . . . . . . . . . . . . . . . . . A.3 France . . . . . . . . . . . . . . . . . . . . . . . . . . . A.4 Germany . . . . . . . . . . . . . . . . . . . . . . . . . A.5 Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . A.6 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . A.7 United Kingdom . . . . . . . . . . . . . . . . . . . . . A.8 United States . . . . . . . . . . . . . . . . . . . . . . .

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189 189 191 191 192 192 193 195 196

Author Biography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

207

About the ICSC Research Scholar Program . . . . . . . . . . . . . . . .

208

About SEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

208

About the International Council of Shopping Centers . . . . . . . . . .

209

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

211

List of Figures

1.1 1.2 1.3 1.4 1.5 1.6 2.1 2.2 2.3

2.4 2.5

2.6 2.7 2.8

The U.S. retail sector accounts for 20% of the country’s total site energy use by commercial buildings . . . . . . . . . . . . The triple bottom line concept blends economic, social and ecological criteria . . . . . . . . . . . . . . . . . . . . . . . . Forum Duisburg is the first BREEAM Very Good rated center on the European continent . . . . . . . . . . . . . . . . Sonae Sierra’s corporate sustainability program is based on an ISO 14001 Environmental Management System . . . . . . The Rio Sul shopping center is one of Sonae Sierra’s showcase environmental projects . . . . . . . . . . . . . . . . Marks & Spencer’s Galashiels store is one of the chain’s many green buildings . . . . . . . . . . . . . . . . . . . . . . Forest City’s Northfield Stapleton development was the first “lifestyle” center to be LEED-Silver certified in the U.S. . . . Abercorn Common in Savannah, Georgia, was the first LEED-certified center in the U.S. . . . . . . . . . . . . . . . . Morningside Crossing, Toronto’s first LEED-compliant shopping center, is one of 30 projects for which the developer, First Capital Realty, plans to pursue LEED certification . . . . . . . . . . . . . . . . . . . . . . . . . . . Cabot Circus in Bristol, U.K., is a green retail project from Hammerson . . . . . . . . . . . . . . . . . . . . . . . . . . . The £350 million Highcross shopping center in Leicester, U.K., is a significant contribution to a city revitalization project and is rated Very Good by the BREEAM rating system AEON shopping center in Laketown, Japan, received high marks from that country’s CASBEE rating system . . . . . . . Orion Springfield is Australia’s first Green Star rated shopping center . . . . . . . . . . . . . . . . . . . . . . . . . The 30,000-m2 green roof on Metro Development’s Meydan center in Istanbul, Turkey, not only offers a space to linger but also helps control the building’s internal climate . . . . . .

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3

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3

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5

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8

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10

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14

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24

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25

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30

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31

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34

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36

xvii

xviii

2.9 2.10 3.1 3.2

3.3 3.4 3.5 3.6 3.7 3.8

3.9

4.1 6.1 6.2 7.1 7.2 7.3

7.4

7.5

List of Figures

City Square Mall in Singapore was the first such development to be awarded the government’s platinum Green Mark . Central Walk shopping mall, opened in 2007 in Shenzhen, China . . The growth of new LEED registered projects in the U.S. has consistently grown at more than 50% per annum . . . . . . . . . . LEED for New Construction and Major Renovations distributes its points across six different environmental attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An example of a “LEED Scorecard” showing points garnered by this LEED Gold-rated Office Depot project . . . . . . . LEED for Core and Shell can be used for shell retail spaces . . . . LEED for Commercial Interiors rating system can be used for store remodels . . . . . . . . . . . . . . . . . . . . . . . . . . . LEED-EBOM allows developers and retailers to benchmark performance against established criteria . . . . . . . . . . . . . . . Improving indoor air quality leads to major reductions in health symptoms, improving overall employee productivity . . . . . The new BREEAM for Retail system will allow a closer match of green building criteria to specific retailer design and construction practices . . . . . . . . . . . . . . . . . . . . . . BREEAM for Retail Interiors provides retailers with green design criteria for individual store remodels and new construction inside of malls and shell retail spaces . . . . . . . . . The benefits of green retail spaces encompass five major areas of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wal-Mart was a pioneer in using extensive rooftop area for solar power generation, as shown by this project in California . . . . This Office Depot store in Austin, Texas, uses solar power to offset a portion of store electricity needs . . . . . . . . . . . . . . . EUROPARK in Salzburg, Austria, is an award-winning green retail development from SES . . . . . . . . . . . . . . . . . . The ATRIO Center in Villach, Austria, connects that country with nearly Slovenia and Italy . . . . . . . . . . . . . . . . . . . . . ECE shopping centers receive a total of about 155 million kWh per year of hydroelectric power. Ernst-August-Galerie in Hanover is one of 48 ECE shopping centers participating in the company’s green energy initiative . . . . . . . . . . . . . . . Redevco plans to assess its retail developments in Europe according to green building rating standards; 40 Princess Street in Edinburgh was the first Redevco building to receive BREEAM certification . . . . . . . . . . . . . . . . . . . . . . . . The 23,000-ft2 Green Circle Shopping Center in Springfield, Missouri, is the first shopping center in the U.S. pursuing a Platinum-level LEED certification. . . . . . . . . . . . . . . . . . .

37 39 42

47 48 51 52 53 56

62

63 69 88 91 100 101

102

106

108

List of Figures

7.6

8.1 8.2 8.3 8.4

9.1 9.2 9.3

10.1 10.2

10.3

12.1 12.2

13.1 13.2 13.3 A.1

The Tanger Outlet Center at the Arches on New York’s Long Island transformed a former industrial site into a 800,000-ft2 open-air mall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy use in retail stores varies dramatically by end-use and type of activity, as shown by the annual energy use index (EUI) . Falabella’s center in Chile aims to become the first LEED-certified shopping center in South America . . . . . . . . . . Chipotle Mexican Grill shows that even small quick service restaurants can achieve LEED certification . . . . . . . . . . . . . . A variety of studies over the past decade strongly suggest that using skylights to increase daylighting in stores can increase retail sales significantly . . . . . . . . . . . . . . . . . . . Marks & Spencer’s Bournemouth store is one of the chain’s many green building projects . . . . . . . . . . . . . . . . . . . . . Office Depot uses skylights as well as signage to tell customers about their green commitment . . . . . . . . . . . . . . . Wachovia Bank was the first to receive “volume certification” under the U.S. Green Building Council’s LEED for Commercial Interiors program . . . . . . . . . . . . . . . The Alexa center in Berlin, Germany, is another of Sonae Sierra’s green projects . . . . . . . . . . . . . . . . . . . . . . . . . Best Buy, Dick’s Sporting Goods and PetSmart are tenants in the $400 million, 100,000-ft2 Stafford Park shopping center in New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stop & Shop is the first U.S. grocery chain to use the LEED-EB program to benchmark performance at more than 50 stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate sustainability programs typically contain all of these five elements . . . . . . . . . . . . . . . . . . . . . . . . . . Woolworths made a major commitment to green construction and operations in South Africa with their Midrand distribution center . . . . . . . . . . . . . . . . . . . . . . . . . . . The benefits of adopting sustainable retail solutions are multifaceted and long-lasting . . . . . . . . . . . . . . . . . . . . . Freccia Rossa is a green shopping center in Brescia, Italy . . . . . . Communicating your sustainability progress is an essential part of every successful program . . . . . . . . . . . . . . . . . . . Australia’s Green Star program is a credible rating system used also in New Zealand and South Africa . . . . . . . . . . . . .

xix

110 115 117 118

120 130 132

134 139

144

151 168

169 180 181 184 190

List of Tables

3.1 3.2 3.3 3.4 3.5 3.6 3.7 4.1 4.2 5.1 5.2 5.3 6.1 6.2 6.3 6.4 6.5 8.1 11.1 12.1 12.2 A.1 A.2 A.3 A.4 A.5 A.6

Growth of All LEED Project Registrations, 2004–2008 . . . . LEED-NC Certifications by Attainment Level, December 2008 LEED-NC 2009 System Categories of Concern . . . . . . . . The Major LEED Rating Systems for Commercial Buildings, December 2008 . . . . . . . . . . . . . . . . . . . . . . . . . Use of LEED Credits in Gold and Platinum Projects . . . . . BREEAM Certifications, Non-domestic Buildings, 2004–2008 2008 BREEAM Rating Categories and Weightings . . . . . . Potential Business Benefits of Green Retail Centers and Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Who Benefits? . . . . . . . . . . . . . . . . . . . . . . . . . Hard Costs for Greening Retail Projects (U.S. Experience) . . Soft Costs for Greening Building Projects (U.S., 2008 Estimates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Green Building Initiatives—An Example of Estimated Costs ($ millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Economics of PV Systems . . . . . . . . . . . . . . . . Average Cost in Cents/kWh over 20 Years for Solar Power Panels Production (kWh/kw-Peak/Year) . . . . . . . . . . . . Financial Benefits to PV System Owners . . . . . . . . . . . Noneconomic or Intangible PV System Benefits . . . . . . . . Considerations in Purchasing Solar Power from Investment Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . LEED-NC Points Achieved for Several Retail Stores . . . . . Top Ten Purchasers of Green Power in the U.S., 2008 . . . . . Corporate Departments Engaged in Sustainability Task Force . Key Functional Areas for Sustainability Planning . . . . . . . Australian Green Star Rating Levels . . . . . . . . . . . . . . French HQE Targets . . . . . . . . . . . . . . . . . . . . . . HK-BEAM Performance Categories and Available Points . . . HK-BEAM Rating Levels . . . . . . . . . . . . . . . . . . . BEE Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . CASBEE Grades . . . . . . . . . . . . . . . . . . . . . . . .

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42 43 46

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49 54 60 61

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68 69 81

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82

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85 92

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92 94 94

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96 121 164 175 176 190 192 193 194 194 195 xxi

xxii

A.7 A.8 A.9

BREEAM 2008 Sections and Weights . . . . . . . . . . . BREEAM Ratings . . . . . . . . . . . . . . . . . . . . . Credit Categories and Points for LEED for Retail: New Construction 2009 Rating System . . . . . . . . . . . . . A.10 Comparison of Credit Categories and Points Across LEED Rating Systems . . . . . . . . . . . . . . . . . . . . . . .

List of Tables

. . . . . . . . . .

195 196

. . . . .

198

. . . . .

200

Abbreviations

AIA ASHRAE AuSSI BAS BCA BIM BIPV BRE BREEAM CaGBC CAM CASBEE CBI CDI CDLI CFL CFCs CRS CSO CSR DGNB DOE EMS EPCs EPBD EPI EPP ESCO

American Institute of Architects American Society of Heating, Refrigerating and Air-Conditioning Engineers Australian SAM Sustainability Index Building Automation System Building and Construction Authority (Singapore) Building Information Modeling Building-Integrated Photovoltaics Building Research Establishment (U.K.) Building Research Establishment Environmental Assessment Method (U.K.) Canada Green Building Council Common Area Maintenance Comprehensive Assessment System for Building Environmental Efficiency (Japan) Commercial Building Initiative, U.S. Department of Energy City Developments Limited (Singapore) Climate Disclosure Leadership Index (Carbon Disclosure Project, U.K.) Compact Fluorescent Light Chlorofluorocarbons Center for Resource Solutions (U.S.) Chief Sustainability Officer Corporate Social Responsibility Deutsche Gesellschaft für Nachhaltiges Bauen (German Sustainable Building Council) U.S. Department of Energy Environmental Management System, see also ISO 14001 Energy Performance Certificates (European Union) Energy Performance of Buildings Directive (European Union) Environmental Performance Indicator Environmentally Preferable Purchasing Energy Service Company xxiii

xxiv

ESRD ETS FSC ft2 GBCA GRI GSBC Ha HCFCs HK-BEAM HQE HVAC IAQ ICSC IEQ ISO JaGBC JSBC kW kWh kWp LCC LED R LEED LEED-CI LEED-CS LEED-EBOM LEED-NC LOHAS lm-h m2 m3 MACRS M&S NPV Pg PR PV RECs RMB ROI SRI

Abbreviations

Environmental Standards for Retail Development (Sonae Sierra) Environmental Tobacco Smoke Forest Stewardship Council Square Foot/Feet Green Building Council of Australia Global Reporting Initiative German Sustainable Building Certificate, see also DGNB Hectare Hydrochlorofluorocarbons Hong Kong Building Environmental Assessment Method Haute Qualité Environnementale (French Green Building Rating System) Heating Ventilation and Air Conditioning Indoor Air Quality International Council of Shopping Centers Indoor Environmental Quality International Standards Organization, also ISO 14001 Japan Green Building Council Japan Sustainable Building Consortium Kilowatt Kilowatt-Hour Kilowatt (Peak) rated output, used only for photovoltaics (PV) Life-Cycle Costing Light-Emitting Diode R Leadership in Energy and Environmental Design LEED for Commercial Interiors LEED for Core and Shell LEED for Existing Buildings – Operations and Maintenance LEED for New Construction Lifestyles of Health and Sustainability Lumen-hours (used only in calculation of mercury concentration in lamps) Square Meter(s)/Metre(s) Cubic Meter(s)/Metre(s) Modified Accelerated Cost Recovery System (U.S.) Marks & Spencer Net Present Value Picograms, or “one millionth-millionth” of a gram Public Relations Photovoltaic Renewable Energy Certificates (U.S.) Renminbi (Chinese currency) Return on Investment Solar Reflectance Index

Abbreviations

StEP TOD USGBC VOC

xxv

Solving the E-Waste Problem (United Nations) Transit-Oriented Development U.S. Green Building Council Volatile Organic Compound

Chapter 1

Sustainability Matters

Sustainability, like quality, doesn’t cost; it pays. In all my business experience, I have never seen a more powerful differentiator in the marketplace [1]. —Ray Anderson, Founder and Chairman of Interface, Inc., 2007 sales: $1.1 billion

What is sustainability and why does it matter to the retailer and developer? We’ve heard about corporate social responsibility (CSR) for years. How does this differ from the current discussion about sustainability? One way to think about it is this: Sustainability refers to being responsive to the entire web of living systems inside of which we live and work, whereas CSR primarily pays attention to social obligations (government regulations, worker well-being and consumer demands). One definition of CSR describes it as comprising “two elements: acting as a good corporate citizen, attuned to the evolving social concerns of stakeholders, and mitigating existing or anticipated adverse effects from business activities” [2]. For many business leaders, CSR has become a primary way to secure a long-run competitive advantage. The classic definition of sustainability comes from the U.N.’s Brundtland Commission report of 1987: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” [3]. This definition clearly speaks to the long-term, overriding issue of sustainability: we should be living off of income and not stored capital. In other words, our society should be striving to live off of renewable resources and not one-time resources. What’s driving the current push toward corporate sustainability? There are a number of factors. Many companies are responding to customer (demand) pull, supplier push, European regulations (like the Registry of Hazardous Substances, or RoHS) and their own internal stakeholders in creating sustainability offices and hiring or appointing “chief sustainability officers.” There is also a strategic desire to “get ahead of any future legislation” that might regulate such things as carbon emissions. Creating sustainability offices is also the best way to formalize and centralize disparate efforts in various business units and locations [4]. One magazine survey indicated that 25% of Fortune 500 companies expected to appoint chief sustainability officers in 2008 [4]. One pundit, Marc Epstein, reported J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_1, C 2009 by the International Council of Shopping Centers Copyright

1

2

1 Sustainability Matters

that “Companies are currently looking to get past the regulatory and compliance aspect of this. The companies that get it are beginning to look at the growth that can come about as a result of sustainability.” In spite of the current economic recession, one leading sustainability consultant, Gil Friend of Natural Logic, cites several reasons why U.S. companies continue to show strong interest in sustainability [5]. • Reduce energy costs for ongoing operations. • Mitigate risk of future regulation of carbon emissions. • Take advantage of opportunities that will arise due to the Obama administration’s commitment to green issues. • Well-designed sustainability initiatives often have a really attractive return on investment. The downturn is prompting many businesses and their customers to reevaluate their value propositions and priorities. This reassessment goes hand in hand with increasing eco-efficiency and creating long-term value through sustainable jobs and renewable energy sources [5]. One important and perhaps overriding issue in sustainability relates to the buildup of human-produced carbon dioxide in the Earth’s atmosphere. The Fourth Assessment Report of the U.N.’s Intergovernmental Panel on Climate Change, issued in 2007, put the probability of human-induced global warming at 90%, up from 67% in the previous Third Report, issued in 2001 [6, 7]. Reducing carbon dioxide emissions in the building sector is critical to our ability to combat global warming. Energy-efficient design and operations of buildings, along with on-site renewable energy production, represent one important response to the challenge to people all over the world to reduce our collective ecological footprint.1 Green buildings are an important component in the effort to bring carbon dioxide emissions back to 1990 levels, as required by the Kyoto Protocol, so that we can begin to stabilize carbon dioxide concentrations in the atmosphere at levels no more than 20% above today’s. Recent studies by the international consulting firm McKinsey indicate that buildings can provide up to 25% of the required carbon emission reductions, requiring costs that can be easily recovered over the life of the building [8, 9]. Retail matters in global warming emissions. Figure 1.1 shows that retail stores and centers account for 20% of site carbon emissions in the U.S., a considerable amount by anyone’s reckoning. To combat global warming, and for other reasons discussed in this book, environmental sustainability is firmly on the global corporate agenda, and is beginning to make a stronger impression in the retail real estate development industry. There are many paths that shopping center developers and owners can take as they create and execute a sustainability program internally and externally. This chapter presents four representative sustainability programs in depth, two undertaken by large shopping 1 See

www.footprintnetwork.org for a fuller explanation of the term ecological footprint.

1

Sustainability Matters

3

Fig. 1.1 The U.S. retail sector accounts for 20% of the country’s total site energy use by commercial buildings. Source: Govt Chart: www.nrel.gov/docs/fy08osti/41956.pdf

center developers based in continental Europe, one by a large U.K.-based retailer and one by a U.S.-based developer. Their varied approaches may give guidance to others launching a sustainability program. Each corporate sustainability program involves considerations of the triple bottom line, concern for economy, environment and ethics (the “three Es”) or people, planet and profit (the “three Ps”), shown in Fig. 1.2. The triple bottom line is a good conceptual way to present the topic of corporate social responsibility within

Fig. 1.2 The triple bottom line concept blends economic, social and ecological criteria

4


the larger context of development issues. In this view, each company should pursue activities that create economic benefit, while simultaneously improving (or at least not adversely impacting) the natural environment and providing significant benefits for society. In our research for this book, we found that the European developers are more open in their consideration of the people or ethics aspect of the Triple Bottom Line, viewing business as having an important social mission in their countries, as well as a profit-making one.

1.1 Multi Development Multi Corporation B.V. is headquartered in Gouda, the Netherlands, and is active in 23 countries throughout Europe, extending from the United Kingdom to Turkey [10]. In 2007, Multi was named European Retail Developer of the Year at the MAPIC conference in Cannes [11]. CEO Glenn Aaronson is a firm believer in changing the world via the “2% solution,” making things 2% better every year, instead of trying to make huge leaps all at once. He believes that any corporation can handle 2% change, such as 2% higher costs for green buildings and 2% per year improvement in results. In the space of 10 years, he notes, “you’re then 20% better, and it’s virtually painless.” In his view, the solution to the challenge of achieving sustainability is “getting better” all the time, the well-known approach of continuous improvement. The issue of course is how to audit the changes to make sure that the 2% change is happening each year, without backsliding.

1.1.1 Multi’s Sustainability Principles Aaronson has led the charge at Multi toward incorporating sustainability into every aspect of the company’s operations. The first shopping center to use the company’s sustainability principles was built in Duisburg, Germany, and opened in the fall of 2008 (shown in Fig. 1.3). The project received a Very Good rating from the U.K.’s BREEAM system (see Chapter 3 for a fuller discussion of BREEAM). Multi has formalized its sustainability commitment into five key principles, known as the “5Es for a Sustainable Future” program: 1. Everlasting Design—design should aim at creating flexible and timeless urban spaces that will hold their value far into the future; 2. Ecological Footprint—each project should optimize the use of land and reduce the consumption of resources, by both constructing new buildings more effectively and managing existing buildings more efficiently; 3. Equal Benefits—each project should provide benefits to the local community, through a variety of giveback programs;

1.1

Multi Development

5

Fig. 1.3 Forum Duisburg is the first BREEAM Very Good rated center on the European continent

4. Economic Vitality—each project should aim to create healthy business environments to ensure financial sustainability; 5. Education for All—each project should raise public awareness of the changes required to preserve our planet. Multi’s five principles are its own customized version of the traditional triple bottom line such as the 3 Ps—people, planet and profit—or the “3 Es”—environment, economy and ethics. The five principles also contain operational criteria that reflect Aaronson’s belief that if a company holds strong beliefs internally— in this case about sustainability—it is also important to express these values externally.

1.1.2 Turning Principles into Development Activity With the right focus on customer, shopper, employee and community benefits, appropriate to time and place, it is relatively straightforward to craft a set of operating guidelines for future development and to begin filling in the outline with specific green features. A statement of core values such as the 5 Es begins to suggest synergies to the design team. For example, a focus on light and daylighting immediately integrates with energy efficiency considerations. Studies of daylighting in retail show gains in sales of about 5% but also energy savings of about 10% of initial investment per

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year.2 Appropriate transport connections begin to reduce the carbon footprint of the development by encouraging more public transit and pedestrian access. Aaronson strongly supports the use of BREEAM, the U.K. green building assessment and certification standard for shopping centers in the European Union.3 Aaronson believes that BREEAM is more flexible than other systems such as LEED, that it can be customized to fit many different development situations and that it is focused appropriately on the social dimension of development, in addition to obvious considerations such as water and energy use. One interesting approach adopted by Multi is to use each shopping center as a forum for education about sustainability by creating an educational focus in each center. In the case of the Forum Duisburg project, there is a social program that trains disadvantaged citizens in construction and center operations, in cooperation with the local municipality. Consisting of 59,000 m2 of gross leasable area (GLA), the project cost about C170 million and includes a district heating plant using combined heat and power systems, a green roof and insulation well above standard [12].

1.1.3 Getting the Company on Board Multi has gone through a progression of steps to reach its current level of commitment to sustainable development activities. This sequence may prove to be typical for many retail developers. Under Arco Rehorst’s leadership, a Sustainability Committee was created in 2006, followed in 2007 by a strong CEO commitment to move forward with the committee’s recommendations. Rehorst and the committee started with a long list of possible topics, some 63 in all, narrowing them down to the top 12 to create a focus for future work. From these points of focus came a calendar with a specific focus for each month. In 2008, the firm began regular videoconferencing with its 20 country managers, to bring them up to speed on the commitment and the program. The company is already a big fan of ISO 14001, the international environmental management standard. The goal is to improve sustainability achievements with each succeeding project, and to this end, management believes that it is important to set aspiration levels at the outset of a project and then score performance against these levels. Each new investment proposal submitted to management now becomes an “investment plus sustainability” proposal in that it details the sustainability achieve-

2 See

2003 studies by the Heschong Mahone Group, sponsored by California’s Pacific Gas & Electric Company, available at http://www.h-m-g.com/downloads/Daylighting/A-5_Daylgt_ Retail_2.3.7.pdf, accessed June 13, 2008. 3 This position was adopted in 2008 by the ICSC for all European projects.

1.2

Sonae Sierra

7

ments that it targets. Each new development will carry tenant guidelines, for example, to set green cleaning standards. The purpose of this approach is to transform investment decisions over time, by encouraging development executives to change what they consider to be appropriate considerations. In this case, sustainability has to be considered when money is being allocated, or the project is likely to fall by the wayside.

1.1.4 Getting the Customers on Board Every retail developer such as Multi has two sets of customers: directly, the retail tenants, and, indirectly, the customers it hopes to attract to the shops. There is also a third, very important constituency, namely the investors in the project. Because sustainability measures often involve higher initial costs, certainly at the beginning of the journey, the developer’s dilemma is either how to persuade the retail tenants to pay higher rents (in exchange for continuing savings in energy costs) or to persuade the project’s investors to accept slightly lower returns. This is an important problem, one unlikely to disappear in the next three to five years, even as the world begins moving toward sustainable development and tenants may begin to desire the reputational benefits of locating in green centers. Whether they will be willing to pay higher rents for these benefits is still open to question. (Chapter 5 deals directly with the issues of cost.) The issue of potentially lower returns is also likely to be temporary for two reasons: first, the centers with lower energy, water and waste management costs will be able to demonstrate those reductions in shared operating costs as time goes forward (and therefore have the potential for rent growth); second, developers with green experience are likely to obtain other benefits, such as attracting investment capital and recruiting and keeping key employees (a major emerging issue in most advanced economies at this time).

1.2 Sonae Sierra An innovator in the shopping center business, Sonae Sierra offers an integrated approach to owning, developing and managing shopping centers. Sierra centers integrate leisure with retail and other services, with a focus on green issues. Based in Portugal, the company currently operates fifty centers, with twentyeight under development in Portugal, Spain, Italy, Germany, Romania, Greece and Brazil. For fiscal year 2007, the company reported net operating revenue of C639 million, with net profit of C300 million and net asset value of C1,713 million [13].

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1.2.1 Sustainability Sonae Sierra’s CEO, Álvaro Portela, created a corporate responsibility policy in the past decade [14], based on the firm “belief that no economic activity can take place in a vacuum” [15]. The company was a founding member in 1995 of the World Business Council for Sustainable Development, one of the leading organizations in the field. The ultimate goal is for the business to be “sustainable, in the very longterm meaning of the word.” Sonae Sierra uses an Environmental Management System (EMS) certified under the ISO 14001 standard (see Fig. 1.4). The company’s Environment Manager oversees the application of the EMS to company operations. The key to ISO 14001 is its focus on continuous improvement. Sonae Sierra ensures sustainable buildings by focusing on environmental responsibility in the design, construction and operation phases. Portela believes that the corporate responsibility policy is essential to their

Fig. 1.4 Sonae Sierra’s corporate sustainability program is based on an ISO 14001 Environmental Management System. Courtesy of Sonae Sierra

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Sonae Sierra

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brand, but “like all brand attributes, you have to deliver what you promise to your stakeholders to be taken seriously.” Hence the importance of each year’s corporate responsibility action plan and the EMS system for monitoring performance. A centralized, online database gathers data for Sonae Sierra’s water use, waste and climate issues. This information generates reports that, for example, call for tighter water use, set annual targets for waste recycling and provide directions for improving Building Management Systems (BMS). Sonae Sierra’s environmental focus covers four major areas. 1. Climate Change The company’s stated short-term goal is to reduce greenhouse gas emissions by 10%. Sonae Sierra uses its Environmental Standards for Retail Development (ESRD) —an internal internet specification tool—to come up with the best environmental practices in the planning and design of new shopping centers. The tool considers 190 standards that cover issues such as energy, water, waste, transport, health and well-being, site sustainability and materials. The standards are based on Sonae Sierra’s experience, best practices and certification schemes such as LEED and BREEAM. The standards determine the use of technologies such as solar, ventilation, efficient boilers, air-conditioning units, advanced lighting and combined heat and power in design. The company is committed to achieving a high rating under the EU’s Energy Performance of Buildings Directive, which issues grades of A to G, from best to worst in terms of annual energy use per square foot/meter of operating area [16]. Furthermore, the company is part of a three-year project (ending 2009) called the World Business Council for Sustainable Development’s Energy Efficiency in Buildings (EEB) Project which delineates the changes necessary to have all buildings become zero net energy consumers. ESRD have led to transport impact studies at the design stage. These studies result in green travel plans, local transport partnerships and encouraging greater use of public transport, walking and cycling. Furthermore, the company encourages efficient vehicle use through traffic-calming measures, priority lanes, dedicated parking bays for car-poolers, refueling stations and points for alternativefuelled vehicles [17]. In 2004, Sonae Sierra conducted a study to understand the greenhouse emissions of its core activities. In partnership with a Portuguese environmental consulting firm, Sonae Sierra initiated the pilot phase of the project to estimate emissions. This phase was conducted in Portugal in its corporate offices and in the Centro Colombo and Rio Sul shopping centers, shown in Fig. 1.5. In the second phase in 2005, Sonae Sierra applied the Greenhouse Gas Protocol guidelines as a measurement tool to all its offices and centers. 2. Water The company’s goal is to maintain water consumption at or below four liters (one gallon) per visit per year, a target it claims to have achieved in 2007. ESRD standards require water-efficient designs—such as equipment specifications and

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Fig. 1.5 The Rio Sul shopping center is one of Sonae Sierra’s showcase environmental projects. Courtesy of Sonae Sierra

water recycling—and wastewater treatment—such as oil and hydrocarbon separators. Some of the water efficient features are rainwater harvesting and gray water recycling, water-efficient sanitary equipment (such as spray taps and lowflush toilets), efficient irrigation systems and the use of non-water-intensive native or adapted plant species. Furthermore, to prevent pollution from rainwater runoff, filter drains and porous pavements are used. 3. Waste The company’s stated goal is to achieve a minimum 50% recycling rate and a maximum 30% landfill disposal rate. Sonae Sierra conducts site-specific waste management strategy studies to determine the required space for waste separation and recycling. The company calls for construction companies to provide reports of their waste management. Furthermore, it encourages tenants to manage waste responsibly, even though it has little control over tenant activities. 4. Land Use Sonae Sierra’s goal is to use previously developed land for new shopping centers and to protect biodiversity where possible in developing new sites. Where sites have been previously contaminated, the company takes remedial action according to the Canadian Environmental Quality Guidelines or the Dutch

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Sonae Sierra

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Standards for Soil Quality. ESRD standards specify planting indigenous plant species in landscaped areas and favoring the use of hedgerows and green barriers.

1.2.2 Implementation Issues Introducing a major change toward sustainability at the corporate level is not without its challenges. According to Portela, “the main challenge was the company’s cultural evolution that we had to create in order to place the corporate responsibility management issues at the core of our strategy and mission. All the company, from board-level to the rest of the staff, has to understand and believe that this [policy] is crucial for the growth of the company and it should impact the way we all do business.” This challenge implies the need for a massive and continuing sales job inside the company, as people are continually brought into the organization and those inside the company need constant reminders about the mission. Portela also points out one of the major areas of concern for all developers, saying, “another big issue is how to balance short-term [additional] costs against long-term externalities, since both the environmental and economic benefits are only visible during the operation phase. Only a company [like ours] that holds onto assets, and actively manages them, is able to recoup additional capital costs through reduced running costs.” As for the future two to three years, there is still the challenge “to keep our suppliers and tenants inspired to replicate our own sustainability efforts, and to continuously find innovative and more sustainable ways of developing and managing shopping centers.”

Examples of Sonae Sierra’s Approach to Sustainability El Rosal, Ponferrada, Spain. Built to reflect local character, this shopping center achieved ISO 14001 certification for the construction phase. One of the center’s environmental features is a solar roof with 600 photovoltaic (PV) panels on a 1,500-m2 area that cost C620,300. This results in energy production of 132,447 kWh per year with annual savings of C58,300. At current electricity prices, the company expects to recover the initial system cost after just nine years for equipment with a 25-year life. On average, emissions are reduced by 48 metric tons of carbon dioxide per year and over 25 years by 1,200 metric tons of carbon dioxide. Centro Colombo, Portugal. In this development, Sierra introduced the Green Travel Plan project. It analyzes the transport infrastructure and implements measures to encourage and improve the accessibility of the shopping

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center by public transport, bicycle and foot. Furthermore, in customer surveys, Sierra asks what form of transport its customers use in visiting the centers so that it can monitor indirect greenhouse emissions. Parque D. Pedro, Campinas, Brazil. Water is treated at the center’s treatment plant and reused in bathrooms and for irrigation. In 2007, 48% of water supplied was from reclaimed sources. The reuse and irrigation system cost C83,115, while savings in the first year were C100,000. The center was one of the first buildings in Brazil to receive ISO 14001 certification. Arrabida Shopping Center, Portugal. This center uses a composting system that allows garden managers to use organic waste in the center’s green areas. Zubiarte, Spain. The Bilbao city council and the Zubiarte management team introduced a bicycle loan scheme. People can borrow and return bicycles for free by registering on the internet. Centro Vasco da Gama, Portugal. This project utilizes subterranean water from a nonpotable water supply. The investment for the system consists of a pumping station and treatment equipment. Monthly water consumption has been reduced by 530 m3 (142,000 U.S. gal), corresponding to 11% of total water consumption. According to the company, the initial system investment will be recovered during the first year, with total cost savings equivalent to C11,900 in the following years. Luz del Tajo, Toledo, Spain. An EMS monitors areas such as energy saving, transportation, water treatment, contamination, resource use, selection and use of materials, ecology, and health. A building management system controls energy savings, a pre-treatment system separating residues of fat and hydrocarbons, timers in the public taps and the use of filters in kitchen extraction systems.

1.3 Marks and Spencer The prominent U.K. retailer Marks & Spencer (M&S) embarked in 2007 on a series of wide-ranging sustainability initiatives, widely known as “Plan A,” because as Chairman Sir Stuart Rose said at the time, “there is no Plan B” when it comes to environmental responsibility. Plan A is a five-year, £200-million, 100-point plan for moving the company forward as a leader in corporate sustainability. The plan means that by 2012 M&S aims to accomplish 100 goals relating to five primary areas of concern: • • • • •

become carbon-neutral; send no waste to the landfill; extend sustainable sourcing; set new standards in ethical trading; help customers and employees live a healthier lifestyle.

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Marks and Spencer

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When announcing the plan in January 2007, M&S Chairman Stuart Rose said [18]: Every business and individual needs to do their bit to tackle the enormous challenges of climate change and waste. While M&S will continue to sell great quality, stylish and innovative products, our customers, employees and shareholders now expect us to take bold steps and do business differently and responsibly. We believe a responsible business can be a profitable business. We are calling this “Plan A” because there is no “plan B.” M&S will change beyond recognition the way it operates over the next five years. We will become carbon neutral, only using offsetting as a last resort; we will ensure that none of our clothing or packaging needs to be thrown away; much of our polyester clothing will be made from recycled plastic bottles instead of oil and every year we will sell over 20 million garments made from Fairtrade cotton.

1.3.1 Beyond Environmentalism M&S’s shift toward greening its operations is a business decision as well as being Rose’s personal philosophy: “No one had announced a big initiative up until then, and we wanted to be the first. . .[w]e were the first out of the pack. I’m not crowing, but it’s important. I’m not going to deny, if you get it right, it does give you a competitive advantage.”

1.3.2 2008 Plan A Update Although the financial benefit is still unclear, Plan A has had some definite business benefits for M&S. For example: • Marketing Week magazine named it as the greenest brand (March 2008). • Over 20% of electricity consumed by the business comes from renewable sources; saving 55,000 tons annually of CO2 produced by stores and offices. • The company opened three eco-stores in the U.K.—Bournemouth, Galashiels and Pollok. The stores were built or remodelled to help the company learn about sustainable construction and many of the lessons are included in a Sustainable Construction manual and have been rolled out across the M&S chain. The Bournemouth store has reduced its energy use by 18% and was refitted to include displacement ventilation and CO2 -based refrigeration, for example. Similar initiatives were included in the stores in Pollok and Galashiels. The Pollok store achieved the highest fitout assessment score that the BRE has issued to date. (The Galashiels store is shown in Fig. 1.6.) • First eco-factory, in Sri Lanka, in partnership with supplier MAS, the eco-factory “is designed to minimize environmental impact.” Green energy is used to power the factory with solar supplementation of around 10%. The factory will use about 40% less energy than an equivalent factory in that place. Rainwater collection and low flow fixtures also reduce normal water use by approximately 50%.

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• Teardrop-shaped eco-trucks with better aerodynamics emit 20% less carbon dioxide. • Carrier bag charging introduced—customers are now encouraged to use a bag for life, and carrier bag use has been reduced by 80%. • Food packaging weight decreased, with a large amount of it now recyclable or compostable. It is important to note that Plan A is an evolving plan and adjustments are made with each lesson learned. For example, because of the threat of loss of habitat through converting agricultural land to biomass crops for ethanol production, M&S put an indefinite hold on the use of biofuels.

Fig. 1.6 Marks & Spencer’s Galashiels store is one of the chain’s many green buildings. Courtesy of the project architect, 3DReid for Marks & Spencer

1.4 Regency Centers Based in the U.S., Regency Centers owns, operates and develops grocery-anchored and community shopping centers. At year end 2008, the company owned 440 retail properties, including those held in co-investment partnerships. Including tenantowned square footage, the portfolio encompassed 58.4 million ft2 located in top markets throughout the U.S., representing an investment at completion of $3.0 billion [19]. The author interviewed Mary Lou Fiala, vice chairman/chief operating officer (COO), and also moderated a presentation by two key players on the Regency

1.4

Regency Centers

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sustainability team at the 2008 ICSC ReCON conference, Scott Wilson, vice president construction, and Mark Peternell, vice president sustainability.4 In November 2007, Regency’s CEO and chairman Martin E. “Hap” Stein, Jr. announced the company’s sustainability program, including a commitment to move toward basic LEED certification of 60% of all new developments beginning in 2010. According to a recent interview with Stein [20]. The company is pursuing LEED certification at six centers, including the 700,000- ft2 Deer Springs Town Center in Las Vegas, under construction. COO Fiala and CEO Stein emphasize that sustainability has become one of the core values at Regency and is integral to its brand of “quality shopping centers.” While respectful of the economic effects of each decision to go green, key executives at the company are committed to sustainability. Regency realizes that it is big enough to make a difference, and it intends to do so with sustainable construction and operations programs. While many of the company’s anchor tenants have not embraced LEED, the majority of them are aggressively pursuing energy efficiency strategies. A larger issue for greening shopping centers remains the split incentives between landlord and tenant, a subject discussed in more depth later in this book.

1.4.1 Branding As part of its sustainability initiative, Regency adopted a trademarked program that it calls “greengenuityTM ”—green ingenuity—as a way to demonstrate quality and innovation, as well as leadership in the field of sustainability and green building. The greengenuity program encompasses new developments, existing centers and corporate operations. The company expects that tenants with strong LEED certification programs for their own buildings may in the future also want to locate in centers that support that mission. In addition, the company expects that creating and implementing a sustainability program will help it with investors who want green real estate in their portfolios.

1.4.2 Training According to Fiala, Regency is currently training key personnel in green building practices and the LEED certification system, including all construction team members. There is also a condensed training program for all of the company’s investment team members, focusing on the business case for green development. A key 4 Full

disclosure: the author served as a consultant to Regency’s in-house task force for about six months in 2007.

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part of the training is to place good information in people’s hands and to take away the fear factor that going green will significantly harm a project’s expected returns. Training and providing good cost information are critical to changing behavior. Fiala says [21], Training is an extremely important part of implementing a successful sustainability program. As such, this has been an integral part of our initiative since its inception over the past 12 months. We hosted day-and-a-half green building training seminars for our own internal construction teams, as well as some of our top A&E consultants and general contractors. In total, this effort reached over 180 professionals. In addition, we had training for our investment teams that focused more on the business case for sustainability and how to incorporate the cost analysis and yield impact into their initial review of potential development projects. Training will continue to be an important part of our platform in 2009. It takes the commitment and dedication of the entire company to be successful. Additional focus will be given to educating retailers to address the issue of competing incentives.

1.4.3 Capital Allocation Similar to Multi Development, Regency requires that all new investment proposals submitted to the Capital Allocation Committee provide an assessment of the LEED certification potential of all or part of the center, as part of its due diligence process. Naturally, some projects are not amenable to LEED certification. However, Regency expects that requiring all investment decisions to at least consider the sustainability issue will drive its green program forward and also teach its investment officers how to deal with the costs and expected returns of green development. COO Fiala says, Based on the internal analysis performed by our task force, we estimate the cost premium for a LEED certified project to be approximately 2%. These premiums increase with the higher levels of certification (Silver, Gold, and Platinum). However, there is such a broad spectrum of sustainability strategies that it is really difficult to make a blanket statement that it costs “X” to be green. Each investment decision needs to consider any on-going benefits, in addition to first costs, and ultimately make a decision based on a project’s overall return on investment (ROI).

1.4.4 Developing a Sustainability Program Regency began its sustainability initiative with an in-house task force. The group spent nine months looking at three key areas: cost and scope of green construction, as well as operations; LEED and public relations/marketing; and tenant and site assessment issues. One task force undertook detailed cost assessments for LEED certification of specific centers already in the development pipeline.

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Regency Centers

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1.4.5 Taking a Larger Perspective The business case for green development is discussed at some length in Chapter 4. Regency’s COO Fiala states it in this way: LEED, or other third party green building certifications, are a testament to a building’s quality, and tenants will seek out shopping centers that have these certifications because they are energy efficient, have better indoor air quality, and have shown evidence of higher worker productivity and increased retail sales. As the demand for green buildings increases, our projects will become even more desirable. As a result of this increased demand, green shopping centers should have lower vacancy rates and quicker absorption. Furthermore, because these projects have lower operating expenses, a tenant’s total cost of occupancy will be less, making our shopping centers more competitive. In the end, these trends will result in higher valuations. In addition to these direct economic benefits, there are a number of indirect benefits that make the business case for green real estate compelling. Our commitment to sustainability has been well received by many of our government partners, and we believe this will be advantageous during the entitlement process for new centers. Similarly, the communities in which we develop and operate shopping centers place a high value on environmental stewardship, and we believe this shared value will result in more customer loyalty, translating into more foot traffic and higher retail sales.

1.4.6 Progress Regency Centers hired a corporate sustainability vice president, Mark Peternell, in 2008. Since that time, in spite of the difficult economic environment for center developments, the program has moved ahead with a number of projects. In December 2008, Regency announced a major commitment to water conservation in the western U.S [19]. Regency’s outdoor water conservation initiative will take thirty-six existing shopping centers and install high-efficiency “smart” irrigation controllers aimed at reducing each facility’s outdoor water consumption, expecting to save 42 million gallons of water each year, saving costs both to the company and to its tenants through lower common-area charges. Smart irrigation controllers adjust to changing weather conditions and to reduce over watering, using local weather information to adjust water quantities, timing and duration. Based on results from this pilot study, Regency expects to continue rolling out smart irrigation controllers across its portfolio. In 2008, Regency chose to partner with the U.S. Department of Energy’s (DOE) Net Zero Energy Commercial Building Initiative (CBI) as a National Account and was chosen among 21 companies in retail, finance and commercial real estate to team with DOE Laboratories to speed market adoption of current energysaving technologies that will produce buildings with significant, measurable energy savings [20].

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1.5 Summary The four examples in this chapter illustrate a wide-ranging approach to corporate sustainability in the retail sector. Chapter 12 draws some detailed lessons for other companies’ programs that we can glean from these and other examples. Being a leader in retail sustainability, whether as a store operator or as a retail developer, requires a major and ongoing commitment to sustainable design, construction, operations and management, and management focus on a host of important initiatives. Without a strong commitment, most companies tend to revert to status quo ante. Leaders don’t wait for all the data to come in, to prove that a sustainability strategy provides the best direction. Leaders act on incomplete data, backed by sound principles, due diligence and extensive business experience. Throughout this book, there are many examples of interesting and profitable approaches to sustainable retail development, all coming from well-known companies in various segments of the retail industry and in countries large and small around the world. The next chapter highlights some of these projects.

References 1. Sustainability matters. p. 188. Retrieved December 21, 2008, from http://www.gsa.gov/gsa/ cm_attachments/GSA_DOCUMENT/oaspublications_R2-mQC1_0Z5RDZ-i34K-pR.pdf. 2. Porter, Michael E., and Kramer, Mark R. (2006, December) Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review. Retrieved on June 21, 2009, from harvardbusinessonline.hsbp.harvard.edu/.../Porter_Dec_ 2006.pdf. 3. Report of the world commission on environment and development (1987, December 11). Retrieved on February 8, 2009, from http://www.un.org/documents/ga/res/42/ares42-187.htm. 4. Executive chief sustainability officer appointments on the rise. (2007). ERS Global Newsletter, Fall. 5. Frankel, Carl. (2009, January 23). No downturn for corporate sustainability initiatives. Retrieved on January 23, 2009, from http://featured.matternetwork.com/2009/1/no-downturncorporate-sustainability-initiatives_8068.cfm. 6. Fourth assessment report of the Intergovernmental Panel on Climate Change. pp. 39, 72. (2007). Retrieved on February 9, 2009, http://www.ipcc.ch/ipccreports/ar4-syr.htm, accessed February 9, 2009. 7. Summary of New IPCC Findings on Climate Change. (2007, February 12). Retrieved on February 9, 2009, from http://www.uoregon.edu/˜climlead/publicationspress/ IPCC%20Summary%202.12.pdf. 8. Curbing global energy demand growth (2007, May). Retrieved on February 9, 2009, from http://www.mckinsey.com/mgi/publications/Curbing_Global_Energy/index.asp. 9. The case for investing in energy productivity (2008, February). Retrieved on February 9, 2009, from http://www.mckinsey.com/mgi/publications/Investing_Energy_Productivity/. 10. This section is based on interviews with three key executives in April 2008 at the company’s headquarters: Glenn H. Aaronson, CEO, Multi Corporation B.V.; Arco Rehorst, Technical Director for Multi Asset Management; and Arno G. N. Ruigrok, Adjunct Director of Multi Vastgoed B.V. 11. Multiple awards for Multi Development at MAPIC in Cannes. Retrieved on June 3, 2008, from http://www.multi-development.com/web/nederland.nsf/wwwVwContent/ l2multipleawardsformultidevelopmentatmapicincannes.htm.

References

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12. Forum Duisburg company web site. Retrieved on June 3, 2008, from www.forumduisburg.de/Aktuelles.php. 13. Sonae Sierra company web site. Retrieved on July 20, 2008, from http://www.sonaesierra. com/Web/en-GB/home/default.aspx. 14. General sources for this section are presentations by Elsa Monterio. Retrieved on July 20, 2008, from youtube.com/watch?v=pVRgKWmgYgU&feature=related (Part 1) and youtube.com/watch?v=5C9VNoanVfg (Part 2). 15. All quotes from an email interview with CEO Álvaro Portela, August 7, 2008. 16. European Commission web site. Retrieved on July 20, 2008, from http://ec.europa. eu/energy/demand/legislation/buildings_en.htm. 17. Presentation by Elsa Monteiro, Head of Institutional Relations, Environment and Communication, Sonae Sierra, at ICSC Centrebuild Europe, London, June 20, 2008. 18. Marks & Spencer: Plan A web site. Retrieved on December 21, 2008, from http://plana. marksandspencer.com/index.php?action=PublicAboutPressDetailDisplay&press_id=2. 19. Field, Catherine. (2008, December 22). Regency Centers goes even greener. Chain Store Age. Retrieved on December 28, 2008, from http://www.chainstoreage.com/ WebExclusives.aspx?storyId=89093. 20. Shearin, Randall. (2008, May). Regency gaining ground. Shopping Center Business, May 2008. Retrieved on June 4, 2008, from http://www.regencycenters.com/uploads/ Regency%20Gaining%20Ground%20with%20Green%20Initiative.pdf. 21. Interview with Mary Lou Fiala January 2009.

Chapter 2

Green Buildings Around the World

The preceding chapter discussed sustainability programs of some well-known players in the retail real estate and retail industries. This chapter focuses more narrowly on green buildings and provides a survey of retail green building developments around the world. While most of the focus is on projects in North America and Western Europe, where sustainable design has had a larger impact, there are also instructive examples from the Middle East, South America, Asia, Australia and Africa. The overall lesson is that green building is a worldwide phenomenon embraced by many retailers. Green buildings are growing by leaps and bounds. A green building is one that is certified in the U.S. by the U.S. Green Building Council’s LEED system, in the U.K. by the BREEAM system, in Australia and New Zealand by the Green Star system and in various other countries by their own third-party systems. Considering any reasonable metric, the rapid growth in the green building sector since 2005 has been remarkable. BREEAM was introduced in the mid-1990s and LEED was introduced in 2000, originally to cover just new construction projects and major renovations. LEED and BREEAM have since been expanded to cover Core and Shell Buildings, new or remodeled Commercial Interiors and the environmental performance of Existing Buildings. BREEAM and Green Star have similar categories to LEED for certification, which are examined in more detail in the next chapter. Green rating systems typically cover seven major categories of environmental concern, each of which can apply to the retail store and shopping center sector development.1 • • • • •

Sustainable site development Water conservation, both indoors and outdoors Energy conservation and renewable energy use Materials and resource conservation Indoor environmental quality

1 The entire LEED system is available for download and use from the U.S. Green Building Council,

http://www.usgbc.org/leed. BREEAM can be accessed at www.breeam.org and Green Star can be found at http://www.gbca.org.au/green-star/rating-tools/.

J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_2, C 2009 by the International Council of Shopping Centers Copyright

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• Transport energy use • Emissions from site operations In the LEED, BREEAM and Green Star systems and in the green building movement in general, the retail sector has certainly been a laggard, as this sector has faced different challenges and obstacles from the public, nonprofit, and commercial office sectors, which we’ll discuss throughout this book. As of December 2008, approximately 200 retail projects had registered their intent to certify under the LEED-NC or LEED for Core and Shell (LEED-CS) rating system, compared with nearly 15,000 total projects [1]. Green Star and BREEAM just certified their first green projects in 2008. However, the premise of this book is that there are great opportunities for the retail sector to embrace sustainable design, development and operations, for sound business reasons.

2.1 Why Retail Should Go Green The entire world appears to be going green, albeit at different rates and with different approaches. In the commercial office sector, for example, there is a growing appreciation for the business case benefits of green buildings. Many of these benefits apply to the retail sector in one way or another. A fuller discussion of driving forces influencing the business case for green retail buildings and developments is provided in a later chapter. These economic and noneconomic, tangible and intangible benefits include some or all of the following: • • • • • • • • • • •

Reduced energy costs Increased use of utility and tax incentives for energy conservation Increased building value, through higher net operating income (NOI) Improved productivity and reduced health impacts of building operations Improved sales and lease-up (letting) of properties Growing evidence of increased sales from daylighting, averaging 5%2 Marketing benefits Public relations benefits Recruitment and retention of key people Greater funding availability from institutional sources Increased interest by investors (for both public and private companies) in a company’s long-term sustainability programs • Corporate social responsibility exemplified in green buildings, especially with concern over global warming and carbon emissions mounting each year Not all benefits apply in all cases, but this list is indicative of what green retail stores and retail center developers should consider when weighing the costs and 2 See

studies by Heschong Mahone Group for Pacific Gas & Electric, www.h-m-g.com.

2.2

North American Case Studies

23

benefits of greening their operations. In this chapter, we will also explore tenant and consumer demand, local government incentives and mandates and increasing energy costs as driving factors. Chapter 4 presents the business case for green retail in more depth.

2.2 North American Case Studies For this book, the author assessed a number of case studies of LEED-certified and other green retail projects. In small retail operations, an early green adopter in the U.S. was PNC Bank, with more than fifty retail branches certified or registered for LEED certification.3 The giant retailer Wal-Mart completed two “experimental” stores in Colorado and Texas (not LEED-certified, however) and committed in 2005 to more than $500 million in energy conservation upgrades. Owing to its mammoth size, Wal-Mart is a special case discussed in Chapter 8. From other developers, by 2007, two shopping centers were certified at LEED Silver, and the first LEED Gold shopping center was well under way. The first LEED-certified retail project, going back to 2004, was a Giant Eagle supermarket in Ohio. A large grocery chain, Stop & Shop, based in the northeastern U.S., has certified more than fifty stores under the LEED for Existing Buildings program, something we’ll profile in more depth in Chapter 10. These are just a few examples of early adopters among retailers. A more detailed treatment of retail store initiatives will be found later in the book.

2.2.1 Developer Case Studies 2.2.1.1 Northfield Stapleton Forest City’s Northfield development in Denver at Stapleton Field (the former Denver airport site) received the first LEED for Core and Shell Silver certification for a “main street” or “town center” retail development. The Stapleton residential development has received smart growth awards from the Urban Land Institute and the National Association of Homebuilders. The master plan for the entire project required “sustainable development,” a condition that applied also to the retail segment. The LEED certification process involved about sixteen small buildings at the core of this large (1.2 million ft2 ) development, which opened for business in 2006. This open-air project features extensive signage about the green features of the project (created from salvaged signage from the former airport runways), highefficiency plumbing fixtures in public restrooms, low-toxicity paints and carpets, a reflective roof, high-efficiency irrigation and a small solar power system (not visible 3 U.S. and Canadian case studies were based largely on interviews conducted during 2007 and 2008,

by Gretel Hakanson, Yudelson Associates, and Sonja Persram, Sustainable Alternatives Consulting, Toronto.

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Fig. 2.1 Forest City’s Northfield Stapleton development was the first “lifestyle” center to be LEED-Silver certified in the U.S. Photography by Steve Crecelius, Wonder Works

from the street level). There are also tenant guidelines that stress both education and incentives for tenants; those who comply get to display a sticker on their window that says, “Sustainability Program Participant” (Fig. 2.1).

2.2.1.2 Abercorn Common Developed by Melaver, Inc., a privately held developer, the 169,000-ft2 Abercorn Common in Savannah (shown in Fig. 2.2), Georgia, also received a LEED-CS Silver certification in 2006. Abercorn Common boasts the nation’s first certified quickservice restaurant in a LEED-certified building, along with a host of green features in the other parts of the center. The project was the first retail LEED for Core and Shell certified project in the country, achieving the Silver level of performance [2]. According to the developer, the second phase of the project, the 16,000-ft2 Shops 600, was certified at the LEED Silver level and built without any discernible cost increase. At Shops 600, the leasable retail space includes solar water heaters and a green roof. Harvested rainwater provides 5.5 million gal a year of irrigation water, the project’s entire consumption. In this warm climate, a highly insulated building envelope and a reflective white roof reduce electricity consumption by more than 30%. Porous pavement in the parking lots reduces stormwater runoff by 30%, and water-efficient plumbing units reduce projected water use by 50%, compared with national code requirements [3]. Green development was an extension of the owner’s vision. A few years ago the company decided that all subsequent development projects would be LEEDcertified. This directive arose out of the company’s core values. In 2002, the

2.2


25

Fig. 2.2 Abercorn Common in Savannah, Georgia, was the first LEED-certified center in the U.S. Attic Fire Photography.

executive team met with leading sustainability expert Paul Hawken4 and developer John Knott, who recommended that the company retain its ownership of its buildings, and to insert its values into the development process. At that time, LEED was rising in prominence, and the company was planning the Abercorn Common project. During 2002, Melaver’s planning of an office project was fairly far along (the Whitaker building) when it was halted for four months to allow staff to learn about LEED sufficiently to enable achieving the LEED goals. The knowledge base and goals were then also applied to Abercorn Common, which required a little reworking of the initial planning.

2.2.1.3 First Capital Realty First Capital Realty Inc. is the one of largest owner, operator and developers of retail shopping centers in Canada. Primarily sited within major metropolitan neighborhoods and anchored by supermarkets, the firm’s Canadian centers comprise 161 properties totaling about 18.9 million ft2 of gross leasable area, of which $132.8 million in properties is under development [4]. The company is undertaking an ambitious greening program whereby one-third of all properties will be LEED-certified with the Canada Green Building Council within three to four years, 4 Hawken’s two 1990s books, The Ecology of Commerce and Natural Capitalism (with A. and H. Lovins), are still considered must reading for business executives desiring to understand how to apply sustainability thinking to their enterprises.

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and the remaining (existing) buildings will be “as green as possible” over ten to fifteen years.5 2.2.1.3.1 Visionary Leadership This green building program was initiated in 2006 by president Dori Segal, who engaged corporate executives with his vision for the company’s shopping center property holdings to be sustainable going forward—not just from an environmental perspective, but for economic reasons. In 2007, twenty-seven green LEED-NC projects were in progress, and 27 more were at the planning stage. The LEED-certified requirement will relate to all new construction—whether on greenfield sites or on existing properties. As indicated, for existing properties, greening will evolve more slowly, such that, for example, HVAC/re-roofing/landscape upgrades will take place as the existing components approach the end of their useful lives. 2.2.1.3.2 Morningside Crossing Opened in September 2008, the development of Toronto’s Morningside Crossing (Fig. 2.3) testifies to First Capital’s commitment to corporate responsibility and sustainability [5]. As the first large project to benefit from the firm’s May 2006 declaration that all of its new buildings would be green, this property had additional challenges, including a previous legacy of opposition from city hall and residents. For First Capital Realty, the sustainable approach to the redevelopment of this property was unique and appropriate. The plans and detailed design work were mostly complete for Morningside Crossing when the company made the commitment to pursue LEED certification for its new developments. As a large and complicated project that involved the demolition of a three-story mall and the promise of uninterrupted service to several existing tenants, the conversion to LEED standards and principles for all the new buildings further challenged project managers and tenants. Significant changes were introduced to drawings, and new commitments were written into leases to reflect environmentally inspired objectives. Examples include the provision of white reflective roofs; 95% of the concrete from the old mall and parking structure was diverted from landfill and reused on-site; rainwater is now collected on rooftops and redirected for landscape irrigation; and new green technologies ensure greater water and energy efficiency throughout the development. The objective of LEED certification became a central theme that permeated all business decisions for this project and all those to follow. This desire to pursue products and practices that reduce the ecological

5 The

Canada LEED certification is essentially equivalent to the U.S. Green Building Council’s LEED program requirements, with some adaptation for Canadian conditions.

2.2


27

Fig. 2.3 Morningside Crossing, Toronto’s first LEED-compliant shopping center, is one of 30 projects for which the developer, First Capital Realty, plans to pursue LEED certification. Photo: © Greg Schmidt 2008

footprint has instilled a new corporate mantra for the people who work for and with First Capital Realty. First Capital Realty has clearly demonstrated that the principles of sustainable development can be integral to a successful business strategy. While the decision to construct green buildings presented some early internal challenges, the company’s commitment helped guide this development from the unwanted status that preceded its arrival to that of a friend and celebrated addition to the community a couple of years later. First Capital’s outreach efforts were extensive and involved local residents and stakeholders from the very onset of this project. The initial plans were altered in response to direct meetings with city officials and other stakeholders. This included the input of about 600 local residents at an open house staged by First Capital staff and senior management to introduce the company and the proposed project.

2.2.2 Retailer Case Studies 2.2.2.1 Giant Eagle Supermarket The first LEED-certified retail project was an 80,000-ft2 Giant Eagle supermarket in the Brunswick Town Center shopping plaza in northeastern Ohio in 2004. When building the Brunswick supermarket, Giant Eagle implemented a range of

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environmentally friendly features that are fairly typical of the measures available to large retail stores: • The consumption of 30% less energy than comparable supermarkets, with more than 50% of the location’s electrical energy supplied through off-site-purchased wind power. • More than 50 skylights integrated with electrical lighting sensors, which automatically adjust the amount of electric light supplied depending on the light generated by the skylight. • A fiber-optic lighting system for wine coolers that reduces heat generation. • Natural filtration of parking lot stormwater into the adjacent constructed wetland. • Water-conserving equipment that will save more than 100,000 gal per year. • A construction waste recycling program that diverts 62% of waste from landfills. • All wood used in the building was sustainably harvested certified by the Forest Stewardship Council. • Drought-resistant plants and trees that require no irrigation other than natural rainfall, saving about 400,000 gal of water each year. • A green housekeeping program that uses environmentally responsible cleaning products. • A white reflective roof and increased insulation to allow the building to cool and heat easier [6].

2.2.2.2 Home Depot of Canada Home Depot of Canada Inc. has 155 stores in Canada and has been working to develop an array of ecological choices for home renovations. The North Hill project in Calgary, Alberta, was the company’s first LEED-certified project [7]. Two years ago, when Home Depot of Canada was planning a fifth store in Calgary, the city required that any development within the location preferred by the company—the downtown core—be LEED-certified, and (in the specific instance) utilize an existing building site. Given the desirability of the site, the agreement was struck, and the first LEED-certified Home Depot store was developed. The site was a small, old hotel, which was demolished, with much of this old building reused in the new structure. The size of the site meant underground parking was required. For a variety of green and non-green factors, including the way it was demolished, the requirements for reuse and a labor shortage prompting skyrocketing labor rates (caused by rapid growth in northern Alberta oil sands development), the cost increment for this development was 25%. Lower energy operations and maintenance costs have been noted at the store: energy costs for lighting are 40–50% less than at other stores. Additionally, there have been some water savings due to the installation of water-free urinals and lowflush toilets, as well as timed equipment for plant watering at the garden centers. Many of these higher building standards (such as energy-efficient lighting, temperature sensors allowing energy shedding by regulating lighting with external

2.3

United Kingdom (U.K.)

29

temperatures, central energy management of all stores in Canada and LED signs at both entrances and exits) have been implemented as specifications for all new construction, and some have also been applied in the existing building stock. However, the company is not yet committed to bringing all its buildings to LEED standards, or even to the energy efficiency standards of LEED certification level projects. The driving force for greening future Home Depots in Canada is the business case. If a store is being developed on a greenfield site, it would be more likely to be built to LEED standards. And where a region requires that developments comply with LEED standards, and the expected sales volumes balance out the anticipated cost increases, Home Depot of Canada’s business case requirements may be met. In Bowmanville, a town near Toronto, low land costs allowed development standards targeting a LEED-certified level. While there is a great deal of pride over the LEEDcertified North Hill store, the company did not seek market differentiation on that basis. Home Depot of Canada believes there have been reputation benefits from the project, but these are difficult to measure.

2.3 United Kingdom (U.K.) Paul Edwards is head of sustainability at Hammerson, a major European real estate investment trust. He says: At Hammerson, we find BREEAM useful. We produce our own internal document called a Sustainable Implementation Plan (SIP) with BREEAM plugged into the overarching document. The SIP covers a lot more than just environmental issues, with social issues such as jobs, skills and training included, it is also always evolving as the project develops. For us, BREEAM is just an element of our overall program. I think one of the benefits of BREEAM is that it enables you to label a building as green. It has industry recognition and so tenants, agents and other stakeholders are starting to understand its meaning and that it provides some comfort as to the environmental credentials of the building. BREEAM has limits though and does not cover all environmental aspects [8].

2.3.1 Cabot Circus The first BREEAM Excellent retail project in the U.K. is the Cabot Circus project in Bristol (shown in Fig. 2.4). Cabot Circus provides nearly 1 million ft2 (93,000-m2 ) of new retail space within a 1.5 million ft2 (139,353 m2 ) mixed-use master plan occupying a 36-acre site. It is a leading example of a comprehensively mixed-use scheme with nine different uses: retail, catering, leisure, offices, market housing, affordable housing, student housing, hotel, and car parking. The project represents a £500 million investment by The Bristol Alliance—a partnership between Land Securities and Hammerson, two U.K. Real Estate Investment Trusts. In addition, other entities provided a further £100 million of development within the master plan [9].

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Fig. 2.4 Cabot Circus in Bristol, U.K., is a green retail project from Hammerson. Photo: © Bristol Alliance

The scheme is the first retail project of its kind to achieve the highest BREEAM rating of Excellent. Key environmental achievements include: • Eighty-five percent of waste was recycled during construction including store fitout waste • Seventy percent of construction workers lived within 25 miles • “Considerate contractors” average score of 33 (out of 40) • Lighting energy use reduction through intelligent lighting controls • Sustainable tenant fitout guidance and assessment document • Rainwater harvesting system • Roof gardens within residential areas.

2.3.1.1 Sustainability Guidelines The developer provided environmental guidance for all tenants through a number of initiatives, including a store fitout guide, retailer and on-site management training and an education and green issues awareness program. Lighting to streets uses high efficacy LED lighting where appropriate. Motion detectors control back-of-house area lighting to significantly reduce energy use. Car park lighting energy usage costs are reduced 50% through the use of intelligent controls and high-efficiency lamps. An enhanced level of control allows three-stage switching of lighting to all levels, linked to daylight sensors to ensure that lighting is not on during daylight hours. Perimeter lighting is also controlled independently of lighting further into each floor. The architectural design of the scheme took advantage of natural

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United Kingdom (U.K.)

31

Fig. 2.5 The £350 million Highcross shopping center in Leicester, U.K., is a significant contribution to a city revitalization project and is rated Very Good by the BREEAM rating system. Photo: © Hammerson

ventilation to reduce the energy demands associated with heating and cooling via large air handling systems, saving around 5 million kWh annually. Building materials with low environmental impact were used throughout the project. Sustainably harvested timber and mineral wool insulation, along with recyclable materials such as zinc and copper, were used in preference to less recyclable materials. Materials such as natural stone, brick, steel, glass and landscaping were predominantly U.K.-sourced where possible. During construction, the project recycled 90% of steel waste, and 80% of timber waste was chipped and recycled. By design, some 40% of concrete came from recycled sources. Low-water-use fixtures were installed in residential units, landlord and public areas. The rainwater harvesting system captures rainwater from the street canopies for reuse in flushing toilets and irrigation throughout the project. Another Hammerson project is Highcross, shown in Fig. 2.5. Of this project and Hammerson’s overall approach, Edwards says, When I joined Hammerson in 2007, we basically drew a line in the sand on all of our projects in construction and asked: What is the current sustainability status on all of these projects? We called it a sustainability profile. We did this for Cabot Circus and Highcross. We found that they would have achieved a BREEAM Very Good. We reviewed all of the aspects of Very Good and then all of the aspects of how to get to Excellent [the next level], including how much it would cost. It was basically a case of focusing the teams’ minds as much as anything. That initial investigation came back saying it was going to cost us £2 million at Cabot Circus and £2.6 million at Highcross. Following a detailed and thorough review with the design team and main contractor, we found it was just simple things that

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were missed or points hadn’t been claimed and the cost at Cabot Circus was reduced to just under £300,000. We invested in modeling the stores and reorganized the way we actually approached BREEAM. Highcross is an extension to an existing asset and so it posed much more difficult questions, and the cost turned out to be prohibitive at that particular time in the project. So at Cabot Circus it turned out not to be a huge cost to take it to Excellent and the Bristol Alliance agreed that the investment was worth it. The main things we’ve done are incorporate high efficiency lighting, daylighting, natural ventilation, high efficiency boilers, rainwater collection and use of sustainable materials. We also completed an exercise with WRAP—Waste Recycling Action Program, a government program. Through that, we found we could change minor things that created a better, more sustainable project, such as increasing the recycled content of blockwork. In summary, it is much easier to achieve a higher rating at a lower cost if you start early. BREEAM does not solve sustainable development, its merely acts as a directional tool.

2.4 Austria In Central Europe, SES SPAR European Shopping Centers (SES) operates a number of shopping centers with a strong focus on sustainability. In 2008, ICSC recognized two of its centers in Austria with ReSOURCE awards: Q19 Einkaufsquartier Döbling in Vienna and ATRIO in Villach, which also received a commendation in the medium-size award category [10, 11]. SES received the award for its efforts to ensure the efficient use of energy, waste disposal and use of locally sourced materials, and also for the strong social- and community-oriented strategies to ensure the integration of the centers within the social and economic infrastructure of existing towns. For example, ATRIO caters to three distinct cultures, Austria, Italy and Slovenia, providing a real heart to the crossborder community and living up to its motto “Sensa Confini”—without borders. The program of the center adopts the motto of the three countries’ cross-border Olympic bid. The traditional Roman idea of the atrium is reborn in both the name of the center and the central plaza idea. The architectural concept arranges the mall and the Interspar hypermarket around this glazed central plaza (50 × 60 m), creating a new urban square for the city of Villach. ATRIO saves energy with a concept that transforms most of its foundation into geothermal “energy piles” making use of geothermal energy assisted by a district heating system from a local power plant. External LED lighting meets all current European regulations. Recycling is aggressive, and the center was subjected to a stringent environmental impact assessment before building permission was granted. R At the Q19 shopping center in Vienna (Wien-Döbling), translucent Teflon roofs are illuminated to create a space that appears to open to the sky and saves energy. Q19 utilizes energy-efficient cooling systems, benefiting from less use of electricity, with higher electrical rates designed during periods of peak demand to reduce daytime usage. Water and energy consumption are monitored constantly. LED lighting of the facade is used to create strong architectural effects. With landscaped, planted roofing and green public green areas, biodiversity and community comfort make Q19 an example of environmental, social and economic sustainability.

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Japan

33

2.5 Japan AEON is a large Japanese retailer that has approached sustainability and retail development in a very systematic way [12]. To understand its approach to green buildings requires an appreciation of the high-level principles and goals it has adopted for corporate sustainability generally. In 2004 and 2005, AEON released an “Agenda for Prevention of Global Warming” and a “Midterm Plan for Prevention of Global Warming.” Its new developments since then have incorporated the company’s philosophy and action agenda. As a retailer, AEON developed three principles to inform its sustainable agenda: first, prevent global warming through improvements in logistics; second, prevent global warming through building and operating the stores; and third, prevent global warming through acting with customers. In March 2008, the company released the “AEON Declaration for Prevention of Global Warming.” In this declaration, AEON set a goal for carbon dioxide emission reduction of 30% by 2012, compared to 2006 emissions levels. This goal represents a reduction in carbon dioxide emissions of 1,850,000 metric tons. To implement the declaration, the company set numeric targets for installing photovoltaic panels on 300 stores and planting 11 million trees worldwide. To further implement the declaration, AEON developed an “Eco-Store” concept to study effective environmental measures for its stores. Based on the studies, AEON opened the first eco-store, AEON Chikusa Shopping Center in Nagoya city, in May 2005. The company has since opened eight eco-stores in Japan; for example, in the shopping centers AEON Kashiwa in Kashiwa city, Chiba prefecture; AEON Dainichi in Moriguchi city in Osakaj; AEON Kagoshima in Kagoshima city; Maxvalu Taki; AEON Laketown (shown in Fig. 2.6) and AEON Hiezu.

Fig. 2.6 AEON shopping center in Laketown, Japan, received high marks from that country’s CASBEE rating system. Courtesy of AEON Retail Ltd.

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These stores introduced eco-friendly measures such as utilizing solar energy, planting trees, installing advanced HVAC systems and using recycled materials. Through self-assessment, these stores got “A” ratings from Japan’s CASBEE6 system. CASBEE further certified an even higher “S” ranking for AEON Laketown Shopping Center, which reduced carbon dioxide by more than 20%, compared with a typical center. This shopping center won additional awards, including an Ecobuild Award, Lighting Dissemination Award and Environmental Equipment Design Award in 2006 and an Assessment Case Study award from the World Sustainable Building Conference in 2005.

2.6 Australia Green Star is the Australian green building rating system. In the summer of 2008, the Green Building Council of Australia introduced a new version of Green Star for retail centers. The first three certified projects under this new standard came from the pilot system used to test the applicability of the rating criteria. The Mirvac Group’s Orion Springfield Shopping Center in southeast Queensland, near Ipswich (shown in Fig. 2.7), was rated at 6 Star Green Star (World Leader) in 2008 [13]. The Center houses about 110 shops in 35,000-m2 of space, with a Main Street, Town Square, and connecting malls. Mirvac’s strong commitment to sustainability is found in its broad participation in national and global sustainability programs, including the 2006 and 2007 Climate Disclosure Leadership Index (CDLI) and a listing on the U.K.’s “FTSE4Good” Global Index [14]. The Australian SAM

Fig. 2.7 Orion Springfield is Australia’s first Green Star rated shopping center. Photography courtesy of Christopher Frederick Jones

6 CASBEE

is the Japanese equivalent of LEED and BREEAM.

2.7

Turkey

35

Sustainability Index (AuSSI) recognizes Mirvac as one of the top sustainabilitydriven companies within the entire Australian economy [15]. The cost of the Orion Springfield project is estimated at A$130 million, with an additional A$2.5 million (about 2%) spent on green building initiatives, which the company predicts will offer a payback period of six years. According to Mirvac, this shopping center is already saving money operationally compared to other centers in its portfolio and is future-proofed to meet tenant and consumer demand for sustainable buildings over the coming decade [16]. The Chadstone Shopping Center in Melbourne, Victoria, was rated at 5 Star Green Star (Australian Excellence), also in the Green Star pilot program, while the Westfield Doncaster Shopping Center, an A$600 million redevelopment in Melbourne, was rated at 4 Star Green Star (Best Practice). The 120,000-m2 (1.29-million-ft2 ) Doncaster Center implemented some unique initiatives, including two 50,000-l (13,200-gal) rainwater harvesting tanks to provide water for general cleaning and irrigation purposes, solar hot water panels, light fixtures with energy-saver lamps and sophisticated building management systems that monitor and minimize energy use [17].

2.7 Turkey The Germany-based Metro Group Asset Management company opened its center in Meydan in 2007. The parent Metro Group is one of the largest international retailing companies. In 2007 the Group reached sales of around C64 billion. The company has about 290,000 employees and operates over 2,100 stores in 32 countries [18]. Metro Group has had a sustainability program in place since 2002, with the goal of identifying the relevant social and ecological challenges facing the company, with resulting practical actions and objectives to maximize opportunities and/or minimize risks for the company [19]. Metro Group is particularly focused on using renewable energy systems, including solar and geothermal. Metro Group Asset Management realized high-level green building standards with its Meydan Shopping Square (shown in Fig. 2.8), which opened in Istanbul in October 2007. A sustainable energy concept is the main characteristic of the Shopping Square. One of Europe’s largest geothermal plants is located beneath the center; in summer the plant cools the center and in winter, it heats it. The geothermal plant helps to save 1.3 million kWh of primary energy per year as well as 350 tons of carbon dioxide. The Meydan Shopping Square has about 30,000 m2 (323,000 ft2 ) of green roof space. This project has already received several international awards since it opened, including the Prime Property Award 2008 at the Expo Real conference in Munich, which recognizes properties that combine sustainable management with social requirements, and the Award for Excellence of the Urban Land Institute (ULI) Europe. Following the opening of the Meydan Shopping Square, Metro planned to open another shopping center in Istanbul, Merter, which will open in mid-2009 and feature a sustainable climate control concept: a solar chilling system built on the roof of

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Fig. 2.8 The 30,000-m2 green roof on Metro Development’s Meydan center in Istanbul, Turkey, not only offers a space to linger but also helps control the building’s internal climate. Photo © Mr. Murat Pulat

the center. Solar chilling technology is new: Parabolic troughs form a field of collectors and capture the energy from the rays of the sun. The resulting high-temperature water can be utilized in winter in the heating system of the building. In summer the steam from the hot water is transformed into cool air in an absorption refrigeration system and thus used for climate control.

2.8 Singapore The Singapore Building and Construction Authority (BCA) awarded the City Square Mall in Singapore, a project of City Developments Limited (CDL), the Platinum Green Mark in 2007. This is the first time that the government awarded this top-tier Green Mark certification to a private developer for a commercial building [20]. The BCA Platinum Green Mark is awarded to exemplary green projects that demonstrate 30% energy and water savings, as well as environmentally sustainable building practices and innovative green features. Shown in Fig. 2.9, the 700,000-ft2 mall is projected to reduce its energy usage by approximately 39% compared to standard designs. This savings results in an estimated emission reduction of over 5,700 metric tons of carbon dioxide per year. CDL invested approximately 5% of the total construction cost into the development of the center’s numerous green innovations. The City Square Mall’s design features include many Singaporean firsts. It is the first shopping mall project to be integrated with an urban park. It is the first commercial project to boast a pneumatic waste collection system for an odor-free

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China

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Fig. 2.9 City Square Mall in Singapore was the first such development to be awarded the government’s platinum Green Mark. Artist’s impression courtesy of City Developments Limited

and pest-free environment, built with separate chutes to encourage recycling of food and dry waste. It is also the first shopping mall to have motion sensors fitted into the basement parking garage to control the lighting level for vehicles.

2.9 China An interesting example of an early LEED-certified shopping center in China is the LeSong Mall in the northeastern city of Harbin [21]. The LeSong Mall is a four-story, 642,000-ft2 (60,000-m2 ) building with a retail capacity of 135 shops, including supermarkets and retail stores. Developed by Hadian Real Estate Company, LeSong Mall achieved LEED Silver certification in 2005 under the LEED-CS pilot program.

2.9.1 LeSong Mall LeSong Mall was designed to reduce energy consumption by 29% compared to the prevailing LEED baseline standard. The building also saves water through use of water-efficient plumbing fixtures. Low-VOC (low off-gassing) paints and lowemitting carpeting were used to improve indoor air quality. Construction waste materials were recycled or reused, with over 75% of construction waste diverted from the waste stream. The project also used locally sourced materials for more than 20% of value of all construction materials.

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2.9.1.1 Energy Efficiency Measures Energy efficiency measures include high-efficiency lighting, daylighting controls, additional insulation above code, high-efficiency glazing, demand-control ventilation and chillers with heat recovery for domestic hot water production. The lighting power density was reduced by 20%, from the original design of 25 W per m2 to 20 W per m2 (from 2.32 to 1.86 W per ft2 ). Lighting controls are used to automatically dim or turn off lighting in daylight spaces. Daylighting controls act to reduce the overall building peak electrical load in two ways: first by direct reduction of lighting energy use, and second by reducing the cooling load demand resulting from the waste heat of electric lighting. Daylighting controls were used within 15 feet of perimeter window areas, and in the open mall area under the barrel-vault skylight. Ventilation for the building is achieved through a demand-controlled ventilation control scheme employing carbon dioxide sensors to monitor and control ventilation. This approach effectively matches ventilation to actual occupancy of the building, thereby reducing heating and cooling costs. Use of more efficient lighting, along with an improved thermal envelope, allowed for a “downsizing” of installed chiller capacity by nearly 17% over the baseline building, saving a capital cost of RMB 649,440 (US$93,000).7

2.9.2 Central Walk Another interesting Chinese project, designed by the U.S. firm Callison Architecture, is the Central Walk project in Shenzhen, encompassing 135,000 m2 (1.5 million ft2 ) of high-end retail, dining and outdoor public space, shown in Fig. 2.10. Central Walk attempts to balance environmental responsibility and resource efficiency with commercial viability. To achieve this, several factors, including access to public transportation and green space, optimized energy performance and a green roof, were incorporated to make Central Walk a significant green mall in China. The building’s recessed design allows the roof garden to seamlessly connect with the street-level garden walkways and activities. Integrated landscaping and cascading gardens throughout the project foster physical and visual connections to nature. At 26,000 m2 (276,000 ft2 ), the roof garden reduces the heat island effect while restoring open space and natural habitat. The subterranean design and daylighting optimize energy performance. Roof skylights provide daylight to lower levels to reduce dependence on artificial lighting during the day. The vertical design stacks the rooftop public park on top of a four-story retail center with underground parking, while the center’s direct connection to the city’s new subway line and bus system, along with walkways and footbridges, promotes a pedestrian-friendly environment [22].

7 Conversion

rate of approximately 7 RMB = $1 US.

References

39

Fig. 2.10 Central Walk shopping mall, opened in 2007 in Shenzhen, China. Courtesy of Callison/Chris Eden

2.10 Summary In terms of greening the retail sector, there’s little doubt that the retail landscape worldwide will look much different by 2012. In spite of the poor economic climate for retail development and retail in general prevailing in 2008 and 2009, one can still expect that the number of large retailers and developers announcing green building initiatives will accelerate in 2009 and reach a crescendo in the 2010 to 2015 period. The number of shopping center developers building certified green retail centers will increase, so there will be hundreds of new projects registered each year and dozens certified. The engagement of center developers with the public sector, in terms of entitlement (political approval) benefits and green project requirements, will feed this trend.

References 1. USGBC project registration statistics, available at http://www.usgbc.org/leed. These numbers are updated monthly. 2. Melaver project receives 2nd LEED certification. (2007, February 22). Savannah Morning News. Retrieved on March 31, 2007, from http://www.abercorncommon.com/ index.php?option=com_content&task=view&id=20. 3. Shops 600 at Abercorn Common receive LEED Silver certification. (2007, February 25). Retrieved on March 31, 2007, from www.prleap.com/pr/67257. 4. First Capital Realty Annual Report. (2006). Retrieved on December 28, 2008, from http://www.firstcapitalrealty.ca/Files/Annual Report/fin_e_28.pdf

40

2


5. Information supplied by First Capital Realty. 6. Giant Eagle becomes first LEED certified supermarket. (2004, December, 27) Retrieved on December 28, 2008, from http://www.greenbiz.com/news/news_third.cfm?NewsID=27528. 7. Interview with Nick Cowling, Senior Manager, Communications and External Affairs, Home Depot of Canada Inc., June 2007. 8. Interview with Paul Edwards, November 2008. 9. Cabot Circus media information provided by Hammerson PLC. 10. ICSC ReSource Award goes to Sonae Sierra. (26 April 2007). ICSC Press Release. 11. SES Spar European Shopping Centers web site. Retrieved on 28 December 2008, from http://www.ses-european.com/ATRIO.3f2bc4f96c.s33.24.1.html. 12. Interview responses from Jyunji Kinoshita and Kitase Tadashi, Group Environmental and Social Contribution Department, AEON, December 2008. 13. Orion Springfield web site. Retrieved on December 28, 2008, from http://www. orionspringfield.com.au/sustainability, accessed December 28, 2008. 14. FTSE4Good Global Index. Retrieved March 16, 2009, from http://www.ftse.com/Indices/ FTSE4Good_Index_Series/index.jsp. 15. Mirvac web site. Retrieved on December 28, 2008, from http://www.mirvac.com/ sustainability-overview. 16. Green Building Council Australia. (2008). p. 32. The Dollars and Sense of Green Buildings. 17. Westfield Doncaster the passion for fashion. (16 October 2008). Retrieved on December 28, 2008, from http://whatswhat.com.au/fashion/news-and-celebrity/alicias-blog/2008/10/ 16_Westfield_Doncaster_Redevelopment_Unveiled.html. 18. Interview with Arco Rehorst, Metro Group, November 2008. 19. Metro Group web site. Retrieved on December 28, 2008, from http://www.metrogroup.de/ sustainability. 20. Information provided by City Developments Ltd., December 2008. 21. Information supplied by Abhishek Lal and Jason Hainline, EMSI, www.emsi-green.com. 22. Personal communication, Callison Architecture, January 2009.

Chapter 3

What Is a Green Building?

Following a worldwide survey of the green building movement, this chapter takes a closer look at green building design and certification systems, the core of any strategy for greening retail buildings and developments. Since 2000, the green building movement has become increasingly influential in the public and institutional sector and in private-sector office buildings. However, it is just beginning to be noticed in the retail sector, as retailers and developers start to engage in major sustainability initiatives. Greening the retail sector is an important component of the overall green building movement; in the U.S., for example, more than 20,000 retail buildings are built annually, and they comprise the second-largest commercial building sector, after office buildings.

3.1 Green Buildings Since 2000 Green buildings and sustainable design have been major movements in the design, development and construction industry since about 2000, with an accelerating interest since 2006. Figure 3.1 shows the growth of green buildings in the U.S., in terms of cumulative LEED project registrations and certifications, both increasing 75% in 2007 alone, and more than 80% in 2008, versus the prior year. In this respect, the acceptance and practice of green building design, after growing steadily from 2000 to 2005, in fact began accelerating from 2006 to 2008 (equating green commercial buildings in the U.S. with LEED-certified buildings). A similar situation holds true, with less dramatic growth, for the U.K.’s BREEAM system, as shown in Table 3.6. However, a large majority of such projects are still at a basic level of green design, as shown by the number of LEED Certified and Silver projects as a percentage of the total. By the end of 2008, total LEED for New Construction and Major Renovations (LEED-NC) project certifications (U.S. projects only) numbered 1,420 (including the four major systems—LEED for New Construction and Major Renovations, LEED for Core and Shell, LEED for Commercial Interiors, and LEED for Existing Buildings: Operations and Maintenance), total certifications were 2,213. Table 3.1 shows the growth of each of these programs since 2004, through the end J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_3, C 2009 by the International Council of Shopping Centers Copyright

41

42

3 What Is a Green Building?

Fig. 3.1 The growth of new LEED registered projects in the U.S. has consistently grown at more than 50% per annum

of 2008, shown by the number of new projects registering their interest in pursuing eventual certification. Table 3.2 shows that the relative percentage of high-performance LEED-NC certifications (Gold and Platinum) represent about 35% of the total, with Platinum representing some 113 U.S. projects, or 5% of the total. Looking at these numbers, it is easy to want to focus on Gold and Platinum projects. However, most retail projects are still at the more basic LEED Silver and Certified levels. Table 3.1 Growth of All LEED Project Registrations, 2004–2008 [1] LEED system LEED-NC LEED-CS LEED-CI LEED-EB Total a

2008 9,555a 2,147 1,757 2,063 15,522

2007

2006

2005

2004

5,800 1,147 852 769

3,895 325 462 244

2,758 142 233 151

1,792 62 106 88

8,568

4,926

3,284

2,048

Numbers are cumulative, beginning in 2004.

3.2

High-Performance Building Characteristics

43

Table 3.2 LEED-NC Certifications by Attainment Level, December 2008a Level Certified Silver Gold Platinum Total a

Number of certified projects 664 711 635 113 2,123

Percentage of total certifications 31.2% 33.5 30.0 5.3 100.0

Numbers are cumulative, beginning in 2004.

3.2 High-Performance Building Characteristics What do the terms “green building” and “high-performance building” actually mean? A green building is one that considers and then reduces its impact on the environment and human health. A green building uses considerably less energy and water than a conventional building and has fewer site impacts and generally higher levels of indoor air quality. It also accounts for some measure of the life-cycle impact of choices between various types of building materials, furniture and furnishings. Green building benefits result from better site development practices; design and construction choices; and the cumulative effects of operation, maintenance, removal and possible reuse of building materials and systems. In the U.S. and Canada, a green building is generally considered to be one certified by the LEED green building rating system of the USGBC or Canada Green Building Council (CaGBC).1 For our purposes, we will use “high-performance” buildings to designate those that achieve a certification from the U.S. or Canadian LEED systems, or from the U.K.’s BREEAM system, or from the Australian Green Star.2 This is not entirely a fair choice, because there are some excellent green buildings that have not sought certification; however, increasingly, one must ask that a high-performance building achieve a reputable third-party certification, since otherwise there would be no standards at all for the definition. This said, the retail industry has criticized LEED for certain requirements that it feels are not realistic for the retail store or development. For example, retail stores tend to use more lighting than the office buildings that are still the core application for the LEED rating system. In response, the USGBC has worked with the retail industry in the U.S. to develop a specific LEED for Retail standard (for individual stores) that will become an official certification program in August 2009, following a 1 This

is the author’s viewpoint and not necessarily that of the ICSC or its members. U.S. ENERGY STAR labeling system deals only with the relative energy performance of a building compared with others of similar use, while in contrast, LEED and BREEAM are absolute, objective standards. It is an important label, but falls short of being a green building certification. The same holds true for the European Union’s energy use labels under the Energy Performance in Buildings Directive, scheduled for full implementation in 2010.

2 The

44


two-year “pilot program” or “beta test.” The primary “missing link” still is a rating system for overall shopping centers; USGBC and the industry are working on an equitable rating system for such centers, but this is unlikely to be in place before 2010. The essence of LEED and BREEAM is a point-based rating system that allows vastly different green building practices to be compared, using one resulting aggregate score. This provides an owner, tenant or developer with the ability to label a wide variety of buildings and to rate very dissimilar approaches to sustainable construction and operations with one composite score. Some people may argue with the relative importance of various categories of environmental concern, but both of these rating systems have stood the test of time through continuous improvement and openness to intelligent modification and innovation. Because they are pointbased, LEED and BREEAM also appeal to the competitive spirit in the retail psyche, which values winning very highly and often associates getting “more points” with beating the competition. Interestingly, LEED and BREEAM are seen around the world as good examples of rating systems that are practical to use, but which still signal achievements in sustainable construction and operations far above the norm for most buildings.3 Over the years, LEED and BREEAM have continually adjusted their credit requirements to stay at the leading edge of green building design. In 2009, for example, LEED credits were revised, reflecting a rigorous “life-cycle assessment” approach, giving each credit equal weight for equal environmental benefit. This new system gives owners, along with design and construction teams, far more flexibility in picking which credits to pursue in a given geographic region or for meeting client preferences that might, for example, value energy savings or water savings much more than the current system. In September 2006, the U.S. General Services Administration reported to the U.S. Congress that it would use only the LEED system for assessing the government’s own projects [2]. The U.S. Army adopted LEED in 2008, to replace its own homegrown “Spirit” rating systems. Therefore, in the commercial and institutional arena, if a project is not rated and certified by an independent third party, such as LEED or BREEAM, it can’t really be called a green building, since there’s no other standard definition. Companies are of course free to come up with their own programs, but these still have to meet the test of general public and media acceptance, something that the USGBC and the LEED system have accomplished over the past ten years. If someone states they are “following LEED or BREEAM” but not applying for certification of the final building, one should wonder if the final construction will really achieve the expected results, especially if there is no detailed documentation 3 For

example, a similar approach is being pursued by the German Green Building Council, Deutsche Gesellschaft für nachhaltiges Bauen, which formed in 2007, www.dgnb.de. The Germans began to issue their certificate of sustainable building excellence, “Deutsches Gütesiegel Nachhaltiges Bauen,” early in 2009. See Appendix A.

3.3

Green Building Practices

45

and independent third-party review of results. If they say they are doing “sustainable design,” you have a right to ask, “Against what standard are you measuring your design, and how are you going to prove what you did?” Most retail buildings don’t yet measure up to any accepted standard of a green building. However, that situation is undergoing rapid change for the better, as more retailers and developers are engaging in store and project certification using accepted green building certification programs.

3.3 Green Building Practices A green building uses design and construction practices that significantly reduce or eliminate the negative impact of buildings on the environment and occupants. In the LEED and BREEAM systems, these practices include building location, water and energy use, environmentally preferable purchasing and waste management activities, improved indoor environmental quality and a “continuous improvement” approach to green building innovations. Though owned by the USGBC and BRE, respectively, the LEED and BREEAM rating systems are publicly available documents; they have been kept current and improved over time. The new LEED 2009 system, effective April 27, 2009, has greater flexibility for building teams to consider regional issues, a strong focus on life-cycle assessment and a better way to handle alternative approaches to designing “low-carbon” buildings. In this way it has moved closer to the BREEAM system. Table 3.3 shows the six major categories in the LEED-NC 2009 (for new construction and major renovations) rating system for commercial and institutional buildings and mid-rise and high-rise residential towers above four stories. At first thought, many people think of a green building as one that primarily uses less energy and possibly uses recycled-content materials. Looking at the entire LEED rating system, one can see that the categories of concern are much broader and more comprehensive than just saving energy. Most practitioners in the design, development and construction industry in the United States and Canada have embraced this system over all other competing standards and definitions. One piece of evidence for this viewpoint is the more than 77,000 industry professionals who have already become LEED Accredited Professionals by national exam [3]. From the standpoint of commercial buildings, the LEED rating system is heavily weighted toward saving energy. However, it’s virtually impossible to get LEED Silver or Gold ratings without paying close attention to the sustainable sites criteria, water conservation measures, providing higher levels of indoor environmental quality and engaging in choices that conserve materials and resources. In this sense LEED Silver and Gold projects are fairly balanced across all five main groups of environmental attributes (see Table 8.1). In certified retail projects the main difference between Gold and Silver is a higher level of energy savings in the Gold project.

46

3 What Is a Green Building? Table 3.3 LEED-NC 2009 System Categories of Concern

Category

Total points

Issues evaluated by the LEED-NC 2009 system

1. Sustainable sites

26

2. Water efficiency

10

3. Energy efficiency

35

4. Materials/resources

14

5. Indoor environment

15

6. Innovation

10

Avoiding sensitive sites; promoting urban infill; locating to facilitate use of public transportation; reducing site impacts of construction; creating open space; enhanced stormwater management; lowering the urban heat island effect and controlling light pollution Encouraging water conservation in landscape irrigation and building fixtures; promoting wastewater reuse from on-site sewage treatment Energy conservation; using renewable energy systems; building commissioning; reduced use of ozone-depleting chemicals in HVAC systems; energy monitoring and green power use Use of existing buildings; facilitating construction waste recycling; use of salvaged materials, recycled-content materials, regionally produced materials, agricultural-based materials and certified wood products Improved ventilation and indoor air quality; use of nontoxic finishes and furniture; green housekeeping; daylighting and views to the outdoors; thermal comfort and individual control of lighting and HVAC systems Exemplary performance in exceeding LEED standards; use of innovative approaches to green design and operations; four points for addressing regional issues

3.4 The LEED Rating Systems LEED rates all buildings across five major categories of concern, using key environmental attributes in each category. LEED collects and incorporates a wide variety of best practices across many disciplines including architecture, engineering, interior design, landscape architecture and construction. It is a mixture of performance standards (for example, save 20% of the energy use of a typical building) and prescriptive standards (for example, use paints with less than 50 g per l of volatile organic compounds), but leans more toward the performance approach. In other words, LEED believes that best practices are better shown by measuring results (outcomes) not by prescribing efforts alone (inputs). Until 2009, each LEED rating system had a different number of total points, so that scores could only be compared within each system; however, the method for rewarding achievement is identical, so that a LEED Gold project for New Construction represents in some way the same level of achievement (and degree of difficulty) as a LEED Gold project for Commercial Interiors (tenant improvements).

3.4

The LEED Rating Systems

47

Fig. 3.2 LEED for New Construction and Major Renovations distributes its points across six different environmental attributes

Figure 3.2 shows how the LEED-NC rating system splits points into the five major categories of concern. LEED version 2.2 project attainment levels are rewarded as follows4 : Certified Silver Gold Platinum

>40% of the 64 core points in the system >50% of the core points >60% of the core points >80% of the core points

The LEED rating system is a form of an eco-label that describes the environmental attributes of the project, similar to the nutrition labels on food. Prior to the advent of LEED, there was no labeling of buildings other than for their energy use, R program. While useful in as found in the federal government’s ENERGY STAR presenting a building’s energy use compared with all other buildings of the same type in a given region, ENERGY STAR gives an incomplete picture of a building’s overall environmental impact. The LEED scorecard shows a project’s achievement in each credit category and allows you to quickly assess the sustainable strategies used by the building team (Fig. 3.3) The irony here is that a $20 million building that is not LEED-certified has less labeling than a $2 box of animal crackers, in terms of its “nutritional” benefits

4 LEED

2009 will award certificate levels based on the same percentages of the 100 “core” points in the new system.

48


Fig. 3.3 An example of a “LEED Scorecard” showing points garnered by this LEED Gold-rated Office Depot project. Redrawn with permission from Office Depot

(energy use, water use, waste generation, etc.) and its basic ingredients (materials and systems). Owners of commercial buildings have far less knowledge of what is in the building they just built or bought than one might think, because the construction process is messy: there are usually thousands of design decisions made, along with many product and materials substitutions and changes during construction, and there is seldom money left over to document what really went into the building, so that the construction documents often give an incomplete or even inaccurate picture of what is actually in the building and how all of the building systems are supposed to work together. (The case may be slightly different for retail prototypes, but even so, there are a lot of changes to accommodate site conditions and local codes.) To understand a building’s ingredients and its expected performance (including operating costs for energy and water), an eco-label such as LEED, BREEAM or Green Star is especially valuable both to building owners and to occupants who may naturally be more concerned about how healthy the building is rather than how much water it saves. Figure 3.3 shows the LEED scorecard for an Office Depot certified project.

3.4


49

Complicating this rather straightforward percentage method (for determining levels of LEED certification) is the addition of a sixth category with up to 10 “bonus” points for “innovation and design process.” In addition to securing a certain number of points, each rating system has “prerequisites” that each project must meet, no matter what level of attainment it achieves. For example, a LEED 2009-certified building must reduce energy use to at least 10% below that of a comparable building that just meets the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) 90.1-2007 standard for building energy performance.5 Table 3.4 shows the four major systems that account for the vast majority of LEED registered and certified projects as of December 2008 (not including the LEED for Homes and LEED for Neighborhood Development pilot programs). From this table, you can see that the LEED-CS system is the second most popular, followed by LEED-EB (now LEED for Existing Buildings Operations and Maintenance). To best understand LEED, think of it as a self-assessed, third-party-verified rating system. (In that sense, it is like the U.S. income tax system: you decide what you owe, and a third party—the Internal Revenue Service—decides if you are correct!) In the case of a LEED certification, a project team estimates the particular credits for which a project qualifies and submits its documentation to the USGBC, which assigns the review to an independent third party; there is a one-step appeal process for situations in which the project proponent disagrees with the reviewers’ decisions. Table 3.4 The Major LEED Rating Systems for Commercial Buildings, December 2008 Rating system

Percentage of total registrations [4]

Percentage of total certifications

LEED for New Construction (LEED-NC) LEED for Core and Shell (LEED-CS) LEED for Commercial Interiors (LEED-CI) LEED for Existing Buildings (LEED-EB)

61.6 13.8 11.3 13.3

67.1 6.0 18.8 8.1

3.4.1 LEED for New Construction The most widely known and used LEED system is LEED-NC, which is useful for all new buildings (except core and shell developments), major renovations and housing of four stories and above. Table 3.3 captures the essence of the LEED-NC rating system’s major categories of concern. Through the end of 2008, about 62% of LEED projects were registered and 67% were certified using the LEED-NC assessment 5 ASHRAE 90.1-2007 is the accepted U.S. and Canadian standard for measuring expected building

energy performance against a standard or “building code-compliant” similar building designed and constructed without additional energy-efficiency measures.

50


method. LEED-NC has frequently been used as the assessment system for retail stand-alone buildings, along with the pilot version of LEED-NC for Retail. A LEED-NC rating is typically awarded after a building is completed and occupied, since it requires a final checkout process known as “building commissioning” before the award can be made. Under the current LEED version 2.2, certain credits known as “design phase” credits can be assessed at the end of design and prior to construction completion, but no final certification is made until all credits are reviewed after substantial completion of the project.

3.4.2 LEED for Core and Shell Buildings LEED for Core and Shell is a system employed typically by speculative developers who control less than 50% of a building’s tenant improvements at the time of construction. They may build out 40% of the space for a lead tenant, for example, and then rent the rest of the building to several tenants who will take much smaller spaces. LEED-CS is a popular system for developers building retail shell spaces, and it works well as long as the developer also provides the HVAC system and requires certain green building measures as part of the tenant’s lease. LEED-CS allows a developer to precertify a design at a certain level of attainment, then use the LEED rating to attract tenants and, in some cases, financing. LEED-CS also allows a “design phase” review if precertification is not requested. Once the building is finished, the developer submits documentation to secure a final LEED rating. Figure 3.4 shows how the LEED credits in the five main categories are distributed in the LEED-CS system. Except for having eight fewer total points (including two fewer points for energy efficiency), the distribution of credits is quite similar to LEED-NC.6 The benefit of the LEED-CS system for a retail center developer is that marketing cannot wait until a building is finished. By allowing a precertification, using a system very similar to LEED-NC, the LEED-CS rating assists the developer in securing tenants and thereby encourages more green buildings. Not only that, LEED-CS awards a point for creating tenant guidelines that encourage each tenant to use the LEED-CI system to build out their interior spaces. If that happens, the result is similar to a LEED for New Construction building, and everyone is happy! In the commercial office sector, there is growing evidence that a LEED-CS certification helps developers to lease space faster and attract better tenants. There is also evidence that ENERGY STAR-labeled buildings attract higher rents and result in higher resale values [5, 6]. To date, there are no similar studies for the retail sector, as it is at a much earlier stage of market penetration for green buildings.

6 See

the presentation of LEED 2009 in Appendix 2, in which all of the four major rating systems now have the same number of points.

3.4


51

Fig. 3.4 LEED for Core and Shell can be used for shell retail spaces

3.4.3 LEED for Commercial Interiors LEED-CI is designed mainly for situations in which the base building systems are not changed and in which a tenant only takes up space in a much larger retail shell building. In this circumstance, the ability to affect total energy and water use, or such issues as open space, landscaping or stormwater management, is either much smaller or nonexistent. Thus, other green building measures are incorporated into the evaluation system. These measures include choices that retail tenants can make about lighting design, energy-using equipment, lighting control systems, submetering, furniture and furnishings, paints, carpet and composite wood products and length of tenancy. (Chapter 9 focuses on retail commercial interiors, showing how any store remodel or store in an existing retail building can adopt green construction and operating principles.) Figure 3.5 shows the distribution of credits in the LEED-CI 2009 rating system.

3.4.4 LEED for Existing Buildings: Operations and Maintenance LEED-EBOM was originally proposed and designed to be a method for assuring ongoing accountability of LEED-NC buildings over time. It has become instead a stand-alone rating system for building owners who want to benchmark their

52


Fig. 3.5 LEED for Commercial Interiors rating system can be used for store remodels

operations against a nationally recognized standard. LEED-EBOM addresses many issues not dealt with in new construction, including upgrades, operations and maintenance practices, environmentally preferable purchasing policies, waste management programs, green housekeeping, continuous monitoring of energy use, retrofitting water fixtures to cut use, relamping and a host of other measures that reduce the environmental footprint of a store or development. All of these issues are important for retailers and center operators, and Chapter 10 devotes considerable attention to them. By late 2008, of the first 110 LEED-EB project certifications, 14 projects had received LEED-EB Platinum ratings, and the system appeared to be gaining momentum, as new LEED-EB project registrations in 2008 increased by 268%. Figure 3.6 shows the distribution of credits in the LEED-EBOM 2009 rating system.

3.4.5 LEED for Neighborhood Development Sometime in 2009, the USGBC will adopt LEED-ND as a rating system, following a two-year pilot program with nearly 240 participating projects in 39 states and 6 countries. LEED for Neighborhood Development is a rating system that integrates the principles of smart growth, new urbanism and green building into the first national standard for neighborhood design. It is being developed by USGBC in partnership with the Congress for the New Urbanism (CNU) and the Natural Resources Defense Council (NRDC). LEED-ND is the urban, mixed-use standard that moves away from certifying individual buildings to certifying large multiple-use developments. It’s beyond the scope of this book to consider LEED-ND, since it’s

3.5

Typical Green Building Measures

53

Fig. 3.6 LEED-EBOM allows developers and retailers to benchmark performance against established criteria

still in the pilot phase, but it may be of some interest to retail developers who do mixed-use projects that might include housing, offices, public buildings and other project types [7].

3.5 Typical Green Building Measures While there is no such thing as a “typical” green building, there are specific design and construction measures that are used in many high-performance buildings. Understanding these measures will help designers work with green builders, building owners, developers, facility managers, government officials, business clients, nonprofit executives or just interested stakeholders in a green building program. Based on the author’s analysis of the first 1,015 LEED-NC certified projects, the following technical measures are those that one might associate with a typical green building project: • Solar photovoltaic systems (44% of Platinum projects had at least 12.5% of total energy use supplied by PV systems, versus only 8% of Gold projects). • Site restoration (used in 88% of Platinum projects and 61% of Gold projects, but only 56% of Silver projects). • Carbon dioxide monitors (used in 96% of Platinum projects, 69% of Gold projects and 59% of Silver projects). • Green or LEED-compliant roofs (used in 84% of Platinum projects and 66% of Gold projects, versus 63% in LEED Silver projects) [8].

54


• Use of certified wood products (in 48% of Platinum projects and 42% of Gold projects, versus about 19% in all LEED-Silver certified projects) [8]. • Rapidly renewable materials such as cork and bamboo flooring (used in 28% of Platinum projects versus used in less than 5% of other projects). • Daylighting design (used in 84% of Platinum projects, 51% of Gold projects and only 41% of Silver projects). Many of these systems and approaches aren’t common because they have fewer opportunities (for example, hard-to-restore sites in dense urban areas), experience supply-chain difficulties or require greater initial cost. The primary reason, of course, for the lack of use of any green building measure is the higher initial cost, followed by the relative inexperience of design teams working with various systems and products. To illustrate the use of these measures, Table 3.5 presents an analysis of 25 LEED-NC Platinum and 105 LEED-NC Gold projects.7 There are more Platinum and Gold projects, of course, but the detailed project data from them is not readily available. Table 3.5 Use of LEED Credits in Gold and Platinum Projects

LEED credit category

Percentage of Platinum projects awarded this credit (n = 25)

Percentage of Gold projects awarded this credit (n = 105)

1. 2. 3.

88 96 84

61 61 66

76 44

44 8

64 84 84 28 48 96 68 84

42 55 90 8 42 69 36 59

60

37

84 88

51 68

4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Site restoration Stormwater control Urban heat island effect (green roof or ENERGY STAR roof) Light pollution reduction Renewable electricity (12.5%/15% of total) Measurement and verification Purchased green power Recycled content materials @ 20% Bio-based materials Certified wood @ 50% Carbon dioxide monitors High-efficiency ventilation @ 30% Improved air quality at occupancy Under-floor air systems for interior thermal comfort Daylighting Views to outdoors

7 Research

by Beth M. Duckles, a Ph.D. candidate at the University of Arizona, for Yudelson Associates, based on the USGBC web site, published data through the end of March 2008, http://www.usgbc.org.

3.6

To LEED or to Lead?

55

3.6 To LEED or to Lead? One reason that LEED has displaced ENERGY STAR as the preferred certification system for larger projects in the U.S. (although both may be used by developers and building owners) is that LEED focuses on a broader range of issues than just energy efficiency. These measures often can lead to reducing operating costs and improved occupant health, productivity and comfort. However, at this time in the U.S., LEED and ENERGY STAR both have marketplace acceptance as brand names that indicate a high level of energy and/or environmental performance against measurable and well-defined criteria. Both LEED and other building evaluation systems encourage an “integrated design” process, in which the building designers (mechanical, electrical, civil/structural and lighting engineers) are brought into the design process with the architectural and interiors team at an early stage, often during programming and conceptual design. Integrated design explores, for example, building orientation, massing and materials choices as critical issues affecting energy use and indoor air quality, and attempts to influence these decisions before the basic architectural design is fully developed.

3.6.1 Building Commissioning LEED also requires all certified buildings to be “commissioned,” through the use of performance testing and verification for all key energy-using and water-using systems. Typically, commissioning involves creating a plan for all systems to be tested, performing functional testing while the mechanical and controls contractors are still on the job, and providing the owner with a written report on the performance of all key systems and components. Green building commissioning involves third-party peer reviews during design to see if the design intent has actually been realized in the detailed construction documents. Finally, most commissioning programs also involve operator training and documentation of that training for future operators. Getting the future store and center maintenance staff involved is also a critical component of effective commissioning practice [9]. Commissioning is analogous to the sea trials a ship undergoes before it is handed over to the eventual owners. No ship would be put into use without such trials, which may expose flaws in design or construction. In the same way, no building should begin operations without a full “shakedown cruise” of all systems that use energy and affect comfort, health and productivity. Often the documentation provided by the commissioning process can be helpful later on in troubleshooting problems with building operations. When likened to sea trials, it seems amazing that any building would be built today without a full commissioning process, so it’s a good thing, absolutely essential for a high-performance building, that LEED requires it for all projects.

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3.6.2 Low-Toxicity Finishes High-performance buildings achieve higher levels of indoor air quality through a careful choice of less toxic (low-VOC or no-VOC) paints, sealants, adhesives, carpets and coatings for the base building and tenant improvements, often in conjunction with building systems that provide higher levels of filtration and carbon dioxide monitors to regulate ventilation according to occupancy. With so many building occupants today having breathing problems and chemical sensitivities, it just makes good business sense to provide a healthy building. Documentation of these measures can often help provide extra backup when fighting claims of sick building syndrome. This benefit of risk management is an often overlooked aspect of green building guidelines, but can be useful to demonstrate to prospective tenants or occupants the often invisible measures taken by building designers and contractors to provide a safe and healthy indoor environment. Figure 3.7 suggests the potential reduction in health symptoms from better indoor air quality measures, especially in new buildings. Healthy buildings incorporate daylighting and views to the outdoors not only for occupant comfort, health and productivity gains, but also to reduce energy costs. There is a growing body of evidence strongly suggesting that daylighting, operable windows and views to the outdoors can increase productivity from 5 to 15%

Fig. 3.7 Improving indoor air quality leads to major reductions in health symptoms, improving overall employee productivity. Center for Building Performance Diagnostics, Carnegie Mellon University. eBIDSTM : Building Investment Decision Support Tool

3.7

LEED for Retail

57

and reduce illness, absenteeism and employee turnover for many companies [10]. Throw in higher levels of building controls that allow for such things as carbon dioxide monitoring and demand-controlled ventilation adjustments, for example, and one has an effective program addressing the people problem that can be sold to prospective tenants and other stakeholders. For retail stores, these savings alone are often enough to justify the extra costs of such projects. Considering that a large percentage of the non-product operating costs of retailers relate to employee salaries and benefits, it just makes good business sense to pay attention to productivity, comfort and health in building design and operations.

3.7 LEED for Retail Recognizing the importance of greening the retail sector, the USGBC inaugurated its LEED for Retail program, designed to test out changes to the LEED-NC and LEED-CI rating systems that would work better in retail, without compromising the rigor or integrity of the LEED system. About eighty projects signed up to participate in the LEED for Retail pilot program, where the resulting goal is to produce two LEED Retail ratings systems: LEED for Retail Commercial Interiors (intended for use by retail tenants) and LEED for Retail New Construction (for freestanding retail projects). At the time of this book, the LEED for Retail rating systems were being “harmonized” with the LEED 2009 scheme and prepared for USGBC member ballot in anticipation of a market launch as formal rating systems sometime in the summer of 2009. Justin Doak, now a principal of Ecoxera, LLC, a retail sustainability consultancy, was the project manager of the LEED for Retail program at USGBC. He describes some of the challenges of applying LEED to the retail sector [11]: Essentially the LEED for Retail rating systems recognize the unique nature of the retail environment and address the different types of spaces that retailers need for their distinctive project lines. By capturing the feedback of our pilot projects, we were able to develop a LEED program that would push the market forward, but at the same time not be too rigorous and discourage market adoption. When you go into an apparel supply store versus a quick service restaurant versus a supermarket, you’ll see a huge difference in the way that the stores are designed to accommodate their product lines. A grocery store requires a substantial amount of refrigeration because of perishable goods, floral departments and frozen products. An apparel store requires high-intensity lighting to showcase the clothing lines whereas restaurants with their commercial kitchens have both large regulated and unregulated energy demands. The challenge was that the existing LEED rating systems simply did not address these unique settings adequately and they also failed to provide the baselines need to calculate performance. Also in retail, there are more customers than there are employees, which provides for different calculations and strategies from commercial office buildings.

Issues such as energy use, lighting intensity, daylighting and ventilation rates are certainly critical issues for retailers, but perhaps even more critical is the brand experience retailers are trying to create. Does designing green really help or hinder

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that experience? Doak believes that the movement toward green buildings creates an opportunity to engage the retail consumer at a new level of meaning. The opportunity is that more and more U.S. adults are showing some type of green motivation. The average consumer knows that running water continuously in the back of a store is not a good thing. Trash that’s co-mingled with recyclables is not a good thing. Those inefficient and wasteful practices translate not only into poor environmental impact, but also into higher costs that are ultimately passed on to the customer. People are cognizant of energy and waste; they care about environmental prosperity—it’s just part of the culture now, an addition to humanity’s ethos. So whenever a customer goes into a store and sees bad practices happening, then it translates into a negative experience and pings against brand loyalty. The opportunity now is that retail brands have a chance to build a new level of loyalty with customers who have eco-values. Patagonia, Timberland, REI and L.L. Bean, for example, have done it for years—that’s why they were some of the first adopters of LEED—the alignment was a natural fit. Environmental initiatives are a core competency for these brands and are a big reason why they’ve maintained such a loyal following. As the customer base grows, we’ll see more and more retailers making sustainability a primary endeavour for their company—and not just on the sales floor, but throughout their entire portfolio—all the way down to the products they sell. The challenge (and the barrier) is how retailers are going to implement green practices successfully into their portfolio. Brand experience is a delicate tool and fine art in retail. How can a retailer now incorporate and communicate green practices effectively into its brand experience and efficiently across their multiple sites, including the warehouse and supply chain? That’s tough. It requires an overhaul; a new way of looking at the way it operates and grows its business. Retailers will regroup, test and implement new processes throughout their operations. The biggest challenge will be getting decision makers within our retail brands to understand how a sustainability program works inside the traditional expectations of the retail business model. Just like the development of any new prototype, be it a product or building, an investment is going to have to be made to evaluate where the cost saving opportunities are for the longer term. You have to spend money to make money, but not necessarily for every project down the road—it’s always the learning curve that requires the real investment. Retailers have practiced efficiencies for years. Without it, the P&L doesn’t look good. What retailers have to realize is that when we talk about green, we are talking about efficiencies and practices that make smart business sense, not investments into green appendages. It’s about saving energy, saving water, reducing waste, reusing whatever you can and providing your employees and customers with a healthy place to work and shop. What does this mean? That innovation yields cost-saving opportunities. There are countless examples emerging in small pockets all over the retail industry, the challenge will be full-scale implementation. Once that happens—the aggregate savings will be astounding and drive sustainability into the retail industry faster than any other sector.

3.8 The Future of High-Performance Buildings in the U.S. The U.S. Environmental Protection Agency’s ENERGY STAR program, the most well-known to American consumers, is likely to be used to promote energy-efficient and zero-net-energy, or carbon-neutral, commercial and retail buildings. By 2010, buildings will likely be designed to cut energy use 50% or more below 2005 levels through integrated design and innovative technological approaches [12]. Zero-net-energy buildings are already coming online in the U.S. and the U.K. in

3.9

Non-U.S. Green Building Rating Systems

59

2009, essentially providing all site electric power needs with renewable power, either generated on-site with solar power or purchased from remote wind projects, for example. In Central Europe, the focus tends to be on considering “primary” energy demand, which includes the energy wasted in producing and distributing the electricity consumed by buildings. There are many definitions of “zero net energy” floating around, so the retailer and developer should try to stay informed about this larger discussion in the years ahead [13]. With the growing awareness of the carbon dioxide/global warming problem and the contribution of buildings and urban settlement patterns to this situation, architects and others in the design and construction industry have begun to propose positive actions. One sign of this is the position statement adopted by the American Institute of Architects (AIA) in December 2005, calling for a minimum 50% reduction in building energy consumption by 2010, compared with 2003 averages [14]. In its statement, the AIA supported “the development and use of rating systems and standards that promote the design and construction” of more resource-efficient communities. This position statement echoes the requirements of the “Architecture 2030 Challenge,” which seeks to reduce building energy use by 50% by 2010 and 90% by 2030.8 Many cities have subscribed to climate change initiatives and will begin to require green buildings from commercial projects, especially large developments with major infrastructure impacts. For example, by the fall of 2008, more than 900 mayors representing cities in all 50 states and Washington, D.C. signed on to the U.S. Conference of Mayors’ climate change initiative [15]. Mayors who sign on to the agreement make a commitment to reduce greenhouse gas emissions in their own cities and communities to a level 7% below 1990 levels by 2012 through a series of actions including increasing energy efficiency, reducing vehicle miles traveled, maintaining healthy urban forests, reducing sprawl and promoting use of clean, renewable energy resources. In 2008, three of the four largest cities in California, Los Angeles, San Jose and San Francisco, passed ordinances requiring private-sector projects above 50,000 ft2 to achieve LEED certification. Developers would be well advised to keep a close watch on more local governments starting to mandate LEED certification for large commercial projects, which will certainly affect most retail projects in the coming years.

3.9 Non-U.S. Green Building Rating Systems Three non-U.S. rating systems have substantial support in their respective markets: the Japanese CASBEE system, the British BREEAM and the Australian Green Star [16]. Appendix A fully explains the CASBEE and Green Star systems. In this section, we’ll focus on BREEAM, because it is the largest and oldest system in use 8 See

www.architecture2030.org for regular updates on this challenge.

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outside North America and one likely to be of greater interest to both retailers and center developers outside the U.S., particularly in the European Union. The main standard used in the U.K., BREEAM is supported by the nonprofit Building Research Establishment (BRE) and has the longest track record of any rating system.

3.9.1 BREEAM Through the end of 2008, BREEAM had certified 2,049 nonresidential (commercial and institutional) buildings since 2000, a total nearly as great as the LEED system, but in a country one-fifth the size of the U.S. Table 3.6 shows the BREEAM totals for both registered and certified projects through the end of 2008 [17]. BREEAM rates buildings according to nine major categories, with a single score at the end, similar to the LEED system, with the 2008 weightings shown in Table 3.7. At 27% of the total, energy and transport in new buildings are given weightings similar to the LEED-NC version 2.2 system, but less than that in LEED 2009, which weights energy and transportation impacts almost 40%. Along with specific green building measures and weightings, the percentage scores then translate into green points that yield the following rating categories [18]. 1. 2. 3. 4. 5.

Pass (≥30) Good (≥45) Very Good (≥55) Excellent (≥70) Outstanding (≥85)

More than 600 buildings have been rated Excellent by BREEAM. BREEAM can be used to rate all types of buildings, with individual rating systems available for commercial buildings including offices and retail. One critique of BREEAM, similar to that levied against the USGBC’s LEED system, is that: There is no measurement of how the building performs once occupied. It is believed there has been little or no measurement of carbon emissions from the 628 buildings to have been designated Excellent so far. Total emissions are strongly influenced by tenant behavior, from

Table 3.6 BREEAM Certifications, Non-domestic Buildings, 2004–2008 [17] Year 2004 2005 2006 2007 2008 Total (2000–2008)

Registered projects

Certified projects

449 550 1,353 2,006 5,861

145 192 249 371 728

10,705

2,049

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Table 3.7 2008 BREEAM Rating Categories and Weightings Rating category 1. Building management 2. Health and well-being 3. Energy 4. Transport 5. Water 6. Materials and waste 7. Waste 8. Land use and ecology 9. Pollution Total

Weighting—New builds and major refurbishments 12 15 19 8 6 12.5 7.5 10 10 100

Interior fitout only 13 17 21 9 7 14 8 N/A 11 100

the type of fit-out, the number of people in the building and the hours the building is in use each day, to the amount of electrical equipment installed and the occupier’s understanding of how to run the heating and cooling efficiently [19].

In 2008, BREEAM introduced a new and higher rating of Outstanding, to denote the few projects now exceeding the Excellent rating level. Also, in 2008 BREEAM made major changes to the system, including introducing new environmental weightings, mandatory credits and a two-stage certification process, design stage and post-construction. Benchmarks were set for carbon dioxide emissions to align BREEAM with the new Energy Performance Certificates that must be issued for all buildings to comply with the E.U. Energy Performance in Buildings Directive. Finally, BREEAM introduced a Core and Shell rating system for offices and shell retail spaces, similar to one that has been part of the LEED system since 2004. BREEAM is admirably flexible and creates a “bespoke” (or customized) rating system for unusual building types, such as recreation, laboratories, hotels and various higher education structures. In the U.S., LEED has taken the opposite approach by making most of the diverse building types fit into a straitjacket designed originally for office buildings, although this is changing, with rating systems specifically for schools and retail buildings introduced in 2008 and 2009, respectively. In 2008, BREEAM Retail was introduced as a rating tool that can assess new build or major refurbishment, post construction, tenant fitout, existing (occupied) buildings, management and operation [20]. According to BRE staff, BREEAM Retail was developed with a number of partners representing a significant portion of the retail sector. The two-year development process was sponsored by a number of key players in the retail —Marks & Spencer, Tesco, Sainsbury’s Property Services and many more.9 In addition, a number of key BREEAM assessor organizations

9 BREEAM

Retail development sponsors included British Land Company, Chartwell Land Development, Chelsfield, Grosvenor, Hammerson UK Property, Land Securities, Lend Lease Global Investment, Marks & Spencer, Sainsbury’s Property Services and Tesco. The British Retail Consortium also advised during the project’s development.

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Fig. 3.8 The new BREEAM for Retail system will allow a closer match of green building criteria to specific retailer design and construction practices

were partners in the development of the BREEAM Retail scheme [21]. Figures 3.8 and 3.9 show the BREEAM Retail point distributions. BREEAM Retail can assess the following types of retail developments [22]. • General display and sale of goods: for example, shopping centers, home improvement stores, showrooms and all general retail outlets. • Food retail: for example, supermarkets, general stores with a food retail section and shops that sell food for consumption off the premises. • Customer service retail: For example, bank, post office, dry cleaners, travel agency, etc. Currently BREEAM Retail cannot assess restaurants that do not form part of a wider development. Retail does present challenges to the BREEAM system. BREEAM has successfully overcome many obstacles to develop a methodology suited to assessing the variety of retail environments that exist, particularly since these have very different purposes than office buildings. The issue of daylighting provides an example of how BREEAM requirements can be tailored to the retail environment in individual shopping centers. Daylighting aims to ensure that building users have sufficient access to daylight. In the majority of BREEAM certifications, BRE requires that at least 80% of floor area in each occupied space is adequately daylit to a daylight factor of 2%. BREEAM received feedback from retailers that this target was going to be unachievable and so there was a risk that no one would address the daylighting issue for retail buildings and therefore make no attempt to ensure that building users have sufficient

3.9


63

Fig. 3.9 BREEAM for Retail Interiors provides retailers with green design criteria for individual store remodels and new construction inside of malls and shell retail spaces

access to daylight. To resolve this, BREEAM tailored the requirements of this issue in retail buildings so that at least 35% by floor area of the sales and common spaces have daylight factors of at least 2%. While this still presented a difficult target for retailers to meet, it was no longer unachievable and the design teams could try to incorporate this requirement into a building’s design [21]. There were 43 certified retail projects as of November 2008, according to BRE staff, with nearly 1,300 retail buildings registered for eventual certification (current economic conditions may deter or delay finishing these projects, of course). Retail assessments are currently under way in seven countries outside the U.K.: Germany, Turkey, Sweden, France, Spain, Austria and Iceland. In 2008, ICSC adopted BREEAM as a standard for rating shopping centers throughout Europe, stating at the time [23], After extensive research and comparisons the ICSC Sustainability Working Group, chaired by ICSC European Chair and COO of Redevco Europe, Jaap Gillis, with representatives from other companies such as Sonae Sierra, Multi Development, ING Real Estate and Immochan, launched in 2007 an initiative to develop a pan-European BREEAM framework, in order to establish a common level playing field across the continent. After taking its recommendations to the European Union, which welcomed the selfregulation the retail real estate industry wished to pursue, ICSC is now working with BREEAM to adjust its environmental criteria so it is suitable for adoption by countries across Europe. Using BREEAM, a number of ICSC member-developers aim to implement pilot projects across Europe in 2008. BREEAM could become the blueprint for a pan-European green standard from 2009.

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3.10 Summary All in all, BREEAM is a worthy competitor to LEED in the U.S. and likely to be a dominant system in many countries. It illustrates green building rating systems that actually work because it’s in tune with the marketplace realities, without giving up a sense of higher purpose. Green building rating schemes have come of age. While there is still some awkwardness in applying office building design and construction criteria to the retail environment, there is much agreement in the industry that retail stores and shopping centers need to be upgraded to meet criteria for green building and highperformance interiors. By 2012, most developers and retailers with strong commitments to corporate social responsibility will most likely find a green building rating and certification scheme that can fit their projects.

References 1. USGBC unpublished data furnished to the author. 2. Report to Congress. General Services Administration. (2006, September). Retrieved on March 6, 2007, from http://www.usgbc.org/ShowFile.aspx?DocumentID=1916. 3. U.S. Green Building Council web site. Retrieved February 2009, from http://www. usgbc.org/leed. 4. Data for LEED registrations and certifications are from the USGBC, furnished to the author, end of November 2008. 5. Miller, Norman. Does green pay off? Retrieved January 4, 2009, from http://www.sandiego. edu/business/documents/EconofGreenMArch52008.pdf - 2008-04-18. 6. Burr, Andrew. CoStar study finds ENERGY STAR, LEED buildings outperform peers. (2008, March 26). Retrieved January 4, 2009, from http://www.costar.com/News/Article. aspx?id=D968F1E0DCF73712B03A099E0E99C679. 7. U.S. Green Building Council web site. Retrieved February 16, 2009, from http://www.usgbc.org/DisplayPage.aspx?CMSPageID=148. 8. Yudelson, Jerry. (2006) Marketing Green Building Services: Strategies for Success New York: Architectural Press. p. 129. 9. Paul Schwer, PAE Consulting Engineers, May 2008, “Personal communication.” 10. See, for example, studies by the Heschong Mahone Group for Pacific Gas & Electric Company and the California Energy Commission, available at http://www.h-m-g.com, retrieved January 5, 2009. 11. Interview with Justin Doak, USGBC, November 2008. 12. For example, the U.S. Department of Energy began a Commercial Buildings Initiative and a “Net Zero Commercial Building” program in 2008, http://www.energy.gov/ energyefficiency/6454.htm. 13. Yudelson, Jerry. (2009) Green Building Trends: Europe. Washington, D.C.: Island Press (in press). 14. American Institute of Architects press release. Retrieved December 19, 2008, from http://www.aiaarchitect.net/site/news/06/august/sustainability.html. 15. City of Seattle, Mayor’s Office web site. Retrieved April 26, 2007, from http://www.seattle. gov/mayor/climate/PDF/USCM_Faq_1-18-07.pdf. 16. USGBC website. Retrieved January 4, 2009, from http://www.usgbc.org/ShowFile.aspx? DocumentID=1916. 17. Information supplied by Building Research Establishment to the author, January 5, 2009.

References

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18. BREEAM web site. Retrieved on January 5, 2009, from http://www.breeam. org/manualpage. jsp?id=28. 19. Jansen, Mark. (2008, August 8). BREEAM’s green credentials are not what they seem. Retrieved August 29, 2008, from http://www.propertyweek.com/story. asp? sectioncode=274&storycode=3119943&c=1. BREEAM In-Use, introduced in 2008, intends to challenge this critique by offering retailers a way to continually update their certification, after a building has been occupied for a year or two. 20. BREEAM web site. Retrieved January 5, 2009, from http://www.breeam.org/ page_1col.jsp? id=54. 21. Email interview with BRE staff, November 2008. 22. BREEAM web site. Retrieved January 5, 2009, from http://www.breeam.org/page.jsp?id=19. 23. Gillis, Jaap. (2008, February 15) Property EU. Retrieved January 5, 2009, from http://www.propertyeu.info/services/expert-views/read/default.asp?id=40

Chapter 4

The Business Case for Green Retail

If green buildings are happening in most segments of the commercial real estate sector, as demonstrated in Chapter 2, it is reasonable to suppose that they will also arrive in the retail segment in the next few years. What would be the benefits to a retail real estate developer to have a larger “green profile?” This chapter sets out the business case for green retail buildings and provides examples of some of the monetary and other benefits that early adopters are gaining. Table 4.1 outlines some of the potential benefits and who would receive them, while Fig. 4.1 shows these benefits graphically. Many of these benefits accrue unequally to various parties. For example, a developer incurs many of the costs of energy efficiency and water efficiency investments, but the tenant secures the benefits, at least initially, through lower common area charges. At this time, the developer is typically unable to secure higher commercial rents from tenants, since the potential future energy and water savings are not recognized in most lease negotiations. This makes a developer reluctant to incur these expenses, since the net result is a higher capital cost and a lower potential return to offer investors. This situation forces a developer to look at a broader picture of costs and benefits. For example, in the commercial office sector in the U.S., LEEDcertified and ENERGY STAR–labeled buildings have been shown predictably to have greater rents (up to 30%), higher occupancy rates (2% to almost 4%) and greater resale value (up to 30%), more than compensating for the 2% or so higher capital cost [1].

4.1 Who Benefits and Who Pays? The irony in green retail is that it is mostly the developer who pays for such items as extra insulation and better glazing, more efficient lighting and higher-efficiency HVAC units, as well as stormwater management, construction waste management recycling, LEED certification and the like, and it is the tenant who benefits, through the center’s green advertising and promotional efforts and through lower common area maintenance (CAM) expenses. While the developer recovers some of these benefits through its non-billable CAM charges (typically 20% or a little more), the J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_4, C 2009 by the International Council of Shopping Centers Copyright

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Table 4.1 Potential Business Benefits of Green Retail Centers and Stores 1. 2. 3. 4. 5. 6. 7. 8.

9. 10. 11. 12. 13. 14. 15.

Utility cost savings for energy and water, typically 30–50%, along with reduced carbon footprint from energy savings Maintenance cost reductions from commissioning, operator training and other measures to assure proper systems integration and ongoing performance monitoring Increased long-term building and center value from higher rents, increased net operating income (NOI) and improved public relations Tax benefits for specific green building investments such as energy conservation and solar power, and local development incentives More competitive real estate holdings for private-sector owners over the long run, including higher resale value Productivity improvements for long-term building owners, typically 3–5% Health benefits, including reduced absenteeism, typically 5% or more. Risk management, including faster lease-up and sales for private developers, and less risk of employee exposure to irritating or toxic chemicals in building materials, furniture and furnishings Marketing benefits, especially for developers, large corporations and consumer products companies Public relations benefits, especially for developers and public agencies Recruitment and retention of key employees and higher morale Increased availability of both debt and equity funding for developers, as both banks and investors such as pension funds make green building projects a priority Third-party financing of solar power systems Political and entitlement benefits of providing sustainable retail stores and shopping centers Demonstration of commitment to sustainability and environmental stewardship; shared values with key stakeholders

tenants enjoy the balance. Over the long run, lower operating costs for energy, water and waste disposal should be reflected in higher rents; at the beginning it’s typically not possible to get rent increases. Restructuring a standard lease to share some of the savings is possible, but is not commonly done. However, one growing movement is for retailers to pay a “gross lease” that would include energy costs. In this situation, developer and tenant interests would be more closely aligned. Table 4.2 shows how benefits might be split between various parties. Table 4.2 shows that the benefits have to be considered as a whole and compared with costs, for each of the parties to a retail transaction. There is no clear-cut answer to the question of “does sustainability pay?” However, there is a clear answer to the obverse: Without a major sustainability program, everything else being equal, a retailer or a developer is likely to surrender a major source of competitive advantage. The more significant question is: Which form of sustainability program offers the greatest benefit to the retail developer and to the retail store operator? To this question, we provide a number of answers in Chapters 12 and 13.

4.2 The Developer’s Perspective Clearly, developers and retailers have common interests—to persuade as many consumers to shop the center as often as possible—however, they also have divergent interests, as the developer functions primarily as a landlord, developing the property,

4.2

The Developer’s Perspective

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Fig. 4.1 The benefits of green retail spaces encompass five major areas of interest. Courtesy of Palladeo Table 4.2 Who Benefits? Owner type

Energy

Productivity and health

Marketing and PR

Recruitment Financing

Retail store, stand alone: does the retailer benefit? Retail store, interior: does the retailer benefit? Shopping center: does the developer benefit?

Yes

No

Yes

No

N/A

Small savings Small savings

Yes

Yes

Maybe

N/A

No

Yes

Yes

Maybe

maintaining it and collecting rents. At some point, the developer will likely sell the property. The developer aims to collect enough rent to meet investors’ expected return on investment and to keep the center as fully tenanted as possible for as long as possible. The retailer’s goal is to meet or exceed sales targets by satisfying consumer demand for products and services, while paying as little rent as possible. The retailer typically pays directly for utilities, as well as indirectly for other operating expenses through CAM charges, which it would like to keep as low as possible. Because many consumers care about energy use and environmental impact, both developer and retailer have common interests around green certifications.

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4.2.1 The Entitlement Process Getting land use and building permits to build new centers and often to renovate older centers, as well as to construct mixed-use projects, will continue to be a struggle. In many parts of the U.S., cities and counties are beginning to offer preferential treatment to development applications that promise to achieve LEED certification. This treatment can take the form of “top of the pile” priority processing (Chicago and San Francisco are two cities that offer this benefit) and density bonuses or reductions in certain other requirements. As of the end of 2008, more than twenty jurisdictions in the U.S. offered some type of development incentive for green buildings [2]. Many more cities and counties will begin to offer priority processing for commitments to build to green certification standards, if for no other reason than that it is politically attractive to do so and costs the jurisdiction nothing. In some cases, developers may even have to post bonds to back up their commitment. Cities will figure out that they have to grant land use (planning) and building permits long before the developer has gained LEED certification, and they will need some reassurance that the developer will follow through on its commitment. There are also upcoming mandates for the private sector, since more than 900 U.S. mayors have committed their cities to the U.S. Conference of Mayors Climate Change Initiative, committing them to reduce carbon dioxide emissions below 1990 levels by 2012. As cities begin to grapple with the reality of this commitment, there will be a strong temptation to start forcing the private sector to do its part. Developers would be wise to start getting green building experience now, before more of these requirements come into force. As of early 2009, more than twenty cities around the U.S. (including large cities such as Boston, San Francisco, Los Angeles, San Jose, Dallas and Washington, D.C.) had ordinances requiring LEED certification for larger commercial developments. As most cities are run by politicians who value such issues as green building, reducing energy use and promoting more environmentally sensitive land use, developers can expect to face such demands.

4.2.2 Cost Offsets There are opportunities for reducing initial development costs by reconfiguring shopping center layout to recover and reuse rainwater from rooftops for toilet flushing and cooling tower makeup water, and to recover and treat stormwater from parking lots for irrigation and street and sidewalk washing. Recovered stormwater can also be infiltrated (where soils are appropriate for that purpose) and/or used in landscape ponds, drainage swales or even constructed wetlands (for greenfield sites). The goal of all these green measures is to avoid having to send stormwater to a storm sewer and thereby to avoid a lot of impact or development charges. Civil engineers need to be instructed to look at a cost/benefit analysis of such measures before proceeding with the usual storm sewer hookups. Not all jurisdictions will go along with reducing fees, but it is a useful item to have on the table during negotiations.

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Branding and Marketing

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4.2.3 Tax and Other Incentives in the U.S. At the time of this book, the state of Nevada provided 35% property tax abatements for 10 years to projects that achieve a LEED Silver rating. If the average property tax is 1% of value, then the abatement would be worth up to 3.5% of project costs. Oregon and New York both have large state tax credits for green buildings that achieve at least LEED Silver certification. In Oregon, the incentive is based on square footage (project area), so that an efficient developer can see a very beneficial return. Other states offer similar incentives, so it pays to stay informed at the end of each legislative session about new incentives for green building.

4.2.4 Renewable Energy Incentives in the U.S. More than twenty states and many electric utilities offer some form of incentive for solar power systems [3]. In addition, the 2005 Energy Policy Act (as amended in 2006, 2007 and 2008 by various laws) offers a 30% federal tax credit for solar energy systems placed in service through the end of 2016. Taken together with local utility incentives for solar power, state tax credits and sales tax abatements and accelerated federal depreciation, there is a strong ROI case to be made for putting solar power on every shopping center roof. In April 2007, Kohl’s became the first major retailer to do this, committing to convert more than 75% of its California locations to solar power (see the discussion in Chapter 6) [4]. The benefit of using solar power incentives is simple: Many solar systems can be visible from street level and most of the public does not need a lot of education to recognize them. As a result, a developer or retailer can get a lot of public relations benefit and save money on energy costs. Since 2006, there have been a number of partnerships created to use the state and federal tax and utility incentives for solar power systems, so that it is possible in about seventeen states with such inducements to get the solar system financed by a third party at no initial cost to the developer or retailer, as discussed in Chapter 6.

4.3 Branding and Marketing Green buildings and solar power offer a developer the rare opportunity to do well by doing good. As part of a thoughtful branding and marketing strategy, green and sustainable are beneficial, but they have to be real. The media are pretty well trained by now, or soon will be, to recognize “greenwashing” by the retail sector, so it is best to have a strong corporate commitment to the full extent of sustainable strategies before announcing specific elements. In addition to media scrutiny, greenwashing is an unethical practice that will surely cause consternation and dismay among a company’s employees. For a more extensive discussion of the marketing aspects of sustainable retail development, see Chapter 11.

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Another benefit from green buildings is their positive impact on recruiting. One should also think of the benefits in terms of hiring and retaining good employees. In today’s talent-short world, finding and keeping good people may be a primary benefit realized by greening the retail center and retail store.1

4.4 Case Study—First Capital Realty, Toronto, Canada 4.4.1 Business Case Factors Let’s take another look at First Capital Realty in Canada, where the first driver is location: the company chooses properties surrounded by dense residential communities. The second driver is concern for the tenants. The company anticipates that a demand shift will occur among larger retailers, and that some tenants, especially financial institutions, will consider LEED-CI in their future commercial fitouts. Hence, First Capital plans to be ahead of this market and to stay there. Currently, however, the general experience of First Capital, as with most developers, is that tenants are happy to have the green measures but are unwilling to pay for them. First Capital understands that paybacks will not be in the short term, but will be achieved in the medium and longer term. Although a good deal of effort is now put into educating tenants, the company anticipates that in the future tenants will increasingly demand green leased space, and so the company expects to realize future economic benefits from differentiating itself from the rest of the market in this area. Also, First Capital Realty regards this strategy as part of being a good corporate citizen. While the company anticipates that greener buildings will eventually generate higher rents, it also expects that it will only be able to reliably quantify cost savings for future tenants in this or other properties after one to three years of operation. First Capital anticipates that it will benefit from rent growth only in the medium term—three to five years after a building is fully tenanted.

4.4.2 Financial and Nonfinancial Incentives Permitting and awarding additional building capacity are significant factors impacting costs differentially across the nation: in British Columbia, municipalities are so familiar with, and supportive of, greening that permits are fast-tracked (saving a 1 Many

of the corporate audiences addressed by the author emphatically agree with this idea. Despite the current global recession, there is a considerable shortage of people in the 30–40 yearold age category in most of the world’s advanced economies. Without good people, how are you going to grow your business and/or profit in the future?

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The Retailer’s Perspective

73

great deal of time and money), or the municipality may offer another pad to build on as a developer incentive, given a project’s green goals. Further east, however— from Alberta through Central and Eastern Canada—while municipal policies were intended to encourage building greening, their staffs were unfamiliar with the measures, and in fact the building permitting process was slowed down. First Capital had to spend time with municipal staff in these regions in order to bring them on board.

4.4.3 Challenges There have been three major challenges experienced to date: Tenant education: Much time is spent in educating the tenants regarding potential implications of their space changes arising from the greening. Delays also are incurred due to the leasing department’s education gaps. Municipal staff limitations: As indicated, while municipalities have the political will to green buildings, at the moment, east of British Columbia, municipal staffs are not sufficiently knowledgeable to effectively support green building permitting. Managing costs: Cost challenges were significant at the beginning. The anticipated cost increment for greening was 5–7%; however, for some green components the cost increase was as high as 15–20%. One green project, the Morningside Crossing property, was an existing shopping center with parking. A major portion of the center was vacated and demolished, with an occupied portion still standing while the new center was built. This particular property presented some challenges. First, deals with tenants were done prior to the decision to add green features, which required additional time to educate tenants as to the benefits of the greener building. Second, leases were triple net, with tenants responsible for energy costs; however, some anchor tenants have “clawbacks” and caps on costs, limiting what they are prepared to pay the developer to reduce those costs. Third, the decision to go green took place after consulting and design drawings were done, requiring many changes to the contract that added considerably to the expenses. Costly green components have included higher efficiency rooftop units and low-e, triple-paned, argon-filled windows (with 30% higher costs than conventional windows).

4.5 The Retailer’s Perspective As seen in earlier chapters, a number of retail chains are increasingly committing to ambitious sustainability goals, including tracking and reducing their carbon footprints, greening the supply chain and operating green stores. What might be some of the less obvious reasons for doing this? The first that comes to mind is building or burnishing the company’s own reputation as a forward-looking corporation.

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4.5.1 Reputation Capital Joseph Feldman is managing director and a retail stock analyst at Telsey Advisory Group.2 He says [5]: The green movement has definitely started to take hold within retail. It’s no longer just a fad, it’s a trend that’s here to stay. It may be tough to justify the expense in the current market in terms of the recessionary environment. That being said, a lot of retailers are starting to play with it. When a company like Wal-Mart is putting some significant effort behind the green movement, I think that says a lot. . . Obviously, using less energy is good for the environment but using less energy is also good for Wal-Mart. I think it’s both a company savings and a global savings. A big part of the green initiative from retailers goes beyond the profitability aspect. A lot of it is reputation capital. More and more consumers are concerned with green—being healthy, eating organics, breathing clean air, and consuming less energy. If Wal-Mart is in the forefront of that, it makes sense to me that others will follow its lead. Look at Whole Foods. In reality, the entire concept is based on the green movement. It’s the poster child for the green movement. It’s all about organic and natural products. The concept has built its brand and reputation on healthy, green living, and has gained loyal customers in the process.

4.5.2 CFOs Going Green This point was emphasized in a 2007 survey by a major consulting firm. In this survey, two-thirds of chief financial officers at leading U.S. retailers say their company is actively involved with green or environmentally friendly practices, and 44% of those indicate they have increased their investments in these practices during the past two years [6]. Among the top 100 largest retailers, 83% are involved in green practices, and a majority of those (62%) have increased their green investments since 2005. Among those retailers involved with green practices, 34% are pursuing internal activities (environmentally modifying operations and buildings) exclusively, while 9% are focused solely on external practices (selling green products). Of the retailers surveyed, 57% are pursuing a combination of both external and internal green practices. When asked to identify the greatest motivator for their company to pursue environmentally friendly practices, two-thirds of the CFOs cited the company’s corporate image (54% cited “image among consumers” and 13% cited “image among shareholders”). Surprisingly, a tax break or tax incentive was the greatest green motivator among only 15% of the CFOs, followed by 10% who cited city/state or zoning regulations.

2 Telsey Advisory Group is the leading independent equity research and consulting firm focused on

the consumer sector. www.telseygroup.com.

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Consumer Demand

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4.6 Six Key Areas of Focus for Green Retailing These points were reinforced by a 2008 review of the sustainability programs of 100 U.S. retailers by another consulting and research firm, which found that green retailers had six key focus areas [7]. • • • • • •

Green sourcing/procurement (59%) Waste management (54%) Eco-friendly mandates in packaging (49%) Redesign the retail supply chain (41%) Eco-friendly “end-of-life” programs, such as product takeback (41%) Redesign store facilities and infrastructure (35%) According to the study’s authors: The top actions on the green retail agenda align with the strategic decision to take a holistic approach to all aspects of brand management and total cost of operations. For 59% of retail respondents, implementing a responsible and green-oriented sourcing and procurement plan is a crucial element of success. The focus on the very beginning of the retail supply chain complements the strategy of adopting eco-friendly standards for waste management (54%) and product end-of-life, recycle and reuse programs (41%). This end-to-end approach underscores an intensive vision of the retail value chain and indicates that retailers are becoming more involved in the entire life cycle of their products and operational activities, according to the report.

The study concluded that the six top actions of green retail initiatives demonstrate that practically no aspect of the retail enterprise will go untouched by the sustainability agenda. Even more importantly, the study demonstrated that the best-in-class retailers achieve not only dramatic cost savings (20% decrease in energy costs) especially when compared to industry laggards (39% increase in energy costs), but also dramatically improved customer loyalty. This ought to be reason enough for all retailers to dramatically accelerate their green building and retrofitting programs.

4.7 Consumer Demand One can foresee that as more large retailers (such as Home Depot, Office Depot, Tesco, Marks & Spencer and others) begin to build green stores, consumers will come to expect that the entire shopping center will have green and sustainable features. If one does and another does not, is it possible that consumers will prefer to shop at one and not another? What is clear from a number of studies of the LOHAS consumer (representing Lifestyles of Health and Sustainability) is that a certain core group of such consumers prizes “authenticity” in their lives and selectively patronizes retailers who demonstrate those values. One meaning of authenticity might simply be, we do what we say; for a retailer to sell green products, authenticity requires a very strong sustainability program. What is not clear at this time is how much

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typical consumers are going to change their shopping habits to patronize centers that have such tenants. From the retailer’s perspective, anything that helps attract consumers to a given center, any successful point of differentiation, is a good thing. More traffic should mean more sales, everything else being equal. We can foresee centers offering their own “green seals,” much as Forest City Stapleton did at Denver’s Northfield center, to cooperating retailers who meet LEED guidelines for store fitout. We also expect to see larger retailers and anchor tenants such as Kohl’s, Best Buy, Office Depot, Marks & Spencer and similar enterprises aim at the green consumer with certifications of upcoming stores. What many are of course discovering is that the green certification is a result and not a cause of good store design, as they find operating costs coming down and employee satisfaction rising. The advent of skylights throughout the large retail store environment, pioneered by Wal-Mart, is a good example of doing well by doing good. Not only do sales increase, as shown by research, but cost recovery happens within five to ten years, depending on local prices for electricity. There is also some evidence that there is less eyestrain on retail clerks working under skylights than under artificial lights, leading to greater job satisfaction and longer job tenure.

4.8 Challenges for Greening the Retail Sector The first and foremost challenge to greening the retail sector is cost, a subject that is tackled in the next chapter. Other challenges include the capabilities of the design and construction teams to provide green features on conventional budgets, the disparity between which parties incur costs for green features and which parties get the benefits, and writing green tenant guidelines.

4.8.1 Tenant Guidelines Some developers certify to the LEED for New Construction, BREEAM or the new LEED or BREEAM for Retail standards, while others creating only shell retail space prefer to use the LEED for Core and Shell rating system, with its precertification benefit. In either case, having gone to the effort to green the retail center, a developer often wants to write tenant guidelines that will ask or require tenants to use sustainable design and construction measures in their own spaces. In the LEED rating system, a strong set of tenant guidelines also qualifies for one credit point toward certification of a center. These guidelines could cover such items as using low-toxicity paints, adhesives, sealants and carpets in tenant buildout, using more efficient lighting systems and a wide variety of measures that are covered in the LEED for Commercial Interiors (Retail) rating system. If the guidelines are not required, then developers need to engage in a strong tenant education program, starting with the lease negotiations. This may provoke discomfort among the leasing

References

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brokers or letting agents working for both developer and tenant; therefore, a clear set of guidelines, with attention to how they’re written and promoted, is a key part of the process. There is a strong business case for green retail stores and green shopping center development, but it is not just in terms of the typical return on investment, wherein one tries to recover extra initial costs through utility savings on energy and water. The real business case comes from corporate social responsibility initiatives, supplemented by real but intangible benefits in terms of development approvals, marketing, public relations and stakeholder engagement.

References 1. Burr, Andrew. (2009). CoStar study finds ENERGY STAR, LEED buildings outperform peers. (2008, March 26). Retrieved January 4, 2009, from http://www.costar.com/News/Article. aspx?id=D968F1E0DCF73712B03A099E0E99C679. This study was updated through the second quarter of 2009, with similar results to the earlier data. Personal communication, Andrew Burr, July 2009. 2. Yudelson, Jerry. (2007). Green building incentives that work: A look at how local governments are incentivising green development. Retrieved on February 15, 2009, from http://www.naiop.org/foundation/ greenincentives.pdf. accessed February 15, 2009. 3. The best source for these incentives is the Database of State Incentives for Renewables and Efficiency, maintained by the North Carolina Solar Center, http://www.dsireusa.org. 4. Hajewski, Doris. (2007, April 26). Kohl s to go solar in California. Journal Sentinel. Retrieved on June 14, 2007, from http://www.jsonline.com/business/29452254.html. 5. Interview with Joseph Feldman, November 2008. 6. U.S. retailers embrace “green” practices according to BDO Seidman, LLP survey of CFOs. (2007, October 1). http://www.businesswire.com/portal/site/google/index.jsp? ndmViewId=news_view&newsId=20071001005301&newsLang=en. 7. Getting from green to gold: Retail success factors and outcomes. (2008, August 18). Retrieved on August 18, 2008 from http://www.environmentalleader.com/2008/08/18/green-retailers-sixkey-focus-areas.

Chapter 5

Costs of Greening Buildings and Developments

The key issue in building green retail centers and stores is extra cost versus added benefit. Design and construction teams who work in retail have become good at cost-cutting and cost management. To ask them to add cost for green features goes against the grain. Nevertheless, it is necessary, certainly at the beginning, to add cost to achieve green building certification. The testimony is fairly solid from many developers and retailers that a LEED certification is initially going to add about 2% to the capital cost of a shopping center and perhaps a similar amount to a retail store. From the experience with many LEED project studies, the cost for basic certification should decrease to nearly zero once the basic lessons of green design and green building have been mastered. In one sense, cost is the only issue, since benefits are apparent. It is a truism that “costs are real and present-tense, but benefits are speculative and future-tense.” This means that a developer makes an investment in green building features and certification by paying more in initial costs, but with the hope of getting some significant return over time. This is not an unreasonable thing to do, but right now it is an exercise in leadership in the industry to commit to a strong green building program. One developer told the author in 2007 that the cost impact was about “5 to 15 basis points” (hundredths of a percent, nominally) in the rate of return, certainly a subject for concern but not a deal breaker. There’s no doubt that achieving a LEED or BREEAM certification for a retail development is initially going to cost more, and it is not clear that a developer can recoup these extra costs in higher rents or faster lease-up of the retail spaces, at least not right now. It is possible that the developer may realize some marketing and public relations benefits, but that is speculative in many cases. Perhaps the greatest benefit may lie in a faster entitlement process and perhaps some reduced development fees—for example, a lower storm sewer connection fee, if the development keeps all rainwater on-site, either for recharge, landscaping or beneficial reuse in the buildings. There is also a not-insignificant benefit in achieving or maintaining a leadership position in this fast-changing green retail landscape—many of a company’s employee-associates care intensely about this issue. In one case, a Lowe’s store in south Austin, Texas, completed in 2005, reportedly benefited from its commitment to building a LEED Silver building by receiving all of its permits in three months instead of the expected fifteen months. The resulting J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_5, C 2009 by the International Council of Shopping Centers Copyright

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5 Costs of Greening Buildings and Developments

early opening yielded enough profits in 12 months to pay for the entire building! [1] While this story is an unusual example, it does illustrate the sometimes hidden benefits that may offset higher costs.

5.1 Barriers to Green Building Growth Barriers to the widespread adoption of green building techniques, technologies and systems are related to real-life experience and to a lingering perception in the building industry that green buildings add extra costs. Senior executives representing architectural and engineering firms, consultants, developers, building owners, corporate owner-occupants and educational institutions have positive attitudes about the benefits and costs of green construction, according to the 2005 Green Building Market Barometer, a survey conducted by Turner Construction Company, the largest commercial builder in the U.S. [2]. For example, at that time, 57% of the 665 executives surveyed said their companies were involved with green buildings; 83% said their green building workload had increased since 2002; and 87% said they expected green building activity to continue. However, despite an overwhelming sense that green buildings provided considerable benefits, these same executives thought that green buildings cost 13–18% more than standard buildings! In a 2007 survey by Building Design & Construction, 41% of construction industry participants surveyed said that green buildings added 10% or more to cost of buildings, even while the clear evidence then was that cost increases were less than 10%! [3] This just shows that all building decisions are fundamentally economic ones and that the added costs of high-performance retail buildings and developments will continue to be an issue until project teams figure out how to design such projects consistently without any cost increases. An updated Market Barometer survey performed by Turner Construction in 2008 involving 754 respondents reported the following as presenting an extremely or very significant obstacle to green construction: the costs of LEED documentation (61%), higher construction costs (61%), the length of the payback period (57%) and the difficulty of quantifying the benefits of green building (43%) [4]. Although 54% of executives noted that the cost of LEED documentation is an “extremely” or “very significant” obstacle to green construction, 83% of executives said they would be “extremely” or “very likely” to seek LEED certification if they were planning to build within the next three years. For those seeking LEED certification, 40% expected to pursue Silver, 26% would seek the Certified level, 24% would pursue Gold and 10% Platinum. Among executives who think the first cost of green buildings to be higher, roughly three-quarters believed green buildings can pay back their higher initial costs, with this figure rising to 84% among those who would seek a Gold or Platinum certification. The median estimated payback period cited by executives for sustainable features was seven years.

5.2

Hard and Soft Cost Elements

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5.2 Hard and Soft Cost Elements It is easy to make the distinction between hard costs and soft costs—those for construction and those for design and certification services. (In reality, all costs are hard for the company that has to write the check!) Nonetheless, the hard costs of green, based on experience in other commercial projects, are shown in Table 5.1. These cost premiums are only indicative. As with automobile fuel efficiency claims, “your mileage may vary.” According to research, larger LEED Platinum projects were completed in 2007 and 2008 for less than a 2% construction cost premium (compared with a conventional building), but these results typically come first to experienced developers or large institutions with sophisticated project management teams [5]. It is important to point out that most developers have found that these cost premiums come down over time, as they gain more experience with green projects. These costs do NOT include the costs of including solar technologies, but might include such things as innovative stormwater management, water conservation measures, energy efficiency investments, green materials, construction waste recycling and other sustainability features. In addition to hard costs, there is a range of soft costs, such as requests for additional architectural and engineering fees, holding “eco-charrettes”1 for considering green alternatives and the LEED system documentation and certification activities. Table 5.2 shows some of these cost premiums. Note that the two most expensive elements are things you probably want to do anyway, such as modeling the energy use characteristics of your building(s) and commissioning the HVAC equipment to make sure that it’s working according to design intent. David Green is an architect and principal at Altoon + Porter in Los Angeles, California. His experience says that the soft costs can be quite large, at least for the first few projects a developer undertakes [6]. We have only one project where the cost of green, or specifically LEED-CS certification was evaluated, The Collection at RiverPark, a 600,000-ft2 retail entertainment center in Oxnard, California. In this case the “LEED Premium” was calculated to be $761,500, or less than 1% of the $80 million total construction budget. The bulk of this additional cost ($643,000) is in “soft” or administrative costs paid to USGBC and the consultant team, whereas only

Table 5.1 Hard Costs for Greening Retail Projects (U.S. Experience)

1 An

LEED certification level

Construction cost premium

Certified (Basic level) Silver Gold Platinum

0–2% 1–3% 3–5% Above 5%

eco-charrette is an intensive design exercise focused typically around issues specified by a particular green building rating system.

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5 Costs of Greening Buildings and Developments Table 5.2 Soft Costs for Greening Building Projects (U.S., 2008 Estimates)

Cost category

Estimated cost

Design services Building energy modeling or prescriptive design analysis Building commissioning LEED consultant/certification effort LEED certification fees

0–10% extra (depending on experience with green) $15,000–$30,000 $0.40–$0.70 per ft2 , $20,000 minimum $25,000 to $50,000 (varies by project size) $0.035 per ft2 , with certain minimum and maximum fees

$118,500 has been identified as increased cost to the construction, or only 0.015% of the total construction cost.

Hard costs can be a different story, according to Green: Most of our pre-design explorations show that achieving the minimum level of certification under LEED-NC or LEED-CS can be cost neutral to even cost-reductive compared to standard design and construction methods. Whether projects have been third-party certified or not, we have incorporated many of the green building and green site development strategies into our projects, which were completed on their original construction budgets. So, there were no identified premiums. Third-party certification does have direct and indirect costs to the project and the design team, as the example described above demonstrates. The direct cost paid to USGBC was only about $20,000 of the soft cost total. Even considering the total of hard and soft costs, the figure of $761,500 is only 0.38% of the total $200 million development costs of this particular project.

Modeling energy use is an essential element for any building project, particularly for retailers. How will developers know what the carbon footprint should be without some estimate of expected energy use? How will they know they are meeting expectations without a predictive model of anticipated energy use? How will construction teams be able to meet the European Union’s building labeling requirements of the Energy Performance in Buildings Directive without a model of expected energy use? Finally, how will they be able to design a less energy-intensive building without a baseline against which to measure design improvements? Commissioning is a high-payoff activity for most projects, but is often not done in the retail sector; its main goal is to make sure that all energy-using equipment is working according to design intent. It is amazing but true that equipment tends to get installed without anyone fully checking to make sure it is delivering designed performance. That is the benefit provided by building commissioning. For smaller retail projects, the costs of green building certification can definitely be a perceived barrier, unless a company has a specific plan for realizing some of the benefits of green project recognition. For volume builders, including both retailers with small buildings such as bank branches and companies such as Home Depot, Lowe’s and Wal-Mart with very large stores, the USGBC developed a “portfolio” program that will allow a company to certify the basic green elements of its prototype or typical store, with documentation needed only for specific “site credits”

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Cost Drivers

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for each individual location. The portfolio program aims to drive down the cost of green project certification to levels that a retailer can more easily handle.

5.3 Cost Drivers Costs are real and immediate, but what drives costs? What are the key controllable parameters on which retail real estate executives can focus, to keep the costs of going green under control? Key drivers of design costs include the following: • • • • • •

Design team experience with green/high-performance projects Level of green building certification desired Team structure Design process and scope Green certification required documentation Additional design fees

These two issues are discussed below in more detail, so that the retailer and developer will understand how to address them in the future.

5.3.1 Design Team Capabilities While there are more than 14,000 LEED projects under way in the U.S., fewer than 2,200 were certified at the end of 2008. Part of this is owing to the time lag between project registration (typically early in schematic design) and the completion and certification of a project (which can take two to three years after the start of design). As a result of this gap between interest and certification, most design (and construction) teams engaged heavily with retail work have not yet completed a LEED project. As a result, many design teams are asking for premiums for adding the LEED component to their scope of services, and they are not always very comfortable with what it takes to make a project green. In addition, their ability to deliver green features on conventional budgets is suspect, and unnecessary cost increases on early projects may result. In this situation, a retail developer would be wise to insist that the architect add an experienced green consultant to the project team, to guide the entire team through the design, product and system specification and LEED certification process.

5.3.2 Design Process and Scope Fundamentally, it is critical to bring the entire design and construction team together for enough early-stage meetings to arrive at a unified scope and series of measures to achieve green results [5]. However, one can expect that a serious commitment to

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integrated design will add to design costs, because of additional meetings, design charrettes and further studies and analyses during the design period. A typical allday meeting is going to cost $20,000 if it involves many consultants, each billing $1,200 to $2,000 for the day. The least costly approach is to get everyone together just once, but not to leave the meeting until most key design decisions or directions are made. This approach is especially important when consultants are brought in from out of town or even out of country. In some cases, multi-day charrettes are useful; it is also possible that shorter meetings can work, in cases where the developer’s team is really well informed about LEED and already experienced in delivering high-performance projects. However, some leading experts in integrated design maintain that integrated design requires a series of facilitated charrettes, until all reasonable options and opportunities are fully explored. It is also important to do most of the key thinking at the initial meeting and to use energy models in particular to get better and earlier design decisions. Some of the new developments in Building Information Modeling (BIM) promise to allow energy outcomes to be modeled for alternative design approaches very early in schematic design. At the U.S. Green Building Council’s 2007 Greenbuild conference, one leading BIM vendor showed a promising approach that would eventually allow modeling of approximate energy outcomes even from rough sketches [7].

5.4 The Cost of Learning to Be Green One early adopter of green practices was developer Melaver, Inc., of Savannah, Georgia. In a study of the company’s costs for adopting LEED practices, Melaver considered both soft and hard costs. First of all, the cost of training twenty-seven staff members (including a calculation of the staff time involved, bonuses paid for passing the LEED AP exam, etc.) was about $50,000, or about $2,000 each. However, the more significant cost was $1.5 million of extra costs and deferred rents (from longer time to market) for the first four retail projects [8]. The CFO wrote, “As a values-centric company, Melaver, Inc., is comfortable paying a 50 basis point premium for being a green developer” [8]. Lessons learned included the following: 1. Set green objectives as early in the project as possible. 2. Stick to those objectives throughout the project; this is harder than it sounds, as anyone experienced in design and construction will attest. 3. Make sure all members of the development team are strongly in alignment with these objectives and are not just paying lip service to them. 4. Use an experienced LEED (green building) consultant, at least for the first few projects. 5. Do your learning on smaller projects, if you can, before tackling the “project of a lifetime.” 6. Stay on top of the construction process, to ensure that green objectives are being met by the team in the field.

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Cost of a Developer’s Sustainability Initiative

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7. Only do as much green in the first few projects as your organization can handle. (For example, it may be too much to expect the leasing team to get “green leases” from all tenants.) 8. Expect mistakes and put enough money into the budget to cover them. Having said all this, the company still concludes that short-term and longer-term tangible and intangible cost reductions and value creation provide overriding benefits to the green strategy. Even after a net investment estimated at $5 million, most of which comes from employees’ time, CEO Martin Melaver considers the return on investment to be positive. As he wrote, “Investments in a green bottom line can (and should) be amortized over the long term, comprising part of a company’s overall institutional expertise—an expertise that simply becomes more refined (and profitable) over time.” [8]

5.5 Cost of a Developer’s Sustainability Initiative Sometimes it is helpful to take a more comprehensive look at what a major commitment to sustainability might look like. Table 5.3 shows an example program that aims to LEED-certify $100 million in new projects in year one, followed by $200 million in year two and $300 million in year three, and bring a similar amount of existing buildings up to LEED standards, for a hypothetical development company. Improving the sustainability profile of corporate operations might cost nearly $1 million over a three-year period (of course there is likely to be some financial return as well from this activity). Some of the cost elements might be surprising, such as a major cost of corporate communications and donations to environmental nonprofits, but a developer needs to consider the full financial consequences of this commitment, especially since the benefits might be slower in coming than imagined. The total program cost is 2.75% of all development costs. Table 5.3 Green Building Initiatives—An Example of Estimated Costs ($ millions) Program element

2009

2010

2011

Total

LEED-certify new centersa LEED-certify existing centersb Corporate communicationsc Corporate sustainability operationsd Charitable contributions (to green groups) Total

$2.00 $0.75 $0.30 $0.35 $0.10 $3.50

$4.00 $0.75 $0.30 $0.35 $0.10 $5.50

$6.00 $0.75 $0.30 $0.35 $0.10 $7.50

$12.00 $2.25 $0.90 $1.05 $0.30 $16.50

a Based

on $100 million projects in 2009 at 2% cost increase, $200 million of new projects in 2010 and $300 million of new projects in 2011. b Three centers per year, $250,000 per center, for 2009, 2010 and 2011. c Estimated $25,000 per month. d Assumes one CSO and one sustainability manager, total budget of $300,000 per year, plus education and training expenses of at least $50,000 per year.

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5.6 Summary Green development and green retail buildings are not free, in the sense that they may require higher initial costs, certainly until an organization learns the ropes. However, there are considerable data and experience in greening other building types. As discussed here and in the following chapters, many retailers and some developers have begun to accumulate the experience with sustainable design, construction and operations that will allow them to keep incremental cost increases within reasonable bounds in the future.

References 1. Personal communication, S. Richard Fedrizzi, CEO, U.S. Green Building Council, February 2007. 2. 2005 survey of green building plus green building K-12 and higher education. Retrieved on March 6, 2007, from http://www.turnerconstruction.com/greensurvey05.pdf. 3. Green buildings research white paper: Where building owners, end users, and AEC professionals stand on sustainability and green building (2007, November). Building Design & Construction. Retrieved on December 23, 2008, from http://www.loginandlearn.com/ media/whitepapers.php. 4. Credit market condition not likely to affect plans to build green buildings, say 75% of commercial real estate executives surveyed by Turner Construction Company. (2008, November 18). Retrieved on December 23, 2008 from http://www.turnerconstruction.com/ corporate/content.asp?d=6504. 5. Yudelson, Jerry. (2008). Green Building through Integrated Design. (New York: McGraw-Hill). 6. Interview with David Green, November 2008. 7. Plenary presentation by Phil Bernstein, Autodesk, at the USGBC’s Greenbuild conference, Chicago, November 2007. 8. Melaver, Martin, et al. (2008). The Green Building Bottom Line, p. 113. (New York: McGraw-Hill).

Chapter 6

Solar Power

More retailers are getting aboard the solar power train. With the advent of third-party financing partnerships, putting solar power on the roof allows a retailer to buy renewable electricity without incurring the upfront capital costs. This chapter explores what some retailers are doing today and presents the current economics of solar power [1]. This chapter is particularly focused on the U.S., but the information can be useful for international situations. For example, in Germany, the government kick-started the solar power industry in 2004 by mandating “feed-in tariffs” that required electric utilities to buy solar-generated electricity at about three times the going rate for conventional energy (more than $0.50 per kWh of electricity), on a twenty-year purchase contract [2].

6.1 The Solar Power Movement A powerful change in energy usage among retailers is shining through with each new company announcement. Collectively, solar power implementation is getting significant traction throughout the retail sector, although the number of stores today with those systems is relatively small as the industry experiments with the technology. In late 2007, Wal-Mart announced a solar power pilot project in California and Hawaii to outfit twenty-two facilities with solar energy systems, with a projected output of 20 million kWh per year [3]. The company signed ten-year agreements with three companies: SunEdison LLC, BP Solar and SunPower Corporation. WalMart will maintain ownership of the Renewable Energy Credits (RECs) that the solar systems produce. According to Charles Zimmerman, Wal-Mart’s vice president, prototype and new format development, once it has evaluated the results of the pilot projects, the company may move forward with additional solar power systems for other stores [4]. In late 2008, Wal-Mart announced the installation of its fifteenth system at a store in Hanford, California, a 554-kW array, estimated to provide about 15% of the store’s annual electricity consumption [5]. Figure 6.1 shows a Wal-Mart store in Southern California with an extensive rooftop solar array. J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_6, C 2009 by the International Council of Shopping Centers Copyright

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Fig. 6.1 Wal-Mart was a pioneer in using extensive rooftop area for solar power generation, as shown by this project in California. Courtesy of Wal-Mart Stores, Inc.

In January 2009, Wal-Mart Mexico announced plans to install a 174-kW solar system on top of its Bodega Aurrera Aguascalientes store, which at this time is the largest solar array in Latin America. “This is the first large-scale project to generate energy using photovoltaic panels, not only for Wal-Mart Mexico, but for Wal-Mart International. This puts Mexico at the head of the energy field. The project reinforces our commitment to obtain all the energy the company requires from renewable sources by 2025,” said Raul Arguelles, senior vice president for corporate affairs and people division at Wal-Mart Mexico [6]. In 2008, Safeway Stores installed solar systems on its Placerville, California [7] store and two of its Pavilions stores in California [8]. The grocer has plans to “solarize” twenty-three stores, mainly in California, with systems averaging about 300 kW each. Collectively, these systems are expected to produce 7.5 million kWh per year [9]. According to Joe Pettus, senior vice president of Safeway, “Safeway, one of California’s largest renewable energy purchasers, has embarked upon a major solar initiative with Solar Power Partners to augment our comprehensive Greenhouse Gas Reduction Initiative. There are many items that must come together to make solar economics work, with no two projects being exactly the same” [10]. As of September 2008, Kohl’s department stores installed sixty solar systems on stores in California, New Jersey, Wisconsin and Connecticut, with another twenty in various stages of construction. At the end of 2008, it appeared that Kohl’s was the largest U.S. retail host of solar power [11]. Kohl’s program is expected to generate 35 million kWh annually [12]. Ken Bonning, executive vice president for Kohl’s, said, “Kohl’s is committed to being environmentally responsible. We are actively

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The Solar Power Movement

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seeking ways to make a difference as an organization. Our continued commitment to green power is an important way Kohl’s can make an immediate and long-term impact” [13]. Other retailers with solar power announcements include: • On Earth Day 2008, Macy’s announced a plan to install solar power systems on twenty-eight stores [14]. For fifteen of the stores, Macy’s will purchase solargenerated electricity from a third-party financier. At the end of 10 years, Macy’s can renew the agreement, transfer the equipment to a new site or buy the system. Macy’s plans to purchase outright solar power systems for the other forty stores [15]. • Target installed solar panels on the roofs of eighteen of its California stores in 2007 supplying 20% of their electricity needs [16]. • In August 2008, JCPenney announced plans for solar and wind power projects to supply electricity to ten stores in California and New Jersey and one distribution center in Nevada. “These projects further our commitment to incorporate sustainability into all aspects of our operations. We will closely monitor the results to determine how we can best leverage these innovative methods to increase our participation in renewable energy projects while also benefiting our business,” said Jim Thomas, vice president and director of corporate social responsibility for JCPenney [17]. • In 2007, Costco installed its second solar system at one of its California warehouse facilities [18]. • In January 2009, the Kona Commons shopping center in Kailua-Kona, Hawaii completed a 803-kW project consisting of seventeen distinct rooftop PV systems. Each system is net-metered, and tenants enter into separate agreements with the developer to purchase power from the system [19]. • By late 2008, REI, the outdoor gear and apparel consumer coop, installed solar systems on three San Francisco Bay Area stores, bringing the retailer 50% closer to its goal of installing solar on 10% of its stores [20]. • The largest U.S. solar power system installed in a shopping mall was inaugurated in February 2009, when The Shops at Mission Viejo in Mission Viejo, California added a 20,000-ft2 , 173-kW rooftop system costing more than $1 million. To fund this project, Simon Property Group entered into a power purchase agreement with Houston, Texas–based Element Markets. The system will supply an estimated 5% of the mall’s total annual electricity consumption [21]. Third parties finance most of these projects, with various end-of-lease arrangements. (See the section entitled “The Solar Services Model” in this chapter for a more extensive description of how third-party equipment leasing partnerships work.) Typically, the retailer agrees to take all energy generated by the system (which is typically no more than 30% of its daytime needs) and to pay prevailing or slightly reduced retail electrical energy rates. Ownership of the renewable energy credits created by the solar power output is negotiable between the retailer and the solar system provider. Since the systems provide less power than the typical

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daytime demand of a retailer, except on those rare holidays when a store is closed, there is no need to sell power back to the electrical grid, effectively displacing the marginal price of electricity that would otherwise be purchased during those hours. According to one source [22]. SunEdison, the largest commercial solar power provider in the U.S., sells commercial solar power at or below the going rate for electricity, by leveraging capital from Goldman Sachs and other investors to cover the initial capital cost of installing PV panels on customers’ roofs. By mid-2007, SunEdison already had built 127 of its distributed generation systems nationwide for many customers, including retailers Staples and Whole Foods.

6.2 Solar Technology PVs come in two basic forms: stand-alone PVs, which are typically installed on rooftops (but could be used as shading devices for surface parking lots); and building-integrated photovoltaics (BIPVs), which are usually placed on sunshades, skylights or spandrel panels, or integrated with roofing tiles. For most retailers, the roof-mounted stand-alone solar arrays are probably the system of choice, provided there is enough roof area to make for an economical installation. In general, a free roof area of at least 50,000 ft2 will provide this required area and generate up to 500 kW (peak) system power output, given the efficiencies of today’s PV technology.1 With today’s technology, it is probably better to use single-crystal or polycrystalline solar modules, since they produce about twice as much power per unit area as the “amorphous” silicon panels; hence, they require only half the roof area. In turn, this means that a given area of roof can generate twice as much power. However, solar thin-film technology is advancing rapidly, and retailers should consider new advances from major manufacturers when examining the costs and viability of solar power for their facilities. Some estimates are that the cost of solar power may decrease to about the level of that of conventional power by 2014 (a phenomenon known as “grid parity”), as solar cell production costs continue to fall and retail electricity prices continue to grow. One research firm estimated that venture capital firms pumped $264 million into solar companies in 2006, which is one indicator that expected cost reductions are likely to be achieved [23].

6.3 The Current Market The current U.S. market for photovoltaics for retailers is dominated by investment partnerships, or by large vendors with financing to complete the transaction and take all the tax and utility benefits. In this context, the market is vastly changed from the 1 10–12

W (AC) of peak power per ft2 (100–120 W/m2 ) is typically the output of today’s solar technology.

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PV market during the 1980s and 1990s, when energy was a lot cheaper and PV systems were much more expensive. Consider these points about solar energy in the U.S.: • For commercial systems, costs have come down, from about $10 per W (peak) a few years ago to less than $6 per W (peak) in 2008. • For systems placed in service before the end of 2016, the federal tax credit for PVs is 30%. • Accelerated depreciation tax deduction adds about 25% (net) to the tax benefits of PV systems. • Many state, city, and utility programs are offering additional incentives, in the form of tax credits, subsidies based on system size or payments for power generated.2

Fig. 6.2 This Office Depot store in Austin, Texas, uses solar power to offset a portion of store electricity needs. Photo courtesy of SBLM

2 For

a updated directory of state incentives for renewable energy and energy efficiency, visit www.dsireusa.org, accessed December 21, 2008.

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• Most experts expect the price of electricity to rise considerably in the future, probably faster than the rate of inflation, making the output of PV systems more valuable over time. • Globally, the solar power industry is projected to grow fourfold by 2010, from $20 billion in 2006 to $90 billion in 2010 [24]. Figure 6.2 shows a typical retail solar power system, in this case on top of an Office Depot store.

6.4 Economics of PV Solar Power Without access to third-party financing, of course, a company must make its own investment in solar PV systems. Without tax incentives, feed-in tariffs or other financial supports, the economics of solar power are not very favorable. Take a look at the basic economics of PVs as an add-on power source for buildings (this is a rough order-of-magnitude approach, but not far off), shown Tables 6.1 and 6.2. Table 6.1 Basic Economics of PV Systemsa System cost (50 kW—peak output) $300,000 (assuming $6/W-peak installed) Annual energy output: 75,000 kWh (assuming 1,500 kWh/kW-peak/year) Value of output: $9,000 (at 12 cents/kWh) Annual return on investment: 3.0%, assuming no maintenance costs Payback: 33 years (at 0% discount rate); never (at 5% discount) a

Examples calculated by the author.

An easy way to estimate the cost of PV-generated power is to first collect the following information: 1. Cost of installation, excluding the value of all incentives, expressed as dollars per kW (typically given at peak power output). 2. Annual energy generated (the typical U.S. range is 1,200–1,800 kWh per year, per kW-peak power rating) 3. Value of power generated: typically the retail rate, 8–12 cents per kWh (although some places may have slightly higher average rates) Table 6.2 Average Cost in Cents/kWh over 20 Years for Solar Power Panelsa Production (kWh/kw-Peak/Year) Net Cost

$2,400

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

3000 $/kWp 4200 $/kWp 4600 $/kWp 5000 $/kWp

12.5 17.5 19.2 20.8

13.6 19.1 20.9 22.7

15.0 21.0 23.0 25.0

16.7 23.3 25.6 27.8

18.8 26.3 28.8 31.3

21.4 30.0 32.9 35.7

25.0 35.0 38.3 41.7

30.0 42.0 46.0 50.0

37.5 52.5 57.5 62.5

a

Examples calculated by the author. Production is actual kWh (AC power) output.

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Financial Benefits of PV Solar Power

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4. System lifetime: assume 20 years 5. Net Present Value (NPV) factor: Determine the best way to discount the value of future electricity—typically, figure a 5% discount rate (like a twenty-year government bond); over twenty years, the value of getting $1 each year at 5% is worth $12.46 today. Remember, this is pretty risk-free, and typically generates a fairly reliable return. Then apply this easy formula: Value of PV electricity = (Annual kilowatt-hours produced) × (retail electric rate) × NPV factor. (For example = 1,500 kWh × $0.12 × 12.46 = $2,243.) This sample result says that the system cost could be $2,243 (per kW-peak) and it would generate a 5%, 20-year return, at 12 cents per kWh. If the retail rate is 15 cents, then one could pay up to $2,803 for the same return. If power costs increase faster than the rate of inflation, then even more could be spent on the system, after taking all incentives into account. The fundamental economic problem is: if the system costs $6,000 per kW, there will never be a return on investment, without considering tax and other benefits. From Table 6.1 and the sample calculation, it is easy to see that without tax incentives and utility payments, there is little direct economic justification for photovoltaics as an add-on energy supply system for private projects (in areas with no utility credits or low peak period power rates). Table 6.2 shows how to calculate the cost of solar-generated electricity, given the amount of sunshine available and the installed (net) cost of solar power systems. Readers can apply their own economic variables to come up with a similar table. The calculated values in the table reflect the total cost in cents per kWh produced. They assume a 10% total capital cost (for instance 4% interest rate, 1% operating and maintenance cost, and depreciation of the capital outlay over twenty years). The table can be modified based on the unique variables of the country in which the business is operating.

6.5 Financial Benefits of PV Solar Power But now, the potential financial benefits to PV system owners are shown in the list in Table 6.3. These can change the economic outlook dramatically for most users. Despite the unfavorable “raw” economics of implementing PV systems, Table 6.4 indicates that in some cases, at least, it may pay to look at a full range of economic and financial benefits, particularly those that will reduce initial costs or secure a rapid payback. For example, some states, such as Oregon, offer a 50% solar tax credit and allow projects to “pass through” state tax credits to other private entities, making this benefit realizable to private investment partnerships. In such situations, a PV project may command a return on investment (or internal rate of return) of up to 10–12%.

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Table 6.3 Financial Benefits to PV System Owners • • • • • • •

Federal and state accelerated depreciation (for stand-alone systems) might be worth 25% net Federal tax credits (30% for commercial PV systems put in place by the end of 2016) State tax credits (e.g., Oregon tax credit is valued at about 25% of initial cost) State and local subsidies ($2,000–$3,000 per kW in some places like California and Arizona) Utility credits and payments for power produced (15–30 cents per kWh or more) Peak period power savings, in areas where power demand is monitored “real time” Greenhouse gas emission reduction credits (Renewable Energy Credits)

The financial benefits of solar power have been significant enough to generate tens of millions of dollars for investment partnerships dedicated to investing in solar power on buildings, including retail stores. Many of the larger retailers have one very under-utilized asset: the large expanse of roof area that serves now mainly to keep the rain out. Typically retailers do not have to worry about shading of rooftop solar panels, either, since they are surrounded by parking lots. The rooftops are also largely vandal-proof, since they are generally out of sight and/or hard to reach, with 24/7 security the norm in large retail environments. Table 6.4 Noneconomic or Intangible PV System Benefits PV feature

Benefit to user or owner

PV systems on buildings are visible from the street PV output can be measured and displayed easilya PVs are a visible commitment to renewable energy

It is immediately recognizable to the public that you have a green building that uses solar energy PV can be incorporated into public education about green buildings They may generate support for retail projects and result in faster entitlements for development projects Because they are visible and do not pollute, PV systems may be perceived as attractive and thus gain media attention to publicize the project PVs can be part of a “micro-utility” that can be owned and operated by a private company, even for public projects, qualifying them for full tax benefits. As physical property, PV systems may qualify for accelerated depreciation

Larger PV systems are still newsworthy in most locations Rooftop PV systems can be physically separated from the underlying building and owned by different entities and taxed as physical property instead of real estate, which is beneficial under U.S. tax law To the public, PV systems represent a commitment to using renewable energy PVs can help get additional LEED project credits for energy efficiency and renewable energy

a

PVs can be part of the branding of a retail company

The value of moving from a basic LEED-certified project to a LEED Silver level may be significant where there are tax credits, or where there is an owner or public policy requirement for attaining LEED Silver (or higher) certification

For one example, see http://www.qualityattributes.com/greentouchscreen

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The Solar Services Model

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6.6 Noneconomic Benefits of Solar Power Consider, too, the noneconomic benefits (some tangible, others intangible) that may come with installing PV systems, as shown in Table 6.4, which describes how PV systems may translate into user or owner benefits. The major point of this discussion is that PV has a prime benefit for retailers, because it is a visible commitment to renewable energy, or because “The six o’clock news will have something to film.” Based on the list of benefits in Table 6.4, it is clear that the decision whether to go with PVs should not be made just by the electrical or energy engineer, but the senior corporate leaders. Proponents of photovoltaics have to be creative in presenting the economics and financing of solar energy systems, as well as the nonquantifiable benefits, to upper management. Architects, engineers and contractors who are PV proponents should also incorporate these benefits in presentations to owners and design review committees.

6.7 The Solar Services Model Installation of PV systems accelerated from 2006 to 2008 because investors, store operators and developers figured out how to separate ownership of the PV system from that of the underlying building. This micro-utility model was first used in the 1980s to install solar water-heating systems in apartment buildings in California; at the time, there was a 55% state solar tax credit, a 25% federal solar tax credit, and generous depreciation schedules. However, as energy prices decreased in the early 1980s, the psychological preference for renewable energy waned, and when those tax benefits disappeared in 1986, so did these programs.3 In the more recent solar services model, a company agrees to buy all the solar electricity generated by a rooftop PV system for a period of at least ten years, at then-prevailing commercial electrical rates. (In essence, the company is running its meter backward.) According to a 2007 report, General Motors, Alcoa, Staples and Whole Foods were installing such units on the roofs of their warehouses and bigbox retail stores. These facilities typically had more than 80,000 ft2 of rooftop area, as well as unimpeded access to sunlight and plenty of electrical demand [25]. In the solar services model, investors build, own and operate the PV systems, while leasing the rooftop for a nominal amount. Typically, the units are larger than 100 kW ($600,000 installed cost), which helps pay for the cost of installation and all the sales and marketing expenses. For a $1,000,000 system, for example, the current U.S. federal tax credit would be $300,000, and accelerated depreciation could add another $250,000 in net benefits. In the state of Oregon, a solar tax credit would net another $250,000 in state tax benefits, as well as electricity payments of $0.15 per

3 Personal

experience of the author, at one time director of solar industry commercialization programs for the state of California.

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Table 6.5 Considerations in Purchasing Solar Power from Investment Partnerships 1. 2. 3. 4. 5. 6. 7. 8. 9.

Length of contract? Anything over 15 years may tie you up for too long Options to renew after 10 years or purchase the system Provisions for default or lack of production, including system removal Level of experience of vendor and reliability of its financing source Can the investment partnerships get access to product, so that the installation will finish before December 31, 2016? Will the installation have any effect on the roof warranty? What if the investment firm goes out of business? Will you have the right to take over the system? What is the price for electricity in the contract? Is it pegged to prevailing utility rates (e.g., 10% off the going rate), or is it level for the term of the contract? Who will own the renewable energy credits? You may want to own these for offsetting other corporate carbon generation

kWh. Table 6.5 presents some of the considerations to explore when an investment group approaches a company or vendors representing them. Tax benefits and utility payments can meet 80–100% of total system cost. Thus, investors would not have to rely on the rather small 2–3% of capital cost generated each year by the electricity from the PV system. For example, at $0.10 per kWh payment and 1,500 kWh/kW per year net power output, a 1 kW system costing $6,000 would generate perhaps $150 a year in income—a 40-year payback, without tax and/or utility incentives. Retailers thinking about investing directly in solar power should be sure to consult a knowledgeable tax advisor, to ensure they can use all the tax credits and other benefits in a reasonable period of time.

6.8 Summary Solar power is a visible signal to consumers that a retail operator or a shopping center operator has a commitment to renewable energy. Depending on the particular tax, utility and incentive programs of a given country or region, a retailer might choose a direct purchase or a third-party supplier. Of all the energy technologies today, solar power offers the best indirect benefits in terms of marketing, political issues and consumer preference; it is also the technology with the greatest potential for future cost reductions. As a result, 2009 and 2010 might be opportune years for retail organizations to get some experience with solar power systems and to figure out how to incorporate them into future planning for stores and centers.

References 1. Yudelson, Jerry. (2007, December). Letting the sun shine on the retail sector. ICSC Research Review, 14 (3), p. 3. 2. Weng, Rainer. (2007, April 23). Photovoltaic investments outside Germany? Looking into the southern EU states. Retrieved on December 21, 2008, from http://www.solarserver.de/ solarmagazin/solar-report_0407_e.html.

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3. Wal-Mart launches solar power pilot project. Retrieved December 1, 2007, from http://www. walmartfacts.com/FactSheets/Solar_Power_Pilot_Project.pdf. 4. Charles, Zimmerman, December 2007, personal communication. 5. Wal-Mart and SunPower complete work on solar power system in Hanford store. (2008, December 12). Retrieved on February 15, 2009, from http://www.walmartstores.com/ FactsNews/NewsRoom/8885.aspx. 6. Grover, Sami. (2009, January 22). Wal-Mart Mexico launches largest solar array in Latin America. Retrieved on February 12, 2009, from http://www.treehugger. com/files/2009/01/wal-mart-mexico-solar.php?daylife=1&dcitc=daylife-article. 7. Safeway Celebrates Earth Day with Two New California Solar-Powered Stores. (2008, April 21). Retrieved on February 12, 2009, from http://www.foxbusiness.com/story/markets/ industries/retail/safeway-celebrates-earth-day-new-california-solar-powered-stores/. 8. Bruce, Allison. (2008, October 21). Pavilions store unveils alternative power source. Retrieved on February 12, 2009, from http://www.venturacountystar.com/news/2008/oct/21/ going-solar-in-simi-pavilions-store-unveils/. 9. Safeway to install solar power panels on 23 stores. (2007, September 14). Retrieved on December 13, 2007, from http://www.environmentalleader.com/2007/09/14/ safeway-to-install-solar-power-panels-on-23-stores/. 10. Solar power partners completes flagship Safeway solar project.(2007, September 18). Retrieved on December 18, 2008, fromhttp://www.energyrecommerce.com/ index.php?fuseaction=public.news_article&id=13. 11. Kohl’s web site. Retrieved on February 12, 2009, from http://www.kohlsgreenscene.com/ KohlsInitiatives/EnergyManagementPrograms.html. 12. Hajewski, Doris. (2007, April 26). Kohl s to go solar in California. Journal Sentinel. Retrieved on December 15, 2007, from http://www.jsonline.com/story/index.aspx?id=596541. 13. Kohl’s readies its California rooftops for solar power. (2007, April 26). Retrieved on December 18, 2007, from http://www.kohlscorporation.com/2007PressReleases/ News0426Release.htm. 14. Macy’s hails Earth Day with SunPower solar dedication in San Jose. (2008, April 21). Retrieved on February 12, 2009, from http://www.foxbusiness.com/story/markets/ industries/energy/macys-hails-earth-day-sunpower-solar-dedication-san-jose/. 15. Macy’s installs solar power in 26 stores. (2007, June 6). Retrieved on February 12, 2009, from http://www.environmentalleader.com/2007/06/06/macys-installs-solar-power-in-26-stores/. 16. Target web site. Retrieved on February 12, 2009, from http://sites.target.com/site/en/company/ page.jsp?contentId=WCMP04-031814. 17. JCPenney launches solar and wind power projects. (2008, August 13). Retrieved on February 12, 2009, from http://www.csrwire.com/News/12855.html. 18. Costco expands solar energy system. (2007, February 6). Retrieved on February 12, 2009, from http://www.environmentalleader.com/2007/02/06/costco-expands-solar-system/. 19. Sunetric completes largest rooftop solar project in Hawaii. (2009, January 30). Retrieved on February 12, 2009, from http://www.solarindustrymag.com/e107_plugins/content/ content.php?content.2457 20. Guevarra, Leslie. (2008, November 14). REI forges ahead with solar plan. Retrieved on February 12, 2009, from http://www.greenerbuildings.com/news/2008/11/14/rei-solar-plan. 21. Simon completes solar panel installation at The Shops at Mission Viejo. (2009, February 4). Retrieved on February 15, 2009, from http://www.csrwire.com/News/14498. 22. Park, Andrew. (2007) The 6th annual Fast 50. Fast Company. Retrieved on December 18, 2007, from http://www.fastcompany.com/magazine/113/open_14-sunedison.html. 23. Davidson, Paul. (2007, August 28). Forecast for solar power: Sunny. USA Today. Retrieved on December 18, 2007, from http://www.usatoday.com/tech/science/environment/ 2007-08-26-solar_N.htm 24. Marsh, Peter. (2007, April 4) Solar energy demand soars. Financial Times Retrieved on December 18, 2007, from http://www.ft.com/cms/s/edfdbbf0-e248-11db-af9e-000b5df10621,

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Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0% 2Fedfdbbf0-e248-11db-af9e-000b5df10621.html%3Fnclick_check%3D1&_i_referer= &nclick_check=1. 25. Deutsch, Claudia H. (2006, October 21). New York Times. Retrieved on December 18, 2007, from, http://www.nytimes.com/2006/10/21/business/21solar.html.

Chapter 7

Greening Shopping Centers

At the first European green shopping center conference, Centrebuild, hosted by the ICSC in 2008, it was obvious to the author that elements of the European retail real estate development community were doing a lot to incorporate low-energy design and sustainability concerns into their new projects, perhaps even more so than North American developers. At this time, beyond new development, few developers are tackling the refurbishment of existing centers to secure greater energy savings, except at normal—8to 15-year—intervals when the retail environment itself requires major alternations. Let’s look at some European shopping center developers and their sustainability programs.

7.1 European Green Building Programs Jerry Percy, head of sustainability for the Gleeds management/construction consulting firm in the U.K., says [1], We’ve seen an acceptance of low-energy and sustainable design in the retail sector from some of the key leaders. The owners of most of the retail projects, particularly for new developments, tend to be out-of-town developers—large developers looking to secure anchor stores and subsequent tenants. Because the vast majority of them are public companies, those large organizations have corporate responsibility targets that involve sustainability in their developments. They’re setting building performance standards of BREEAM Excellent or Very Good, the LEED Gold equivalent. What we’re finding is that some of the larger retailers are now demanding certain levels of building performance to be incorporated into the core and shell. In the U.K., Marks & Spencer is a good example; they’re setting requirements, specifications and design standards, and making them a condition of signing up as the anchor store.

7.1.1 SES SPAR European Shopping Centers, Austria Another example of sustainable retail development on the continent is SES SPAR European Shopping Centers (SES), headed by Marcus Wild, CEO. Filipa J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_7, C 2009 by the International Council of Shopping Centers Copyright

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7 Greening Shopping Centers

Fig. 7.1 EUROPARK in Salzburg, Austria, is an award-winning green retail development from SES. Courtesy of SES SPAR European Shopping Centers

Fernandes is head of sustainability for SES. She led their sustainable development of the EUROPARK center in Salzburg, Austria (Fig. 7.1), which won several awards for its sustainability strategies including the International Design and Development Award in 2007 from the ICSC. EUROPARK Salzburg contains 130 shops in a nearly 51,000-m2 (550,000-ft2 ) shopping center. It opened originally in 1996 and was later expanded by 20,000-m2 and reopened in late 2005. EUROPARK sets a benchmark with its use of sustainable materials, its climate control system, its reuse of the energy in exhaust airflow for heating incoming air and its strong focus on tenant and shopper recycling. Another important project for SES, and one that also garnered its share of awards, is the ATRIO center (shown in Fig. 7.2), in the Austrian province of Carinthia. Completed in 2007, the project’s sales area is 38,000-m2 (400,000-ft2 ), with 82 shops; total project cost was about $140 million. Unique to this project is the use of ground-coupled energy for both heating and cooling, with 652 geothermal energy piles containing piping driven into the ground, supplying about 7,000 kW of heating and cooling energy. The project uses trans-seasonal storage, with waste heat from summer cooling stored in the ground to facilitate winter heating. This has the major advantage of removing cooling towers from the roof and reducing exterior noise levels dramatically. The project saves an estimated 500 metric tons of greenhouse gas emissions per year [2].

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Fig. 7.2 The ATRIO Center in Villach, Austria, connects that country with nearby Slovenia and Italy. Courtesy of SES Spar European Shopping Centers

7.1.2 Forum Duisburg, Germany Forum Duisburg is Multi Development’s first BREEAM-certified mainland Europe retail project and the first retail project to be certified at the Very Good level, meaning it garnered more than 70% of the possible points. Forum Duisburg not only has impressive environmental features, including a green roof, but the project also includes social features, such as a complimentary service for assisting disabled people to shop in wheelchairs, with an attendant paid for by the center, working with a local social service group. Paul Appleby of URS Corp. was involved with the BREEAM assessment of this project. There’s an important lesson for green development to be learned from this project [3]: Certainly the Forum is a landmark project for Multi Development. No expense was spared, so it is a very high-quality project, but it also has some unique features, both architectural and sustainable. It has an impressive array of low carbon technologies, which although well established, have not been widely used for shopping centers. These include combined heat and power with absorption chillers and linked with the city’s low-carbon district energy system. The most important advice I would offer is to get the [sustainability] process started as early as possible. On both of these projects [the other is a C&A store in Mainz], we came in quite late, so the opportunities to influence design were fewer. Sustainability needs to be factored into the design from day one. The projects that we’ve had the most success with are those where we’ve been appointed at about the same time as the architects; and those in which we’ve provided a full sustainability advisory service, which carried through the project all the way from design through construction to delivery.

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[Compared with BREEAM], one of the advantages to LEED is that it is quite processdriven. You’ve really got to commence a LEED assessment as early as possible and it has to continue on through the construction process. It has a stronger intrinsic quality to it and that means you have to take it seriously from day one.

7.1.3 ECE, Germany ECE is the European market leader in the field of inner-city shopping centers. CEO Alexander Otto spearheads the firm’s approach to sustainable shopping center development [4]. The company’s first certified shopping center will be the Ernst-AugustGalerie in Hanover, Germany, shown in Fig. 7.3. The investor in this project was HGA Capital Grundbesitz und Anlage GmbH. In this center, ECE’s development approach includes an intelligent building control system for natural ventilation, a green roof, rooftop PV system, recyclable insulating material, purchase of green electricity and use of local materials. According to Otto: We are undergoing a LEED certification for the Ernst-August-Galerie and are also choosing another project for a BREEAM certification. At this stage we would like to get familiar with the most important and best-known rating systems. We have found out in an investors’ survey that the LEED and the German DGNB rating systems are the ones that are mainly demanded. When making the decision for a rating system [to use on a particular project], we will have to take the needs of our investors into consideration.

Fig. 7.3 ECE shopping centers receive a total of about 155 million kWh per year of hydroelectric power. Ernst-August-Galerie in Hanover is one of 48 ECE shopping centers participating in the company’s green energy initiative. Courtesy of ECE/Ernst-August-Galerie

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ECE created a very interesting tenant interaction program called “Cool Down” to get tenants to use less lighting. Otto says, Energy costs are not in our tenants’ focus so far. But we are sure that, with the increasing expenses, attitudes will change. “Cool Down” was launched in conjunction with our partner Philips. The first phase of “Cool Down” consists of collecting and analyzing data of the current energy use in the shops of the ECE shopping centers. The second phase of the program, that is the discussion with the centers’ tentants and the implementation of the research results, just started at the Elbe-Einkaufszentrum in Hamburg. One challenge is to convince retailers to apply the research results despite the fact that they have to invest time and money at first. But in the long run, energy savings will also result in money savings. ECE is planning to support the retailers with lighting workshops. Together with the designers of the shops ECE aims at finding means to redesign the use of light and to use light more efficiently. “Cool Down” is about to be implemented in a second shopping center in Viernheim. The program will be installed in all ECE centers in the medium-term.

This approach illustrates two key principles for introducing sustainable programs as a developer. First, there must be experiments; every new idea has to be tried out somewhere. Second, there must be active engagement with the tenants, sometimes in the form of technical assistance, such as the lighting workshops. Often it is possible to partner with nonprofits, local government or electric utilities to support such programs. As Otto mentions, the lighting designers or store architects must also be engaged.

7.1.4 PRUPIM, U.K. PRUPIM is a top-twenty global real estate investment manager. It manages 415 retail and leisure properties, 246 offices, 166 industrial assets, and 95 other properties. In the U.K., PRUPIM manages 12 shopping centers worth about $2.9 billion. Sustainability is a core value across the portfolio, including fund management, asset management and property management [5]. The company adopted a target in 2006 to have an approved formal procedure for BREEAM ratings on new development schemes. As of 2007, this procedure was 50% complete. All projects with a value exceeding £5 million would be BREEAMassessed with the goal of gaining a Very Good rating. Two developments were slated to undergo BREEAM assessments. In general, the company expects that commercial office developments will be 25% more efficient than the minimum energy efficiency building regulations, and retail and industrial projects will beat the minimum requirements by 15%. In its 2007 Interim Sustainability Report, the company reported that it “reduced CO2 emissions (measured as kg of CO2 /m2 ) from shopping centers and managed offices by 14%, compared to the 2006 baseline. This means that we have succeeded in achieving our 2012 emissions reduction target 4 years ahead of schedule.” In 2007, the company launched its Sustainable Development Framework, which aims to promote increased understanding of sustainability issues through informed debate among design and construction teams.

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The emission of 55,000 metric tons of CO2 was averted with the continuing purchase of green electricity across a large number of the company’s managed properties. Purchasing green electricity remains a key driver in PRUPIM s efforts to reduce its environmental footprint. Paul Cornes is director of sustainability for the company. Cornes says that PRUPIM has taken a different approach from some of the other developers profiled in this book [6]. We’ve not built any “green” shopping centers or stores as such, although we do apply sustainability measures on all new builds and refurbishments. All our larger managed properties have ISO 14001 certification. We also have an innovative Sustainable Development Framework that brings together all consultants and professionals and encourages them to apply as many sustainability features as possible within the financial constraints of each project.

PRUPIM’s sustainability targets are: • Comply with SMART principles (i.e., targets that are Specific, Measurable, Achievable, Realistic and Time-bound). • Make reference to peer group sustainability targets to ensure alignment with industry good practice. • Performance-related wherever possible, relating to the achievement of formal standards or thresholds of performance and seek to reduce and/or improve the impact in question. • Based on sustainability KPIs (key performance indicators) wherever possible to ensure continuous improvement over time [7]. The Sustainable Development Framework includes six KPIs that in 2007 included the following activities: 1. Development: In 2007, PRUPIM launched what it calls “an industry leading development brief” entitled Sustainable Development: A Framework for Decision Making, to guide its design and construction teams. One area of focus was development of brownfield properties. 2. Investment: Work continued on the Improved Portfolio for existing properties. PRUPIM conducted environmental and energy audits at all of the Portfolio’s properties. PRUPIM expects that the information from the audits will enable it to identify key performance indicators to measure improvements in the Portfolio’s performance, such as reduction in carbon emissions. 3. Property Management: PRUPIM continues to focus on improving the efficiency of electricity, gas and water purchased, ultimately reducing the absolute consumption of each. The company also aims at increasing the amount of waste recycled at the managed properties, which in 2007 was about 25% by weight. 4. People: The company spent £1,394 average per capita on green training in 2007, an increase of 49% from the 2006 level. (The discussion in Chapter 12 points out the importance of staff training as part of any sustainability program.)

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5. Greening the Supply Chain: In 2007 PRUPIM worked with the organization Buying Force to raise sustainability standards in the supply chain. Buying Force questioned its preferred suppliers on their sustainability credentials, and 77% of respondents said that they already had a sustainability policy in place. 6. Community Investment: PRUPIM’s community investment during 2007, measured by the London Benchmarking Group methodology, was just over £400,000. PRUPIM staff also spent 1,165 hours volunteering in the community.

7.1.5 Redevco, U.K. Redevco is another U.K.-based developer with a different approach to sustainability. Derk Welling is manager of sustainability, energy and environment for the firm. Welling describes Redevco’s key sustainability principle, Business in Balance [8]: Balance is the keyword both in how we do business and in the activities we carry out for our clients. Business in Balance means combining people, planet and profit in a balanced way.

Redevco is committed to a program for implementing sustainable solutions. Key elements of the program are: 1. “Policy of Small Steps”: the company prefers achievable “small steps” that can gradually attain concrete improvements as against idealistic requirements that are difficult to implement in reality. 2. Eco-efficiency: Redevco aims to go green, but in an economic way. If a project is not economically feasible, they will not do it. Therefore Redevco considers “eco-efficiency” as a key principle. 3. Continuous Improvement: Redevco seeks continuous improvement in environmental performance in seven areas through performance measurement against environmental performance indicators (EPIs), and an annual program of challenging yet realistic targets. 4. Compliance: Redevco complies with or stays ahead of all legislation that relates to its activities, prepares for expected forthcoming legislation, and adopts environmentally aware practices in those instances where legislation does not meet the company’s own minimum requirements. 5. Stakeholder Engagement: Redevco wants to raise awareness of environmental issues within the company and among all stakeholders and encourages them to work in an environmentally responsible manner. In practice, these principles are implemented through three core activities. First, Redevco carries out BREEAM assessments on all new development projects with construction costs in excess of C10 million with the intention of obtaining a rating of at least Very Good. Second, all existing properties are certified in accordance with the E.U.’s Energy Performance of Buildings Directive. When the BREEAM In Use (equivalent to LEED for Existing Buildings) rating system becomes readily

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Fig. 7.4 Redevco plans to assess its retail developments in Europe according to green building rating standards; 40 Princess Street in Edinburgh was the first Redevco building to receive BREEAM certification. Photo: © Redevco

available, the company plans to certify its existing stock according to this standard. Third, all mall management activities are certified against ISO 14001. Redevco is very supportive of the BREEAM rating system. In 2006 Redevco’s property at 40 Princess Street in Edinburgh (Fig. 7.4) was certified according to BREEAM. Since then, BREEAM assessments have been carried out on more properties, including shopping centers in Turkey (Ankara, Manisa and Erzurum) and the first C&A Eco Store in Mainz (Germany). This eco-store has been awarded a BREEAM Very Good rating, an excellent achievement for refurbishing an existing store built in the 1960s. Energy consumption was reduced more than 10% and carbon emissions were also reduced, partially by installing PV panels on the rooftop.

7.2 North America Two of the earliest LEED-certified shopping centers in the U.S. were the Abercorn Common project by Melaver, Inc., in Savannah, Georgia, and the Northfield

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Stapleton project by Forest City Stapleton in Denver, Colorado completed in 2005 and 2006, respectively and profiled in Chapter 2. More recently another LEEDcertified center is the Uptown Monterey Center in Monterey, California, completed in 2007. Moreover there is a project completed in the summer of 2008, the Green Circle in Springfield, Missouri, aiming at LEED for Core and Shell Platinum-level certification. Let’s take a look at the two more recent projects.

7.2.1 Uptown Monterey Shopping Center, Monterey, California This 40,000-ft2 project was developed by Douglas Wiele of Foothill Partners, California. It was certified LEED Silver under the LEED-CS program, with a net green cost premium of about $30,000 [9]. Uptown Monterey Shopping Center redeveloped a former Safeway grocery store at the entrance to the City of Monterey’s downtown shopping district. A Trader Joe’s Neighborhood Grocery Store anchors the project. The project was developed as a public/private venture between Foothill Partners Granite Land Company and the City of Monterey, which owns the underlying land [10].

7.2.2 Green Circle Shopping Center, Springfield, Missouri Shown in Fig. 7.5, Green Circle is a high-performance strip retail center, completed in the summer of 2008. The development exemplifies design integration. EMSI [11] was the sustainable design, energy and LEED consultant. According to the consultant, the 26,000-ft2 project is on track to achieve LEED Platinum, scoring 53 of a possible 61 points in the LEED-CS 2.0 system. Site measures include an intensive vegetated roof and pervious concrete for 100% of parking; water efficiency measures include use of captured rainwater and an overall 70% reduction in potable water use. Energy use is estimated to be 53% below a comparable standard retail shell building, and there is a central geothermal system that supplies both heating and cooling. There is recycled content decking/siding and a steel structure with a high level of recycled content. The building contains extensive daylighting and uses low-VOC paints and finishes. In terms of innovations, there is an extensive green building education program for the public and a commitment to green housekeeping measures by the owner.

7.2.3 Station Park Green, San Mateo, California This project is one of the first transit-oriented developments (TOD) to be certified under the LEED for Neighborhood Development (LEED-ND) pilot program. Station Park Green developer Ed Lipkin of EBL&S says [12]:

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Fig. 7.5 The 23,000-ft2 Green Circle Shopping Center in Springfield, Missouri, is the first shopping center in the U.S. pursuing a Platinum-level LEED certification. Courtesy of Bob Linder, Green Circle Projects

Currently, we’re in the final stages of entitlement with the City of San Mateo. (Entitlement refers to the process of working to secure government approvals for zoning density.) This process also includes the negotiation of a development agreement whereby we will be granted the rights to proceed with this type of development for a certain period of time. This particular project has a 10-year time horizon, which begins after the entitlements are granted. We view transit-oriented development as a means to enrich the entitlements since TODs intrinsically benefit from high densities. When more uses are available close to the transit network access point, more riders will use the area. By incorporating green building and sustainable design with the higher density component located adjacent to transit, the developer is able “do good” while “doing well.” Station Park Green is a prime example of project that results in a win-win for the community, the developer and ultimately for the consumers themselves.

7.2.4 Northgate Mall Redevelopment, San Rafael, California Macerich is a large retail developer that is renovating suburban Marin County’s largest enclosed shopping center at Northgate Mall, with a goal of recycling over half of the materials of the existing center. The retail project is aiming at LEED for Core and Shell certification when completed in 2009. Overall, the company expects the energy-saving techniques to reduce energy use by 20–30% over traditional systems [13]. Specifically, among green building aspects of the Northgate design are:

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• A mild-weather natural ventilation system that brings in fresh air through clearstory windows in a roof element that will open and close automatically, with rollaway entry doors/walls to take advantage of Marin County’s temperate climate. • High-efficiency lighting systems and a dramatic increase in natural light through extensive skylights and glass openings in the building envelope. • A white roof to reduce the urban heat island effect. The San Rafael property is Macerich’s first of several current redevelopment and new development projects that are targeting LEED certification. Jeffrey Bedell is vice president, sustainability, at Macerich [14]. According to Bedell, Macerich adopted a 5-year sustainability plan in 2008, with reporting to begin in 2009. There are four key focus areas that incorporate all major areas of sustainability, as stated by the company. Macerich is committed to providing a healthy environment for its employees, retailers, shoppers and the communities it serves, which is sustainable for future generations. To achieve this, we will develop and utilize new and emerging technologies, processes and practices while balancing economic, social and environmental impact. • Corporate Responsibility: Encourage and implement tools and programs that contribute to an environmentally focused, efficient and effective organization. • Operations and Asset Management: Provide a healthy, clean and efficient environment for employees, retailers and shoppers. • Development Pipeline: Add value through sustainable building practices that are socially, environmentally and economically responsible. • Community Connection: Provide leadership and promote sustainability with our partners and in our communities. To measure the success of our efforts, we will begin by establishing the carbon footprint for each property and our company as a whole. With this information, we will determine incremental, realizable goals.

Bedell said that his immediate plans are to learn from the three shopping centers currently pursuing LEED certification. He said, We are seeing additional costs which can vary from 1 to 4% depending on the project but we have also found that in total these measures can have very good marginal returns (ROI), typically 15–25% on incremental investment. There has to be a positive economic benefit to the programs we implement, based either on reasonable ROIs or operational cost reduction or long-term cost control. At Macerich, we are committed to measuring quantifiable results from all major sustainability initiatives. In 2008, our focus has been largely internal, but in 2009 our program will start touching our customers and tenants, and we expect the response to be very positive. To date, we have focused heavily on internal communication and education to help gain the cultural change we are looking for within the company.

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7.2.5 Tanger Outlet Center at the Arches, Deer Park, New York Opened in the fall of 2008 and shown in Fig. 7.6, this $400 million, 83-acre (33hectare) redevelopment of a former industrial brownfield site is targeting LEED Silver certification [15]. The 800,000-ft2 (74,350-m2 ), one-story, open-air mall features covered walkways and a large public plaza, with an ice skating rink in the winter and a live entertainment area in the summer. The architecture aims for the center to look like an Italian village, with cast stone and Venetian plaster and a lot of landscaping. The roof sports Spanish clay tiles, and the hardscape design includes unit pavers and high-end colored concrete in a complex design.

Fig. 7.6 The Tanger Outlet Center at the Arches on New York’s Long Island transformed a former industrial site into a 800,000-ft2 open-air mall. Courtesy of Adams + Associates Architecture

7.3 Summary The retail industry has awakened to the sustainability theme, and one can already see that there are good examples of leadership in this arena. Green consultants fully expect that there will be a widespread movement toward green building in European and American shopping centers, with the consensus that BREEAM will be the rating standard of choice in most European countries, with LEED reigning supreme in the U.S., Canada, India and a few other places. Green Star will continue to be the standard of choice in Australia and New Zealand. The Deutsches Gütesiegel nachhaltiges Bauen will certainly become Germany’s dominant standard; France,

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Switzerland and the Netherlands also have their own national standards for green building certification. There are growing numbers of European retailers who are embracing green and who would be the tenants in these centers, so there is likely to be a meeting of the minds over the next 3–5 years on green shopping center development. With its stronger environmental ethos, the European public may very well reward green shopping centers with increased patronage.

References 1. Interview with Jerry Percy, Gleeds, August 2008. 2. Trigos award/Kärnten for Atrio. (2008, April 29). Retrieved on September 6, 2008, www.atp.ag/frameset/news-e.html. 3. Interview with Paul Appleby, URS Corp., November 2008. Mr. Appleby recently retired from URS, so these viewpoints are his own and not the company’s. 4. Email interview with Alexander Otto, ECE, November 2008. 5. PRUPIM sustainability report. (2007). Retrieved on December 20, 2008, from http://www.prupim.com/about/sustainability?contentId=5327. 6. Interview with Paul Cornes, PRUPIM, November 2008. 7. PRUPIM web site. Retrieved on September 25, 2008, from http://www.prupim.com/ about/sustainability/targets. 8. Interview with Dirk Welling, Redevco, November 2008. 9. Presentation at 2008 ICSC ReCON show in Las Vegas. Can be located at http://www. icscseed.org/files/leed.pdf, retrieved December 30, 2008. 10. Pharmaca web site. Retrieved on December 30, 2008, from http://www.pharmaca.com/ pr_090208.html. 11. EMSI web site. Retrieved on February 14, 2009, from http://www.emsi-green.com. 12. Interview with Ed Lipkin, November 2008. 13. Northgate aims for added sustainability, targets rare LEED certification for shopping center design. (2008, October 7). Retrieved on December 20, 2008, from http://www.redevelopmentatnorthgate.com/pressreleasefull.aspx?id=8632. 14. Interview with Jeffrey Bedell, November 2008. 15. The Tanger Outlet Center at The Arches. Retrieved on December 30, 2008, from www.auroracontractors.com/PDF/Top-25-New-York-Projects-Tanger-Outlet-Center-at-TheArches.pdf.

Chapter 8

Greening Retail Buildings

After dealing with the shopping center itself, there are of course many developments with stand-alone retail spaces, including both large spaces (30,000-ft2 or more) and smaller spaces, including banks, coffee shops, juice bars and so on. This chapter deals mostly with the larger stand-alone stores, which are easier to certify as green buildings, since the fixed costs of additional design and construction costs can be applied to more square footage. Through 2008, the largest non-grocery user of the LEED certification system for new buildings has been PNC Bank, one of the ten largest U.S. banks, which had certified about 50 of the company’s small (3,500-ft2 ) retail branch banks. Nevertheless, the trend seems firmly established now that many retailers are implementing significant energy efficiency and green building initiatives. Grocers have been big adopters of greener construction measures, since they use lots of energy in their large warehouse-like stores and have to pay all the energy bills. With much contemporary focus on prepared foods and refrigerated foods in a modern grocery store, there is a lot of energy to save, both in new store design and in existing store remodels. Brian Fleener is senior principal at Mulvanny G2 Architecture, a leading retail architecture firm based in the Pacific Northwest of the U.S. He said [1], A trend that we’re seeing in the retail industry is the retailers are past just getting on the bandwagon. They’re now seeing how sustainability strategies are relevant to their business strategies, where they overlap and they’re trying to find where those overlaps make the most sense. For example, Kroger has looked at heat reclamation (taking heat from various appliances and using it to heat the store) and found it makes a lot of sense to its business strategy, so it’s a “no brainer.” If you were trying to get Kroger to do a green roof, for example, that wouldn’t make much sense to their business strategy.

8.1 Wal-Mart Case Study As the world’s largest retailer, Wal-Mart’s five-year experimentation with sustainable buildings deserves serious study by other retailers. According to Don Moseley, director of sustainable facilities at Wal-Mart [2], J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_8, C 2009 by the International Council of Shopping Centers Copyright

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We built two experimental stores in 2005 in McKinney, Texas and Aurora, Colorado. We have a process where we like to test things and then, if it’s appropriate, we will incorporate them in to the store prototype program. So the experimental stores were, in essence, the test-phase and we incorporated a great number of different sustainably related initiatives. We learned a lot from those stores. We incorporated some of the early lessons from those stores into a set of pilot stores that we refer to as “higher efficiency one” or “HE.1.” There are three of these stores and they opened in 2007. These stores were projected to reduce energy requirements by 20% compared to a 2005 baseline. We then tried to figure how best to further enhance efficiencies and get higher-performance which resulted in a second set of pilot stores. Referred to as HE.2 pilots, four stores opened in 2008. They are projected to be up to 25% more energy efficient than our 2005 baseline.

In March 2008, Wal-Mart opened a store referred to as an HE.5 store in Las Vegas, Nevada. It was designed specifically for the western dry air climate and is projected to perform up to 45% more energy-efficiently than the stores Wal-Mart prototypically built in 2005. Those stores were working towards a specific goal stated in CEO Lee Scott’s speech of October 2005 to design and build a prototype within three years that would be 25–30% more energy efficient. We’re taking progressive steps towards that new prototypical design which we’re anticipating to be on track in late 2009.

Wal-Mart is retrofitting existing stores by incorporating technologies for new stores back through its scheduled remodel program, with the goal of constantly improving and enhancing the existing store footprint. Some of the technologies include enhancements to HVAC systems, using LED technology in freezer cases and exterior signage and adopting water efficiency measures for toilets and urinals and some of the water flow devices. One of Wal-Mart’s three primary goals is zero waste. Moseley says: We’re trying to be more efficient. We’re determining how to generate less waste through the construction process by working with the waste removal companies to recycle that material. At the same time we’re attempting to specify materials that are recycled and we’re trying to evaluate materials that at end of life do not have to go to, as their only choice, the landfill. We’re early in that process, as we’ve been extremely focused on energy efficiency. We’ve been very focused on water. Materials recycling is bit more of a challenge.

Wal-Mart also evaluated photovoltaic systems at both of its experimental stores, then determined that due to the flexibility of roof-mounted systems along with the size of the store roofs, a solar pilot program would be appropriate. Using third-party financing and ownership, Wal-Mart has installed nineteen solar power systems since early 2007, including two stores in Hawaii and seventeen stores in California. Three different vendors own and operate the solar power systems. Wal-Mart purchases power from them through a power purchase agreement at or below the cost it would pay for utility-supplied power. At this time Wal-Mart does not seek LEED or other third-party certification for its buildings. It doesn’t feel that these programs offer much to a dedicated owner that is very familiar with its buildings, especially one that is intimately involved in the design and has a vested interest in the long-term commitments related to energy

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and maintenance. The company’s goal is to serve its customers’ needs as well as those of the store operators. Moseley comments: We feel that we have done and are continuing to do a very good job at making good business decisions that result in reductions in our energy footprint and water footprint and also are sustainable to our business. We don’t feel that third-party certification is a benefit to what we’re doing and we haven’t pursued it. The majority of the decisions that are being made, specifically to the buildings, have a typical return on investment of 2–3 years. We’ve always been focused on keeping our costs down to better serve our customers.

Wal-Mart has also been using skylights for over 12 years and has them in more than 2,200 stores. There are times when you can go into a Wal-Mart and all of the lights are off. Because of the way the building is set up, it’s not even noticeable to the customer when lit by natural light. Interestingly, Wal-Mart may be ringing up additional profits because of sales gain associated with extensive daylighting.1 With respect to the HE.5 prototype for the Western U.S., the real backbone of the system is an integrated refrigeration/HVAC system. Instead of a refrigeration

Fig. 8.1 Energy use in retail stores varies dramatically by end-use and type of activity, as shown by the annual energy use index (EUI). Source: www.nrel.gov/docs/fy08osti/41956.pdf

1 See

recap of studies by the Heschong Mahone Group for the California Energy Commission,http://www.h-m-g.com/projects/Daylighting/summaries%20on%20daylighting.htm# Daylight%20and%20Retail%20Sales%20%E2%80%93%20CEC%20PIER%202003, retrieved February 15, 2009.

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rack-house system that sits on the outside of the store, used to supply the cooling needs of freezer and refrigerator cases, the equipment is now on the roof. It is integrated with the HVAC equipment that is used to heat and cool the building. Waste heat from the refrigeration equipment is being harvested to provide the building’s needs for space heating and hot water. In Las Vegas, the most recent iteration of the HE.5 system, the system runs chilled water through tubes in the floor slab, with the slab acting as the building’s cooling element. Figure 8.1 illustrates why energy use is so important to control in retail buildings, with a special emphasis on restaurants and food service (highest energy use per square foot, smaller retail area) and grocers/food sales (large retail area, high energy use per square foot), in comparison with general merchandise retail and warehouse stores, even those with refrigeration.

8.2 LEED Certification for New and Renovated Retail Buildings Not every store operator has the size or financial resources of Wal-Mart to be able to afford extensive experimentation. Yet many other store operators are designing LEED-certified stores in the U.S. and BREEAM-certified stores in the U.K. Certifying a building as green can be done both with stand-alone stores and with those placed in a mall or lifestyle or strip center setting. In the case of a mall, the more likely program would be LEED for Commercial Interiors or BREEAM for Fit Out, a subject taken up in Chapter 9. This chapter treats mainly design and construction of freestanding stores or those with large footprints such as grocery or large retail big box operators such as electronics, department stores, home improvement and office supplies.

8.2.1 Sustainable Site Features If you are working with a new development or major renovation of an existing center, and you are an important tenant such as a national retail chain, you should ask the developer to do more environmentally friendly site work, then take the credits for that in your green building certification application. Such site work includes buildings with solar power systems already on them, buildings with reflective roofs or green roofs and those with rainwater harvesting systems that provide recycled water for toilet flushing and irrigation. Also, look for centers located near public transit, centers that have rehabilitated contaminated sites and centers that provide amenities for bicycle commuting, including showers and secure storage for bicycles. Figure 8.2 shows the exterior of a store in Chile, part of the Falabella chain which has operations in Chile, Peru, Colombia and Argentina, with 1.3 million-m2 of selling space. The company is committed to sustainability initiatives. For example, in the fall of 2007, Falabella decided to take part in the LEED-CI for Retail

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Fig. 8.2 Falabella’s center in Chile aims to become the first LEED-certified shopping center in South America. Courtesy of S.A.C.I. Falabella

Volume-Build Pilot Project, becoming the first retail chain outside the U.S. to do this. Falabella has already started to implement some of the green concepts in its new stores, even though the company is still in the process of certifying its prototype, and the results have been very positive for their business. The efforts have been spearheaded by the Corporate Projects Department and will continue into the future [3]. Once the LEED-CI prototype is approved, the company expects to apply the measures to up to fifty stores.

8.2.2 Water Efficiency Try to locate in a building with water-efficient landscaping and with water-efficient fixtures already installed. If the retailer has to install water closets and lavatory fixtures, choose the most water-efficient plumbing selections already on the market, including dual-flush toilets, automatic faucets and water-free or ultra-low-flush urinals.

8.2.3 Energy Efficiency Ensure that all the energy-using equipment in the building is properly commissioned, that it meets minimum energy standards and that none of the equipment within the fitout scope of work contains ozone-damaging refrigerants such as CFCs. Then go to work on reducing lighting power density by as much as 35% below current codes, install lighting controls (including occupancy sensors in changing

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rooms, for example), provide zones for various lighting and HVAC equipment (if there is a storeroom, for example, its temperature can be different from that of the retail show floors) and use ENERGY STAR–labeled equipment (or similarly labeled equipment in other countries). Try to get your space separately metered so that you do not have to pay for other shops’ inefficiencies. Finally, purchase green power from certified sources to make up whatever energy use you still have. The area of energy-efficient retail fitout is the place where you can really take measures to reduce your company’s carbon footprint (see the discussion in Chapter 12). Here is an example of the energy strategies employed at a new Chipotle Mexican Grill in Gurnee, Illinois, a Chicago suburb, certified LEED Platinum in 2009. It is the first LEED-certified restaurant for the chain, which participated in the LEED for Retail pilot program. The goal was to reduce the energy use of the overall building by 17.5% compared with a standard restaurant. To accomplish this goal, Chipotle focused on three fundamental strategies: reduce demand, increase efficiency and harvest free energy. Below is a list of how those strategies were realized in this restaurant. Figure 8.3 shows a typical Chipotle store interior. • Efficient building envelope and building systems (HVAC, water heating, makeup air and hood). • Low-e glazing, keeping heat outside in the summer and inside during the winter. • The lighting design for this store utilizes only LED lamps, both saving energy and reducing the amount of heat introduced to the dining room. LED lamps contain no mercury and last for thousands of hours. The LED lamps in this restaurant will not need to be replaced for 7–8 years.

Fig. 8.3 Chipotle Mexican Grill shows that even small quick service restaurants can achieve LEED certification. Courtesy of Chipotle

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• ENERGY STAR–rated kitchen equipment was used where available (ice machine, fryer, refrigerator and warmer). • A 6 kW wind turbine on-site, capable of supplying renewable energy to the store, is estimated to provide about 7.5% of the store’s energy needs. The restaurant is equipped with an energy management system (EMS) capable of monitoring all major building systems (HVAC, wind turbine, water heater, makeup air, hood and lights). In addition, this system will keep daily performance records of these systems that will be available online and in real time. The EMS will control lighting so that the lights are on only when necessary. For example, the lights will be on in the kitchen during morning prep, but off in the dining room until the restaurant opens for business.

8.2.4 Materials and Resource Conservation If you are renovating an existing space, at least 60% of interior, nonstructural components, such as walls and floors, along with ceiling materials, should be reused. For whatever construction waste left from renovation or new construction, divert at least 75% (by weight or volume) from going to landfills. (Existing carpeting may be covered by a manufacturer’s takeback program, for example.) Other resource conservation measures that can be included in store remodeling or fitout include purchasing fixtures, carpeting, resilient flooring and other materials with a high-recycled content, with materials made locally (within 500 miles), using materials containing biobased materials such as wheat board and strawboard cabinetry and using only sustainably harvested wood (certified by the Forest Stewardship Council) for both soft wood and hard wood applications.

8.2.5 Indoor Environmental Quality In this last category, LEED requires minimum ventilation rates of 10 ft3 (0.28-m3 ) per minute per person.2 Additional measures include installing carbon dioxide monitors so that ventilation rates are controlled based on occupancy levels. Perhaps the most important step to take to provide healthy air in the store is to make sure that the fitout work is done in accordance with leading standards for maintaining indoor air quality during construction, including wrapping ductwork with plastic, keeping

2 This requirement may bother some retailers, because without heat recovery ventilation, it can lead

to greater energy use for heating in cold climates and cooling in very hot climates, especially in stores (such as department stores) with very high ceilings. However, the benefits of adequate fresh air are significant for both employees and customers.

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absorptive materials out of the weather and using low-VOC (low-toxicity) paints, coatings, sealants, adhesives, carpets, flooring and composite wood materials. This means carefully supervising the contractor’s staff. Lighting controls, temperature controls that staff can access, appropriate thermal comfort and daylighting will add to indoor environmental quality. Of course, many smaller retailers have little control over elements such as daylighting, but larger retailers, particularly grocery stores, are discovering the sales benefits of that practice. (When signing a lease for space that hasn’t yet been built or even fully designed, the retailer should ask the center developer to include skylights in the retail space if at all possible).

8.2.6 Daylighting and Retail Sales In a 1999 study for the California Energy Commission, sales performances in 108 stores were compared. Two-thirds had daylighting; one-third did not. Monthly gross sales per store were averaged over an eighteen-month period. Statistical analysis was used to control for the influence of other variables. Skylights had the largest explanatory impact of five factors (skylighting, number of hours open per week, population of zip code, average income of zip code and number of years since store

Fig. 8.4 A variety of studies over the past decade strongly suggest that using skylights to increase daylighting in stores can increase retail sales significantly. Source: www.ci.seattle.wa.us/light/ conserve/sustainability/studies/cv5_ss.htm

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remodeled), boosting sales index by an average of 40%. For example, if a non-daylit store had sales of $200 per ft2 , sales in a daylit store could be expected to increase to between $261 and $298 per ft2 . An updated study in 2003 from the same research team looked at seventy-three stores for another retail chain. This time, the median gain was only about 5%, not nearly as much, but still significant. Interestingly, the value of the sales increase was said to be about 20–50 times the value of the energy savings! [4] Fig. 8.4 shows the effect of daylighting on total sales per square foot.

8.2.7 LEED Project Results A typical LEED-NC “scorecard” for several retail stores, in terms of points achieving in various LEED-NC or LEED for Retail-NC categories, is shown in Table 8.1. Most retail projects do not score very well on energy efficiency, primarily because their prototypes have never been optimized for this cost. Second, it is fairly easy to get water efficiency points in LEED (but note that LEED 2009 will require at least a 20% savings in water use compared with a conventional retail building). Third, sustainable site points vary a lot. Focusing on Sustainable Sites credits in the initial planning and construction site work will assist with accumulating LEED credit points for eventual building certification. Fourth, there are a lot of points to be gained in both the materials credits and indoor environmental quality credits. Fifth, Table 8.1 LEED-NC Points Achieved for Several Retail Stores a

LEED category/ LEED project Sustainable sites Water efficiency Energy efficiency Materials and resources Indoor environment Innovation in design Total points/ certification level a Scores

Target, McKinley Park, Chicago

Home Depot, North Hill, Alberta, Canada

Whole Foods Market, Sarasota, Florida

PNC Bank, Adams Township, Penn

Giant Eagle Market, Columbus, Ohio

5/14

7/14

6/14

1/14

5/14

3/5

3/5

3/14

5/5

4/5

6/17

3/17

12/17

9/17

7/13

0/17 (LEED version 2.0) 6/13

3/13

5/13

7/13

6/15

6/15

11/15

12/15

9/15

5/5

4/5

4/5

5/5

5/5

32/Certified

26/Certified

30/Certified

40/Gold

39/Gold

show the number of points achieved in each category out of the total available points.

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many of the “barely certified” projects rely heavily on innovation credits, so it is worthwhile to consider these credits from the beginning of the project. Innovation credits can include 100% green power purchases, a commitment to public education, commitment to green cleaning practices and similar efforts.

8.3 Case Study—Target, McKinley Park, Chicago Designed by Perkins+Will, this 138,000-ft2 store contains a number of sustainable features [5]. The McKinley Park store, located in Chicago, is one of three LEEDregistered Target projects representing an internal LEED Pilot Program exploring the use of LEED as a continuing part of Target’s building program. According to the company, the use of LEED represents a broadening of Target’s green building focus beyond energy efficiency and successfully leverages Target’s goal of zero waste into its building designs. Some sustainable elements of the project include a 61% recycling rate in the store operations; more than 19% recycled content material used in construction; recycling of about 91% of the waste generated during construction; the specification of lowmercury lamps throughout the building; a large area of green roof, in keeping with Chicago’s focus on green roofs; and energy savings of 25% compared with LEED baseline building standards.

8.4 Case Study—Kohl’s In October 2008, Kohl’s department stores announced that the company had completed precertification of forty-five stores according to the LEED standards [6]. Kohl’s now has opened more than 1,000 retail properties. The company announced its LEED initiative in July, when fifty of its stores earned the ENERGY STAR label for energy efficiency. The designation was the largest of its kind for a retail group participating in the ENERGY STAR program. As of September 2008, 100 Kohl’s stores had received the ENERGY STAR label. David DeVos is director of architecture and sustainable design at Kohl’s. He explains the volume certification program this way [7]: The prototype store has been pre-certified at the Silver level. To actually certify the prototype, the USGBC asked us to fully document three stores. That documentation has been completed, except for the enhanced commissioning phase, which occurs 7–10 months after construction completion. To certify the prototypes, we did virtually all of the documentation for those three stores. In addition to that, the USGBC is spot checking 20% of those stores—nine stores. So there are another nine stores that we’re submitting documentation for as well. We are just wrapping up the collection of that data to submit to USGBC. Once all of that is done and approved, we will then submit the scorecards for the remaining 33 stores and then they will be certified. All 45 stores are open for business—they were all new construction totaling 3.8 million ft2 .

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In DeVos’s experience, the only way to tackle mass certification of retail buildings is to roll up your sleeves and go to work on it. We work with a prototype design team, I’ve got a handful of consultants that really know our building: architecturally, mechanically and also structurally. As we went through the analysis of the credits early on—which ones did we think we wanted to work towards and which ones did we think were doable—I worked with that small team way in advance of talking with the contractors. So we knew what we wanted to do. We then validated the costs and got [the measures we wanted] into the construction documents.

8.5 Case Study—SUBWAY R SUBWAY is a chain of small franchised stores making sandwiches to order. As of early 2009, the company claims more than 30,000 restaurants in 87 countries [8]. In November 2007, the company opened its first “Eco Store” in Kissimmee, Florida, a unit that received LEED Silver certification, showing that even a small retail store can achieve this designation [9]. At the time, three more stores were aiming at LEED certification. The sustainable elements of the Kissimmee Eco-Store include high-efficiency heating, ventilation and air conditioning systems; remote condensing units for refrigeration and ice-making equipment; daylighting and controls for highefficiency lighting; LED interior and exterior signs; low-flow water fixtures and building and decor materials from sustainable sources. There is also an extensive use of recycled products and furnishings in the construction of the restaurant and an increased emphasis on recycling in customer areas. “SUBWAY Eco-Stores are designed to reduce energy and water consumption and waste by using more efficient equipment and practices,” said Bill Schettini, chief marketing officer for the chain. “Our Eco-Store program is just one area where we are trying to make our restaurants and operations more environmentally accountable. As a worldwide chain, we have also taken steps to reduce packaging and develop more energy-efficient distribution practices” [9]. SUBWAY is also committed to benchmarking the Eco-Stores against similar conventional stores nearby. The Kissimmee location provides an opportunity for the brand to measure and compare energy and water use against a similar conventional SUBWAY restaurant 3 miles away. The company reported that preliminary figures showed that the Eco-Store reduced energy use by about 20%. According to an article about the Kissimmee Eco-store:

Peter DiPasqua, a SUBWAY franchisee with 89 stores in central Florida, said he originally thought his green store in Kissimmee was largely a “feel-good thing.” But he said as construction progressed, he became more impressed with the benefits of LEED-certified construction. The store cost about 20% more to build, DiPasqua said. But he said he was saving 20% a month on electricity even though the store, in a prime location, was selling 43% more than a store down the street. “I underestimated it all,” he said. “What’s amazing is having 43% more bakes in the oven, and doors opening and toilets flushing. And to have 20% less energy consumption?” [10]

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8.6 Case Study—ASDA ASDA is one of the U.K.’s largest supermarket chains and is owned by Wal-Mart [11]. ASDA has a goal of sending no waste to landfills by 2010. ASDA service centers receive waste from stores in the local area on trucks returning from delivery (backhauling); this means less miles traveled to collect waste. As of 2008, there were five service centers with three more under construction. In 2007, the service centers recycled more than 150,000 tons of cardboard and almost 9,000 tons of plastic wrapping. Recycling prevents 65% of store waste being sent to landfill. The remaining 35%, representing mainly biodegradable materials, is intended to be used as energy through “anaerobic digestion, or at combined heat and power plants.” ASDA has spent £3.5m on a plan “to give shoppers incentives such as aluminum can-crushers in return for boycotting single-use plastic carrier bags.” ASDA intends to reach the Courtald Agreement’s goal of reducing “the environmental impact of plastic bags by 25% by the end of 2008.” Customers are encouraged to use a “Bag for Life” and every time a customer reuses a bag, a point is given to local schools under a “Go Green for Schools” scheme whereby the school can claim green prizes. ASDA reached the goal of a 10% reduction in packaging and in 2007 used 18,000 fewer tons of packaging. By the end of 2008, the goal was to reduce food label packaging by 25% and other packaging by 20%. ASDA’s goal is for all stores and depots to be powered by renewable energy. ASDA has a comprehensive energy-efficiency program and, by using devices like motion-controlled lighting and advanced boiler systems, is on track to reduce energy use by 20% by 2012, compared with the company’s current average energy use. Furthermore, all new stores are intended to use 30% less energy. ASDA has sought permission to build wind turbines at six distribution centers. A flagship green store under construction in Bootle, U.K., will use “natural light, using north facing skylights to let in light” and have “translucent paneling on the south-facing wall to increase natural light, plus under-floor heating from a geothermal source and recycled materials throughout.” ASDA intends to reduce its transportation fleet’s emissions by 40% before the end of 2009. Local distribution hubs allowing suppliers to drop off at one point have saved about 7 million miles traveled. Furthermore, approximately 80 double-decked trailers were in use by the end of 2008, saving 5 million miles annually. Expanding rail and sea use (with a new seaport facility) has also helped reduce miles driven in distribution.

8.7 Case Study—The John Lewis Partnership The John Lewis Partnership, which includes the supermarket Waitrose, is a large U.K. department store chain with twenty-seven outlets [12]. One of its major initiatives, in partnership with the sustainable development consultancy Forum for the Future, is the development of the Sustainable Construction Framework. The framework’s intention is to offer an evolving document that allows the company to

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Case Study—Tesco

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build new stores and make adjustments to existing ones that promote economic and environmental success. John Lewis is a member of the Corporate Leaders’ Group on Climate Change— a group of nineteen business leaders determined to combat climate change. It has pledged to reduce overall corporate carbon dioxide emissions by 10% by 2010, 20% by 2020, and 60% by 2050. In partnership with EDF Energy, 100% of the company’s energy comes from renewable sources. The company’s immediate goal is to improve energy efficiency in stores by 20% by 2010. To this end, John Lewis is taking the following steps: All stores have energy managers and an energy manual that gives detailed advice on how to improve efficiency. All stores receive monthly energy reports assessing their ability to meet targets. Waitrose does not use CFCs in refrigerators and is close to removing all HCFCs.3 Biomass boilers are being added to the Oxford Street franchise store and the new distribution center. (In the U.K., biomass is considered a renewable resource, although some studies have pointed out that only about 20% of the country’s needs for heating and hot water could ultimately come from this source.) In terms of transport initiatives, John Lewis has partnered with Cenex, the national center of excellence for low carbon and fuel cell technologies, to challenge vehicle manufacturers to produce a fleet of energy-efficient vehicles within the next two to three years. The challenge will cover four categories of vehicle: 3.5-ton refrigerated vans; 7.5-tonners; 38-ton trailers; and a refrigerated trailer. The result is intended to reduce CO2 emissions by 30% compared with 2007 levels.

8.8 Case Study—Tesco Tesco, one of the world’s top five retailers, is Britain’s biggest supermarket chain, taking in $1 out of every $8 in the industry [13]. In fiscal year 2008, Tesco recorded £2.8 billion in profit and £51.8 billion in sales [14]. Tesco estimates its annual carbon footprint at about 4.5 million tons [15]. As part of a ten-point plan introduced in 2006, Tesco has taken several steps to green the company [16]. In September 2008, Tesco’s CEO, Sir Terry Leahy, stated: All too often, politicians and businessmen have said to me: “You’re a businessman, so surely you’re opposed to the green agenda?” They think: “You cannot make a profit and go green.” They think: “A consumer society cannot be a green society.” And they believe that developing economies cannot afford to go green. From my perspective, this is all muddled thinking. I fundamentally disagree, and say that if we want long-term growth, we must go green. Failure to act now means risking economic and social disruption on the scale of the great wars and economic depression of the last century. The means to tackle climate change lies not just in the hands of politicians or regulators, the UN or the G-8. If climate change is to be tackled successfully, we need a new framework in which governments, businesses and consumers each play their part [17].

3 CFCs

are chlorinated fluorocarbons and HCFCs are hydrochlorinated fluorocarbons. Both have been shown to damage the Earth’s stratospheric ozone layer and are being phased out of production globally.

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8.8.1 Sustainability Initiatives Tesco is investing £500 million in refitting stores to meet emissions standards and to fund research into energy-efficient operations [18]. The company created a £100 million Sustainable Technology Fund to develop green technologies [15]. For example, Tesco is working with the Carbon Trust and Brunel University to develop trigeneration (combined heat and power) technology that could save over 10,000 tons of carbon emissions each year [15]. Tesco has also funded a £25 million Sustainable Consumption Institute to look for ways to reduce its carbon footprint [19]. Tesco’s goal is to reduce its carbon footprint 50% by 2020, compared with 2006 levels. To achieve this goal, the company expects that all stores built between 2006 and 2020 will be 50% more energy-efficient than a typical store built prior to 2006. The store at Wick, U.K., was built to have a carbon footprint 50% less than stores of equivalent size. Energy efficiency and renewable energy systems included five wind turbines, photovoltaic panels on the roof, water-cooled refrigeration units with LED lighting, 50% higher efficiency ovens and rooftop water collection for toilets and car washes, saving approximately 1 million l (264,000 gal) of water use annually. At the company’s store in Shrewsbury, U.K., zero-emission battery-powered vans save 100 tons of carbon dioxide emissions, equivalent to replacing 6,000 auto journeys annually.4

8.8.2 Cutting Carbon Dioxide Emissions Tesco’s goal is to reduce CO2 emissions by 50% over the next five years (to 2013), compared with 2006 levels, by employing some of the following measures: • A train with the capacity of twenty-eight trucks traveling between two main distribution centers saving 14,560 journeys and more than 5 million miles annually. • Shipping wine from Liverpool to Manchester on barges cuts emissions by about 80%, uses 50 fewer trucks, and results in 1.1 million fewer heavy truck journeys annually. Instead of being driven from southern ports, such as Southampton to Manchester, a distance of 225 miles, the wine travels only 40 miles. • Wine is transported in bulk and bottled less than a mile away from where it is delivered, resulting in savings of 1,800 container trips annually, and more than 20,000 tons of glass is not imported from wine-producing countries every year [15].

4 Note

that any electricity produced with fossil fuels, which is used to charge batteries, will still result in carbon dioxide emissions.

References

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8.9 Summary Retail store operators in North America and the U.K. have begun serious efforts to reduce energy use in stores and carbon emissions from company operations. Many of them are using the LEED and BREEAM systems for evaluating new store construction, building renovations and continuing operations. Most larger chains are creating sustainability programs, setting serious short-term and midrange goals for reducing carbon emissions, tracking progress on an annual basis and figuring out how to meet these goals cost-effectively. Retail operators around the world can learn a lot by studying these early-stage sustainability programs.

References 1. Interview with Brian Fleener, March 2009. 2. Based on an interview with Don Moseley, director of sustainable facilities at Wal-Mart, November 2008, and review of the company’s sustainability web site,http://walmartstores. com/Sustainability/, retrieved December 30, 2008. 3. Information provided by Falabella, February 2009, http://www.falabella.com. 4. Daylight and Retail Sales. (2003, October). Retrieved on January 6, 2009, from http://www.hm-g.com/downloads/Daylighting/A-5_Daylgt_Retail_2.3.7.pdf. 5. Case study information furnished by Perkins+Will. 6. Kohl’s opens 46 new green stores. (2008, October 6). Retrieved on October 16, 2008, from http://www.greenerbuildings.com/news/2008/10/06/kohls-opens-45-new-green-stores. 7. Interview with David DeVos, November 2008. 8. Subway web site. Retrieved on January 4, 2009, from www.subway.com/subwayroot/ AboutSubway/subwayFaqs.aspx. 9. Subway chain becoming more environmentally friendly. (2007, November 21). Retrieved on January 4, 2009, from http://www.subway.com/dm_public/Press_Releases/YHMM6039.pdf. 10. Martin, Andrew. (2008, November 8). U.S. chains aim at saving energy—and money. New York Times. Retrieved on January 5, 2009, from http://www.nytimes. com/2008/11/08/business/08build.html?_r=1&scp=1&sq=subway%20kissimmee%20LEED &st=cse. 11. ASDA web site. Retrieved on December 28, 2009, from http://www.about-asda.com/ sustainability. 12. John Lewis CSR Report 2008. Retrieved on January 4, 2009, from http://www. johnlewispartnership.co.uk/Download.aspx?ResourceId=41214. 13. Madden, Peter. (2007, January 25). Brit’s eye view: British supermarkets are going green but why? Retrieved on January 4, 2009, from http://gristmill.grist.org/ story/2007/1/24/15106/8886. 14. Tesco web site. Retrieved on January 4, 2009, from http://www.tescoplc.com/plc/ir/ financials/highlights. 15. Reducing energy use. Retrieved on January 4, 2009, from http://www.tesco.com/greener living/what_we_are_doing/reducing_energy_use/default.page?. 16. Finch, Julia. (2006, May 11). Tesco plans to be green and a good neighbor. The Guardian. Retrieved on January 4, 2009, from http://www.guardian.co.uk/business/ 2006/may/11/supermarkets.tesco. 17. Leahy, Sir Terry. (2008, September 3). Tesco Chief: “We must go green.” The Guardian. Retrieved on January 4, 2009, from http://www.guardian.co.uk/environment/ 2008/sep/03/corporatesocialresponsibility.carbonfootprints.

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18. Muang, Zara. (2007, July 6). Climate change: Tesco’s strategy—green revolution in store. Retrieved on January 4, 2009, from http://www.ethicalcorp.com/content.asp? ContentID=5228. 19. Sustainable Living. Retrieved on January 4, 2009, from http://www.tesco.com/greenerliving/ what_we_are_doing/sustainable_living/default.page?#L2.

Chapter 9

Greening Retail Interiors

Many of the retail stores in a shopping center are integrated with existing structures. The process for greening smaller retail buildings has been covered in Chapter 8, in the discussion of LEED for New Construction and BREEAM for Retail. This chapter presents ideas for how smaller retail stores can use green design and construction methods to upgrade the environmental performance of their stores. Larger stores doing in-store remodels, typically undertaken while the store remains in operation, can also use these guidelines. The main guidance comes from the rating systems for commercial interiors, especially LEED for Retail Commercial Interiors and BREEAM for Fit-Out.

9.1 LEED for Commercial Interiors LEED provides clear guidance for how to green retail interior spaces. The main issue for most retailers is that in most cases they don’t control the building envelope (shell and windows) or the HVAC system, so a lot of what they could do to reduce energy use is not available to them, except by reducing lighting energy use, something that many are reluctant to do because of the potentially negative effect on sales. A secondary consideration, of course, is that they do not control site work, either. So what are the green building options left for a smaller retailer locating inside an existing shell retail space? It turns out that there is still quite a lot one can do. Some of the options are discussed below.

9.1.1 Sustainable Site Features If you’re building a new store in a shopping center or renovating a retail space, find out if the center has made environmental improvements that result in less impactful site operations. By locating in an ecologically appropriate site, that information becomes part of your green building story. As with the discussion in Chapter 8, such site work may include buildings with solar power systems already on them, buildings with reflective roofs or green roofs and buildings with rainwater harvesting J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_9, C 2009 by the International Council of Shopping Centers Copyright

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9 Greening Retail Interiors

Fig. 9.1 Marks & Spencer’s Bournemouth store is one of the chain’s many green building projects. Courtesy of the project architect, 3DReid, Marks & Spencer

systems that provide recycled water for toilet flushing and irrigation. Also, tenants should look for centers located near public transit, centers that have remediated previously contaminated sites and centers that provide amenities for bicycle commuting. Figure 9.1 shows a typical Marks & Spencer store in the U.K., illustrating some of the exterior aspects.

9.1.2 Water Efficiency If a store must install new fixtures to achieve water conservation goals, it should choose high-efficiency toilets (1.12 or 1.28 gallons, 4.2 to 4.8 liters, per flush), or dual-flush toilets, 0.5 gallons (2 liters) per minute faucets and water-free or low-flow (1 pint or 0.5 liter per flush) urinals.

9.1.3 Energy Efficiency Ensure that all heating, ventilating and air-conditioning equipment in the space is working according to original design, a process called building commissioning (and a prerequisite in LEED for Commercial Interiors). Also ensure that all energy-using equipment meets current energy codes in the local jurisdiction or national minimum standards, whichever is more stringent. Since lighting quality is so critical in retail, employ a lighting design professional who can help you reduce lighting power density at least 10 percent below current codes (reductions of up to 35 percent are often

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LEED for Commercial Interiors

131

possible without reducing lighting effectiveness), install lighting controls (including occupancy sensors — heat and motion detectors — in changing rooms, for example), create specific control zones for various lighting and HVAC equipment to allow for better modulation of energy use and purchase energy-efficient appliances, office equipment, electronics and commercial food service equipment. Finally, consider purchasing green power from certified sources to supply the remaining energy use. Energy-efficient retail fitout measures allow tenants to reduce their company’s carbon footprint. Another way to reduce energy use is to employ LED lighting fixtures and lamps, something that many retailers are trying because of the stunning visual effects possible with these lighting fixtures. A McDonald’s restaurant in the Chicago area is pursuing a LEED for Retail certification. To upgrade its energy efficiency beyond current company standards such as ENERGY STAR appliances, the store installed high-efficiency boilers and an energy management system. The project also has a vegetated roof and an upgraded stormwater management system. Similarly, a LEED-certified Dunkin Donuts green store in St. Petersburg, Florida, opened in October 2008 with insulated concrete form walls to reduce energy use and also supplied an on-site earthworm composting facility (using vermiculture) to reduce food waste disposal [1].

9.1.4 Materials and Resource Conservation Stores should provide for recycling of at least paper, corrugated cardboard, metal, glass and plastic from store operations. This is often a very visible sustainability measure that customers can see. When renovating existing spaces, try to conserve materials by reusing at least 60% of interior, nonstructural components. To contribute to green practices, make sure that the remodeling contractor diverts at least 75 percent of construction waste from landfills. It is possible to use recycled or refurbished shelving and other store fixtures. Consider what Office Depot is doing, shown in Fig. 9.2. According to the company’s sustainability director: Anytime we remodel or take apart a store, rather than selling, liquidating or trashing the fixtures (shelving, movable gondolas, etc.), we take them apart and ship them back to our supplier warehouse. In 2007, we actually reused about 1,800 tons of store fixtures rather than liquidating, selling or trashing. Spending some time up front to create the logistics program with your supplier pays off, so they know that at takedown they’re going to be sorting similar fixtures and storing and coding at their warehouse so there’s traceability of fixture types. So in the next store, if we need 100 of a specific fixture, we can get them from our inventory rather than buy them. In the long run, it not only saves a substantial amount of money but also reduces environmental footprint and ultimately results in less overall hassle, because we don’t have to respecify, repurchase and issue purchase orders for these fixtures [2].

Consider purchasing fixtures, decor, carpeting, other flooring and other finish materials with a high-recycled content, with materials made locally (within

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Fig. 9.2 Office Depot uses skylights as well as signage to tell customers about their green commitment. Courtesy of Office Depot

500 miles), and only using wood products that come from sustainably harvested forests (certified by the Forest Stewardship Council.)

9.1.5 Indoor Environmental Quality To maintain adequate indoor air quality, LEED requires certain minimum ventilation rates for all retail spaces and gives an extra credit point for increasing the minimum required rates by 30 percent.1 LEED also recommends that all tenant improvements consider installing carbon-dioxide monitors to control ventilation rates based 1 The

benefits of adequate amounts of fresh air are significant for both employees and customers and are typically required by building codes in most jurisdictions. The additional credit point is

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on occupancy levels. This is especially important in retail, since occupancy rates vary so dramatically over the course of a day and a week. The retailer should also ensure that all remodeling work is done in accordance with appropriate consideration for maintaining indoor air quality during construction, including good construction practices such as wrapping all ductwork with plastic and using low-toxicity (low-VOC) paints, coatings, sealants, adhesives, carpets, carpet backing, resilient flooring and cabinets composed of composite wood materials. To increase comfort of store staff and customers, consider alternatives that include lighting and occupancy controls, temperature controls that staff can access, and (where appropriate and possible) good daylighting. Many small retailers have little control over elements such as daylighting, but larger retailers have discovered the sales increases from daylighting. (In some cases, a smaller store could consider asking the developer to include skylights and daylighting measures in retail spaces.) High-quality lighting can have a dramatic effect on employee productivity and store sales (discussed in Chapter 8 and illustrated in Fig. 8.3).

9.2 Wachovia Bank In June 2008, Callison Architecture partnered with the U.S. Green Building Council to develop two new sustainable models designed for retailers: LEED for Retail and LEED Portfolio Program, also referred to as LEED Volume Certification.2 The Seattle, Washington-based firm Callison led architectural development for both pilots simultaneously, developing a prototype for Wachovia’s regional financial centers. The Wachovia prototype received the first LEED Silver Commercial Interiors (CI) and Portfolio certification under the new system. “For the first time, national retailers can build to LEED standards across their portfolio of stores without having to go through the certification process for each individual site,” says Chris Hamilton, principal at Callison. “This results in an efficient, streamlined process for building sustainable on a large-scale, thus saving time, money and manpower for retailers that want to go green” [3, 4]. According to another source, “A survey conducted for Wachovia indicated presence of sustainable strategies added to customers’ overall feelings of goodwill toward the brand, and further helped validate their own choice of Wachovia as their banking partner” [5]. Figure 9.3 shows a typical Wachovia interior designed by Callison.

found in the LEED Reference Guide for Green Interior Design and Construction, 2009 edition, Washington, DC: U.S. Green Building Council, page 305. 2 The LEED Portfolio (or Volume) system allows retailers to certify all subsequent projects once an initial prototype has met the established criteria. Typically the program requires specific certification information for every tenth unit installed. If site data are important to the certification, then that information must also be provided.

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Fig. 9.3 Wachovia Bank was the first to receive “volume certification” under the U.S. Green Building Council’s LEED for Commercial Interiors program. Courtesy of Callison/Chris Eden

9.3 Grocery Store Remodel A large grocery store chain remodeling a store in Southern California in 2009 decided to pursue LEED for Commercial Interiors certification for an in-store project [6]. The design team took the following measures: • Sustainable Sites: The store is located close to public transit and in a denser, more walkable community. Additional measures were taken to reduce the volume and improve the quality of stormwater runoff from the roof and parking lot. • Water Efficiency: Reduce water use inside the store by 30% through selecting water-conserving fixtures. • Energy Efficiency: Lighting power density is reduced by 35%, compared with the state building codes, and new lighting controls were installed to help with power management. The store intends to purchase power generated by renewable energy off-site for 2 years to service 50% of its needs. • Materials and Resources: The store will reuse an existing building, including maintaining more than 60% of interior nonstructural components; will divert 95% of construction waste from landfill disposal and will reuse more than 30% of existing décor and fixtures. • Indoor Environmental Quality: The remodel includes measures to increase the use of outdoor air, to manage the construction according to best practices for

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keeping indoor air quality levels high, for using low-VOC paints and coatings and for meeting more stringent thermal comfort standards. The project also provides daylight for 75% or more of regularly occupied spaces through skylights. • Innovation and Design Process: Develop a signage and public education program with fourteen signs throughout the store telling shoppers what measures were taken in the remodel. Additional credits may come from adopting green cleaning and green exterior site maintenance standards and from reducing process energy use from refrigerated cases.

9.4 Summary Even though a remodel has fewer degrees of freedom in design and construction than a new build, there are still many opportunities for creating energy-efficient and environmentally friendly stores that will help meet carbon reduction goals and also provide a positive public relations and marketing benefit with consumers.

References 1. Hoyland, Christa. (2009, January 6). QSRs learn lessons from building green. Retrieved on January 11, 2009, from http://www.qsrweb.com/article_printable.php?id=12917&page=146. 2. Interview with Yalmaz Siddiqui, Office Depot, November 2008. 3. Callison Design is first to receive sustainable retail certification. (2008, June 23). Retrieved on December 31, 2008, from http://www.businesswire.com/portal/site/google/?ndm ViewId=news_view&newsId=20080623005952&newsLang=en. 4. Boye, Will. (2008, December 23). Wachovia shareholders OK Wells deal. The Business Journal. Retrieved on December 31, 2008, from www.bizjournals.com/triad /stories/2008/12/22/daily23.html. 5. Interview, Cindy Davis, Callison, November 2008. 6. Confidential consulting client of Yudelson Associates, February 2009, personal communication.

Chapter 10

Operating Green Retail Spaces

Ultimately, sustainable retail development is going to be mostly about sustainable retail operations, for the simple reason that new building is always going to be a small portion of the total building stock at any given time. How developers operate their properties is the real sustainability story. Reducing one’s carbon footprint, lowering water uses, recycling more waste—all of these questions represent operational performance. This chapter covers the LEED for Existing Buildings Operations and Maintenance 2009 (LEED-EBOM) rating system, which can be used to improve retail operations, add profitability to the store or center and give employeeassociates concrete guidance for sustainable operations. LEED-EBOM 2009, like the rest of LEED 2009 rating systems, is based on a 110point scale, as shown in the Appendix. Unlike the others, it had very little changing to do from the previous version (LEED-EBOM 2008), adding only 18 points and no new categories of concern. As do the other LEED systems, LEED-EBOM has five basic categories (Sites, Water, Energy, Materials and Indoor Environment), plus a category for innovation credits and the new category of regional issues. While it functions as a rating system, LEED-EBOM is a set of voluntary performance standards for the sustainable upgrading and operation of buildings not undergoing major renovations. It provides sustainable guidelines for building operations, periodic upgrades of building systems, minor space use changes and building processes. LEED-EBOM is a collection of generally recognized “best practices” compiled into a point-based rating system, so it’s not as intimidating. How does one operate a retail store or center in a more sustainable manner? This discussion begins with site issues. For many store operators, of course, there is little control over the site, and most of the site issues would fall to the shopping center or mall management. Nevertheless, large anchor tenants do exert influence over center management, particularly for newer centers or newly renovated centers.

10.1 Sustainable Site Management This section addresses environmental concerns relating to building site, landscaping and exterior building management practices. Sustainable site credits promote the following measures: J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_10, C 2009 by the International Council of Shopping Centers Copyright

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Practice low-impact hardscape management strategies Plant sustainable landscapes Implement effective integrated pest management control Reduce emissions associated with transportation to/from site Protect surrounding habitats Manage stormwater runoff Reduce heat-island effects Eliminate light pollution

10.1.1 Exterior and Site Maintenance The first thing a developer can tackle is site maintenance, including landscaping, hardscape areas and building cleaning. This is easy and cheap to do, but it may mean rewriting some of the standard maintenance agreements with local or national companies. Typically these are annual contracts and so the changes can be made fairly quickly. Most of these practices will involve greater use of labor and less use of chemicals, so the net financial impact should be minor. For site maintenance, LEED-EBOM requires the development and implementation of a plan that employs best management practices to maintain building exterior and hardscape in an environmentally sensitive manner. The following elements must be addressed: • • • • •

Maintenance equipment choices Snow and ice removal Cleaning of building exterior Paints and sealants used on building exterior Cleaning of sidewalks, pavement and other hardscape areas

Revising the landscaping plan may have to wait until a major renovation, but in concept it is quite easy. Plant native trees, shrubs and other flora, and don’t provide extra irrigation beyond an establishment year or two, depending on climate. Then, use integrated pest management strategies to reduce the need for chemical pesticides and herbicides. Use locally generated compost to keep adding nutrients to the landscape.

10.1.2 Reducing Single-Occupant Auto Use One of the best ways to reduce a shopping center’s carbon footprint is to offer alternative means of getting to and from the shopping center, via public or dedicated transit systems, providing both employees and consumers the opportunity not to use

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their cars. This is especially important for employees, since retail tends to be a fairly low-wage business. Some specific measures a developer might use include the following: • Consider the opportunities and limitations based on the building’s location • Provide bicycle racks, changing facilities, preferred parking, access to mass transit, or alternative-fuel refueling stations • Offer incentives to building occupants such as additional vacation days or various rewards, in exchange for carpooling, mass transit ridership, etc. • Provide discounted or free mass transit passes to employees and building occupants • Guarantee rides home for employees who typically use mass transit or carpool • Communicate alternative transportation opportunities to building occupants; facilitate communication to increase ride-sharing

Many shopping centers are located in city centers or built-up areas and offer some of these incentives as a matter of course. However, those located in suburban areas are going to be challenged to develop programs to reduce auto traffic. Figure 10.1 shows a shopping center in Berlin located in a dense urban area. This is typical of many centers on the European continent.

Fig. 10.1 The Alexa center in Berlin, Germany, is another of Sonae Sierra’s green projects. Courtesy of Sonae Sierra

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10.1.3 Open Space To reduce site disturbance and maximize open space, conserve existing natural site areas and restore damaged site areas to provide habitat and promote biodiversity, a center can use native or adapted vegetation for a minimum of 25% of the site area, excluding the building footprint. Other ecologically appropriate features, such as water bodies or exposed rock, can be used in lieu of vegetation. Improving and/or maintaining off-site areas are other means of providing this benefit. For urban projects with little or no building setback, developers might consider using native or adapted plants to build a vegetated roof surface that covers an area equivalent to at least 5% of the project site. Especially for new centers or those undergoing major renovations, a developer should perform a site survey to identify unwanted site elements and/or desirable elements, then consider removing excessive paved areas or turf grass and replacing them with ecologically appropriate landscaping. Finally, in areas with extensive landscaping, developers can work with local agricultural extension services or native plant societies to identify native and/or adapted plants and to remove invasive or ornamental plantings.

10.1.4 Stormwater Management The next consideration deals with management of stormwater runoff. To operate the site sustainably, developers should implement a stormwater management plan that includes measures that infiltrate, collect, reuse or evapo-transpire runoff from at least 15% of the annual precipitation falling on the whole project site. This will reduce the impact of runoff from the project site on nearby watersheds and reduce the impact on public conveyance facilities. With more investigation, it may be possible to contain all or most of the annual rainfall on-site, treat it and use it for irrigation, exterior maintenance, toilet flushing and cooling tower makeup water. To implement this plan, developers can provide systems that collect rainwater runoff from roofs, along with storage and treatment so that it can be reused for other purposes. Alternatively, developers can use alternative surfaces like pervious pavement to infiltrate rainwater into the ground, or nonstructural techniques like rain gardens and vegetated swales to increase soil perviousness can be employed, with the benefits of reducing peak stormwater flows and increasing infiltration into the groundwater.

10.1.5 Urban Heat Island Effect We’ve known for the past fifty years that cities are hotter than the surrounding countryside, with attendant impacts such as increased electric power use for summer air

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conditioning and changes in local microclimates [1]. With large paved areas, shopping centers and large retailers should explore means to reduce the local heating caused by their activities. Consider one or more of the following measures to affect at least 50% of the paved site area: provide shade from new or existing trees; provide shade from solar photovoltaic panels (for example, above a parking structure); provide shade from architectural devices or paving materials (such as light-colored concrete) that have a solar reflectance index (SRI) of at least 29. When renovating a center, the owner should consider placing a minimum of 50% of parking spaces under cover. For those options using a reflective surface, the owner will need to adhere to a maintenance program to ensure that surfaces are cleaned at least every two years to maintain good reflectance. For the roof surfaces, developers should consider reroofing with a reflective material so that incoming solar radiation is reflected away from the site, or else putting solar panels or even a green roof on the top of the buildings, to keep them from heating up.

10.1.6 Light Pollution Reduction Many people are becoming increasingly concerned about the loss of night and its effect on both people and ecosystems [2]. For example, in the Sonoran desert of Arizona most creatures are nocturnal. The city of Tucson (Arizona) and surrounding areas have controlled light pollution from human activity for more than fifty years, so that there is plenty of retail commerce, but the skies are still quite dark at night. Humans get the blessings of stargazing without excessive light, and the animals get to do their business the way nature intended. What should one do? First of all, shopping center developers should try to eliminate light trespass from the building and site by dealing with both interior and exterior lighting. Since many centers have activities such as movie theaters and restaurants that run until midnight, one has to deal with safety and security issues that require a certain amount of lighting. All non-emergency interior lighting with a direct line of sight to any openings (windows or skylights) should be automatically controlled to turn off during all after-hours periods, except for manual overrides for cleaning purposes. For exterior lighting, one can partially or fully shield all fixtures rated at 50 W and higher1 , so that they do not directly emit light to the night sky. One can take direct measurements to determine that when the lights are on, the average illumination level is not more than 20% above the level measured when the lights are off.

1A

standard 50-W incandescent bulb will produce about 800 lm of light, where one lumen (lm) per square meter is equivalent to one lux (European standard). A well-lit office will have about 500 lux of light intensity.

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10.2 Water Conservation Water conservation may not seem like an important issue for retail, but a large urban center can use quite a bit of water, both for landscaping, cleaning, cooling and toilets. Throw in a few restaurants, and water use goes up dramatically. What can the retailer and center operator do to protect and conserve water resources, while reducing the burden of the center on local water supply and treatment infrastructure?

10.2.1 Indoor Water Conservation Reduce potable water use from indoor plumbing fixtures and fittings through automatic water control systems. Where possible, install water-conserving indoor plumbing fixtures and fittings that meet or exceed the most recent plumbing code requirements in combination with high-efficiency or dry fixture and control technologies. Focus upgrade resources in areas of high water usage. Train maintenance staff on the unique operations and maintenance of water-efficient equipment. Examples of water-efficient plumbing fixtures and fittings include: • • • • •

High-efficiency valves and aerators for existing water closets, urinals, and faucets Automatic fixture sensors or metering controls Flow restrictors on lavatory, sink and shower fixtures Dual-flush toilets Ultra-low-flush and water-free urinals

10.2.2 Water Metering From a center operations viewpoint, an effective means to reduce water use is to submeter each tenant. Install a building-level water meter to measure and track total potable water consumption in the facility. Install subsystem-level water metering to measure and track potable water consumption by specific building systems; prioritize metering for those systems that use the most potable water. In the same way that a retailer would use energy data to reduce a building’s carbon footprint, establish a program for using water data to understand consumption patterns and identify opportunities for water conservation.

10.2.3 Water-Efficient Landscaping Specify water-efficient, climate-tolerant native or adapted plantings. Implement or maintain high-efficiency irrigation technologies, such as micro-irrigation, moisture sensors, or weather-data based controllers. Feed irrigation systems with

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captured rainwater, gray water (on-site or municipal), municipally reclaimed water or on-site treated wastewater. Consider not operating an irrigation system or using xeriscaping (dry climate landscaping) principles in arid or semi-arid climates.2 Other strategies include: • Directing some stormwater runoff to planted beds and bioswales (vegetated ditches and runoff channels) • Minimizing the amount of conventional (turf) grass • Mulching and using compost to maintain plant health; this compost can be combined with a food-waste composting system • Determining which plants need less water in winter • Using drip irrigation

10.2.4 Cooling Tower Water Conservation It’s important to reduce potable water consumption for cooling tower equipment through effective water management or the use of nonpotable makeup water. Developing and implementing a water management plan for the cooling tower that addresses chemical treatment, bleed-off, biological control and staff training as it relates to cooling tower maintenance can do this. One effective way to reduce water consumption is to use cooling tower makeup water that consists of at least 50% nonpotable water, such as harvested rainwater, harvested stormwater, air-conditioner condensate, cooling tower rejected water, pass-through (once-through) cooling water, municipally reclaimed water or any other appropriate nonpotable water source.

10.3 Energy Efficiency Most retailers and shopping center operators realize that reducing their carbon footprint is critical to achieving sustainable operations. There are many tools and techniques available for reducing energy use in existing centers and stores. (Figure 10.2 shows an energy-efficient shopping center in New Jersey.) Existing centers and stores present greater challenges for energy conservation than new construction or major renovations, since it is harder to change the building envelope (glazing, walls, floors and roofs) to save energy.

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XeriscapeTM is a trademark of the Colorado WaterWise Council, www.xeriscape.org.

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Fig. 10.2 Best Buy, Dick’s Sporting Goods and PetSmart are tenants in the $400 million, 100,000-ft2 Stafford Park shopping center in New Jersey. Michael Lewis Photography

10.3.1 Reducing Energy Consumption The overall goal should be to achieve an increased level of operating energy efficiency performance relative to typical buildings of similar type to reduce environmental impacts associated with excessive energy use. For buildings eligible to receive an EPA rating using ENERGY STAR’s Portfolio Manager tool, developers should try to achieve an energy performance rating of at least 75. For buildings not able to earn an ENERGY STAR rating, the center should demonstrate energy efficiency in at least the 75th percentile for typical buildings of similar type by benchmarking against national energy use data. The 2003 U.S. Commercial Building Energy Consumption Survey is an example of energy data used to establish the national median.3 Reducing energy demand, harvesting renewable energy, increasing equipment and systems efficiency, and recovering waste heat are all methods of improving energy performance. ENERGY STAR’s Portfolio Manager web tool provides a way to keep score of both the current energy use and the effects of future improvements. Portfolio Manager applies both to grocery stores and retail establishments. Under the E.U.’s Energy Performance in Buildings Directive [3], a building’s energy use is benchmarked against national data, with a letter grade and/or score

3

This document will be updated sometime in 2009, based on 2007 U.S. national energy use survey data.

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assigned, along with recommendations. By 2010, every building in the E.U. must evaluate and provide its energy use data to all prospective buyers, renters and lessees.

10.3.2 Building Commissioning Through a systematic commissioning process, an owner can develop an understanding of the operation of the building’s major energy-using systems, create options for optimizing energy performance and generate a plan to achieve energy savings, along with a series of budgeted improvements. To implement the process, planned capital projects should be identified to ensure that the building’s major energy-using systems are repaired, operated, and maintained effectively to optimize energy performance. There will also be a need for ongoing commissioning of all portfolio buildings, to address changes in center or store occupancy, usage, maintenance, and repair. Periodic adjustments and reviews of building operating systems and procedures are essential for optimal energy efficiency and service provision. Beyond building commissioning, a building automation system (BAS) can be used to provide information to support the ongoing accountability and optimization of building energy performance and to identify opportunities for additional energysaving investments. The BAS monitors and controls key building systems, such as heating, cooling, ventilation and lighting. A BAS manages energy consumption and delivery of optimal lighting and thermal conditions by providing integrated control and monitoring of fans, pumps, HVAC equipment, air dampers and mixers, and thermostats.

10.3.3 Renewable Energy Systems The arguments for solar power systems were presented in Chapter 6; some shopping centers can also consider using wind power, biomass boilers, geothermal systems and other forms of on-site renewable energy. In addition, operators can purchase power from off-site renewable sources, to reduce their carbon footprint. Off-site renewable energy sources are defined by the Center for Resource Solutions (CRS) Green-e products certification requirements [4]. In the U.S., green power or off-site renewable energy may be procured from a Green-e–certified power marketer or a Green-e–accredited electric utility program, or through Green-e–certified tradable renewable energy certificates (RECs), or the equivalent.

10.3.4 Emission Reduction Reporting Identify building performance parameters that reduce conventional energy use and emissions, such as energy efficiency measures, operational improvements,

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renewable energy and other building emissions reduction measures to document the emissions reduction benefits of building efficiency measures. Then reductions should be reported to a formal tracking program such as the U.S. EPA Climate Leaders [5], ENERGY STAR, protocols from the World Resources Institute or World Business Council for Sustainable Development [6], International Performance Measurement and Verification Protocol [7], CERES Facility Reporting Project [8] and other systems.

10.4 Materials and Resources Conservation There are three basic considerations in the area of resource conservation: what is purchased, how repairs and renovations are performed and how materials at the end of their useful life are disposed.

10.4.1 Sustainable Purchasing To reduce the environmental impacts of materials acquired for use in the operations, maintenance and upgrades of buildings, building owners should develop a sustainable purchasing policy that addresses purchases for the building and site. At a minimum, the policy should address ongoing consumables that meet one or more of the following criteria: recycled material containing at least 10% postconsumer or 20% postindustrial material; at least 50% rapidly renewable materials (such as agricultural fiberboard, cork, bamboo and linoleum); at least 50% materials harvested and processed or extracted and processed locally (within 500 miles of the building or center); at least 50% Forest Stewardship Council (FSC) certified paper products; and purchase of rechargeable batteries. This policy should be the basis for evaluating items that are purchased for the building and site. It should identify clear objectives and establish a verification procedure for sustainability claims. The U.S. EPA provides guidelines for developing an Environmentally Preferable Purchasing (EPP) Program [9]. Developers may wish to consider incorporating the life-cycle costing (LCC) method, which not only assesses initial cost but also the ongoing operations, maintenance and disposal costs associated with purchased products. Most large organizations that operate multiple sites will have a purchasing catalog that makes it fairly easy to “hard point” purchase requests to products that will meet these criteria. Part of the sustainability program should include keeping track of purchases that meet these criteria and making it part of the organization’s annual reporting. In that way, baseline data for meeting the requirements of the LEED-EBOM program will be established.

10.4.2 Purchasing Consumables Clearly, the majority of purchases will be for consumables. When purchasing materials, supplies or equipment, those that meet one or more of the environmentally

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responsible criteria listed above should be specified. Product certifications such as Green Seal, the German Blue Angel [10] and ENERGY STAR can be used as verification for meeting sustainability criteria. Following the U.S. EPA’s EPP program is also helpful. Retailers should work with their suppliers and purchasing agents to increase the amount of sustainable purchases.

10.4.3 Purchasing Durable Goods and Facility Alterations For durable goods, the focus should be on buying efficient electric power equipment and furniture and fixtures that contain salvaged material, high recycled content or certified wood products. For facility renovations, demolitions, retrofits and new construction additions, a sustainable purchasing program covering frequently used materials can be maintained. This program should apply to base building elements permanently or semipermanently attached to the building itself. For renovation purchases, the goal should be to ensure that at least 50% have recycled or local content, sustainably harvested wood and rapidly renewable materials. Since many materials are going into buildings, it is wise to make sure that they meet sustainability criteria for low-toxicity materials, including paints, resilient flooring, panels and carpeting.

10.4.4 Low-Mercury Lamps One of the primary means for reducing environmental impact and energy use is to relamp from incandescent to lower-wattage fluorescents and LEDs. Unfortunately, fluorescent lamps require mercury to work, and mercury is a highly toxic substance. Therefore, make sure that your purchases of fluorescents and CFLs contain as little mercury as possible. A good baseline for purchasing agreements and lamp changeouts is an average mercury content of less than 70 pg per lm-h.4

10.4.5 Responsible Waste Disposal To reduce the amount of waste and toxins that are hauled to and disposed of in landfills or incineration facilities, a retailer will want to focus also on waste management and disposal, both through educating center and store operators and through national or regional waste disposal contracts. At a minimum the policy should address the following: recycling of all mercury-containing lamps; reuse, recycle or compost 50–70% of the ongoing consumables waste stream; reuse or recycle 75% of the durable goods waste stream; and divert at least 70% of waste generated by facility alterations and additions from disposal to landfills and incineration facilities. 4

A picogram is one-trillionth of a gram, or a microgram times a microgram. A lumen-hour (1m-h) derives from taking the average lumens of a lamp and multiplying by the expected lifetime. For example, a CFL with 1.5 mg of mercury, 1,000 lm in brightness and a 30,000-h lifetime would contain 50 pg per lm-h.

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10.4.6 The Waste Stream Audit Conduct a waste stream audit of the building’s or center’s entire ongoing consumables waste stream. Use the audit results to establish a baseline that identifies the types of waste in the waste stream and the amounts of each type of waste. The audit should help the operator identify opportunities for waste diversion and increased recycling. Waste stream audits are also known as “dumpster diving,” and make great student projects for a nearby college or technical school! For most operators, establishing the baseline involves integrating data from recycling and waste hauler reports with data obtained from the actual sorting and weighing of materials in the waste stream. Opportunities for additional source reduction, reuse and recycling become clearer once you establish the baseline. The waste stream audit analyzes the two major waste streams, waste that goes to landfills or incinerators and waste diverted from disposal by recycling, reuse or composting.

10.4.7 Ongoing Consumables To facilitate the reduction of waste and toxic substances generated from the use of ongoing consumable products by store operations and center activities, a retailer can implement a waste reduction and recycling program that addresses relatively inexpensive, regularly replaced materials such as paper and toner, with a goal of at least 70% diversion from landfills. Have a battery-recycling program in place that implements the battery-recycling policy, with a target of diverting at least 80% of discarded batteries from the rubbish.

10.4.8 Durable Goods Recycling The retailer’s and center operator’s waste reduction, reuse and recycling program should collect and measure all durable goods leaving the building or site. Consider taking part in a leasing or donation program to help maintain waste reduction. In addition to any local or statewide electronics recycling efforts, consider using the United Nations’ StEP initiative for guidance in disposing of electronic waste or for manufacturer and provider takeback options [11]. In the E.U., of course, takeback is the standard practice for electronics, appliances and other products [12]. In the U.S., for example, carpet manufacturers have all adopted takeback programs through their distributors [13].

10.4.9 Waste Disposal from Tenant Improvements and Store Remodels For facility alterations and additions in cities, project teams should be tasked with diverting at least 75% of waste (by volume) from disposal in landfills or incinerators.

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Waste products suitable for recycling include base building elements such as wall studs, insulation, doors, windows and trim. Furniture and electronic equipment are excluded from this calculation because they are covered in the disposal of durable equipment.

10.5 Indoor Environment The quality of the indoor environment is obviously a critical issue for retail operations. First of all, to support good hygiene, ventilation rates should be at least 10 cubic feet per minute, (cfm) (about 0.3 m3 or 300 l) per person in the store.5 This can be accomplished by modifying or maintaining each outside air intake, supply air fan and ventilation distribution system to supply at least the outdoor air ventilation rate under all normal operating conditions. Additionally, ventilation air rates can be adjusted with carbon dioxide monitors that provide more fresh air when occupancy is greater.

10.5.1 Green Cleaning An intelligent retailer or center operator will develop a green cleaning program to reduce the exposure of building occupants and maintenance personnel to potentially hazardous chemical, biological and particulate contaminants, those that may adversely affect air quality, human health, building finishes, building systems and the environment. A green cleaning policy should address at least the following items: • Purchase products and equipment that meet sustainability criteria for green cleaning. • Establish standard operating procedures addressing effective floor cleaning and maintenance issues. • Develop guidelines addressing the safe handling and storage of cleaning chemicals, including a plan for managing hazardous spills or accidents. • Develop staffing and training requirements. Specifically address the training of maintenance personnel in the hazards of use, disposal and recycling of cleaning chemicals, dispensing equipment and packaging. • Implement a method for collecting occupant feedback on cleaning policies and effectiveness. • Install continuous improvement programs to evaluate new technologies, procedures and processes to promote green cleaning.

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Some retailers believe that 7 cfm per person is adequate, but the LEED-cited reference standard, ASHRAE 62.1-2007, requires 10 cfm per person.

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10.5.2 Maintaining Air Quality During Construction Renovations and remodels are critical times for controlling potentially adverse impacts of construction on air quality. Here are a few suggestions that should be mandatory for tenant fitouts and retailers’ own in-store remodels. The goal of these practices is to prevent indoor air quality problems resulting from new construction or renovation and thus help sustain the comfort and well-being of construction workers and store employees and shoppers. To accomplish this objective, retailers and center operators should develop and implement an indoor air quality (IAQ) management plan for the construction and preoccupancy phases. It’s especially important to protect stored on-site or installed absorptive materials from moisture damage and to perform a preoccupancy flushout with new air filters.

10.5.3 Occupant Comfort Store employees are more productive when they are comfortable and consulted on temperature and ventilation levels. LEED-EBOM recommends regular surveys of store employees to determine if lighting levels, ventilation and temperature levels are appropriate. Surveys every six to twelve months also form a baseline for determining satisfaction with new levels of lighting and temperature, as stores modify their normal settings to save energy and to accommodate daylighting.

10.6 Case Study—Stop & Shop Let’s take a look at how a major grocery chain, Stop & Shop, located primarily in the eastern U.S., has implemented the LEED-EB 2.0 system in about 50 stores [14]. Figure 10.3 shows a typical Stop & Shop grocery store. Ahold is Stop & Shop’s parent company, and has a corporate responsibility commitment based on a partnership with customers to build a more sustainable future. Ahold operates 1,300 stores along the East Coast including the Stop & Shop chain, with about 15 million customers every week and 160,000 people employed. Based in Quincy, Massachusetts, Stop & Shop and Giant Food (a sister Ahold company) have 575 stores in 10 states and the District of Colombia, employ more than 82,000 associates and serve more than 500 million consumers a year. Its building program incorporates a constantly evolving, prototype-based store format. In the 1990s, store energy performance improvement was noted as a profit contributor, which led the company to believe that conducting research to develop a new energy-efficient prototype would be worthwhile. In 1998, Stop & Shop developed what they called the Low Energy SuperStore (LESS) prototype [15]. As a result, Stop & Shop/Ahold set a goal of building a superstore that uses about one-third less electricity than traditional supermarkets.

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Fig. 10.3 Stop & Shop is the first U.S. grocery chain to use the LEED-EB program to benchmark performance at more than 50 stores. Vanasse Hangen Brustlin, Inc.

To target transformative changes, the company focused on savings in lighting and HVAC, super-efficient refrigeration, systems integration, and building envelope improvements. In 2001, they piloted related innovations by opening a LESS facility in Foxboro, Massachusetts. Annual electricity savings of 8 million kWh, which eliminates emissions of nearly 1,000 tons of carbon dioxide annually, demonstrated the success of the model. A few years later, the company decided to benchmark its latest store prototype, a store in Southbury, Connecticut. Store 621 was an ENERGY STAR–labeled model that opened in 2005. The review concluded that Stop & Shop stores have excellent energy efficiency, with high ENERGY STAR ratings, and confirmed that stores built by Stop & Shop after the LESS facility were more sustainable, at least in energy terms. In 2007, Stop & Shop also entered into a partnership with the USGBC to measure how well they are accomplishing sustainability and to identify potential improvements. In mid-2007, Stop & Shop began the USGBC’s Volume Certification program, using the LEED for Existing Buildings (version 2.0) program as the basis for store certification assessments. The 51 Stop & Shop grocery stores in the certified portfolio are a subset of a much larger group of grocery stores that share many similar characteristics, making them excellent candidates for the volume LEED-EB certification process. All of the buildings are built from a common specification and further selection criteria included preliminary LEED-EB checklist evaluations, ENERGY STAR ratings, store management/ownership, location and store age. All of the selected stores are located in or near New England, including Massachusetts, New Jersey, New York, Connecticut, Rhode Island and New Hampshire.

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To measure the benefits of their practices, Stop & Shop and its consultant team, led by VHB Engineers, prepared LEED documentation. In May 2008, after about a year’s effort, the project team succeeded in achieving LEED Certified-level status for the 51-store portfolio, representing nearly 3.4 million-ft2 (316,000 m2 ). Stop & Shop is the first company and first supermarket chain in the U.S. to be awarded LEED Portfolio Volume Certification. The approach taken by Stop & Shop will work for other large retail operators, wherein a few dozen stores can be carefully evaluated under the LEED-EBOM program, with results applicable to many more stores. But what’s the business case justification for this program?

10.6.1 The Business Case for Ahold/Stop & Shop Still, the business justification for tackling dozens of facilities all at once under LEED, which sometimes has an onerous and expensive reputation, was a giant leap for Stop & Shop. The most prominent factors in making a business case for LEED were the ability to use the system as a framework for design metrics and to take advantage of reduced certification costs per unit under the new LEED Portfolio program’s Volume Certification approach. The switch from single-building certifications to a volume perspective with attractive economies of scale is critical to giving large retailers, especially those with multiple facilities built on prototype designs, cost-effective incentives to comprehensively address their environmental impacts. From a marketing perspective, LEED is an internationally known standard, which appealed to Stop & Shop as a nationally distributed retailer with a lot of brand equity. The volume process allows building owners to integrate the LEED green building rating system into existing buildings in their company’s portfolio in a cost-effective way without sacrificing the technical rigor and integrity of LEED. The pilot initiative enabled Stop & Shop to further standardize environmentally responsible programs in their stores by integrating green operations into multiple existing buildings in their portfolio all at once, using the LEED-EB rating system. The certification process met Stop & Shop’s overarching goal to confirm through third-party validation that they were successfully applying sustainable principles to store operations.

10.6.2 What Did Stop & Shop Do for LEED-EB Certification? To earn LEED Certified status for the portfolio, Stop & Shop achieved 35 out of 85 points available in the LEED EB-2.0 system: • Site Points Achieved/Available: 3/14 • Water Points Achieved/Available: 3/5 • Energy Points Achieved/Available: 12/23

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• Materials Points Achieved/Available: 5/16 • Indoor Environment Points Achieved/Available: 10/22 • Innovation Points Achieved/Available: 2/5 As you can see, energy and water savings were critical elements. To achieve energy efficiency gains in existing stores, Stop & Shop employed “cool” white reflective roof membranes, reducing solar heat gain and therefore lowering the demand for air conditioning—and also adding extra layers of insulation. Inside the LEED Portfolio stores, advanced energy management systems reduce electricity consumption. For energy savings, Stop & Shop focused particularly upon product lighting, including full-capacity bright ambient lighting, dimmable ballasts for low-mercury T-5 fluorescent lamps, spotlights to highlight products, pendant luminaires to balance ceiling brightness, end-aisle highlighting by continuous track lighting, in-aisle highlighting by localized track and added daylight with numerous skylights, light tubes and large windows to further reduce load and create a bright, comfortable atmosphere. By specifying more efficient lighting and mechanical systems that produce less waste heat, Stop & Stop saves a lot of energy. The stores further conserve energy through appliances like ultra-efficient refrigeration and heating and air-conditioning units. Stop & Shop’s advanced refrigeration more accurately matches the specific refrigeration needs of products in different display cases while at the same time minimizing energy consumption. Energysaving doors, light diffusers and anti-sweat heaters on glass freezer cases further reduce electric loads. In addition, waste heat from refrigeration units is used to preheat domestic hot water and provide direct store heating. During the winter, a high-efficiency natural gas unit supplements these “free” sources of heat. The portfolio certifications included building commissioning and monitoring elements of the LEED-EB program. Indoor air quality is protected through the use of nontoxic, low- or no-VOC materials like paints, sealants, and adhesives in store interiors. Similarly, stores employ policies for green cleaning practices with nontoxic materials. Indoor water conservation in restrooms and other facilities includes low-flow fixtures. Outdoors, stormwater management systems collect and filter runoff on Stop & Shop store sites. Stop & Shop site landscaping limits the use of non-native species that require frequent watering, which has resulted in near elimination of irrigation systems. Stop & Shop’s LEED certification includes a plan for green site and building exterior management, with protection of plant and animal habitats adjacent to stores and integrated pest management. Regarding best management practices for waste, Stop & Shop proactively channels solid waste in a number of its stores into composting, and in all stores practices separation and recycling of plastic, cardboard and paper products. Over 50% of the facility waste is recycled, including packaging, crates and containers; performance was affirmed by store waste audits. In addition, Stop & Shop diverts plastic bags from landfills and neighborhood streets by offering fabric totes and recycling for plastic grocery bags.

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The final key element is Stop & Shop’s development of a customer education program about green building to complement employee awareness training necessary for implementing policies and ongoing improvements. The shopper experience in the LEED-Certified stores includes exposure to informational display boards in high-traffic areas explaining Stop & Shop’s commitment to sustainability, what LEED is and what green building characteristics make the store eligible for high performance recognition.

10.7 Summary From the examples in this chapter, you can see that there is a world of opportunity in “greening” existing shopping centers and retail stores. With the current slowdown in new retail construction, it’s more important now to focus on reducing the environmental footprint of existing operations. Several of the major green building rating systems around the world—LEED, BREEAM, Green Star—provide excellent guidance for this purpose. In addition, many retailers and developers are finding that reexamining existing practices provides opportunities for engaging their employees and connecting with their customers in a very constructive manner. Many have also found significant savings in operating costs by reviewing and changing operations on a comprehensive basis. Finally, sustainability programs should address all aspects of a company’s operations; clearly, existing centers and shops make up the bulk of impacts that need to be reduced.

References 1. U.S. EPA. Heat Island effect. Retrieved on December 27, 2008 from http://www.epa.gov/ heatisland/index.htm. 2. Klinkenborg, Verlyn. (2008, November) Our vanishing night. National Geographic. Retrieved on December 27, 2008, from http://ngm.nationalgeographic.com/2008/11/light-pollution/ klinkenborg-text. 3. European Energy Performance of Building Directive web site. Retrieved on February 16, 2009, from http://www.diag.org.uk. 4. Green-e web site. Retrieved on December 26, 2008 from http://www.green-e.org/ getcert_re.shtml. 5. U.S. EPA. Climate leaders. Retrieved December 26, 2009, from http://www.epa.gov/ climateleaders. 6. World Resources Institute. GHG protocol initiative. Retrieved December 26, 2009, from http://www.wri.org/project/ghg-protocol. 7. NREL. International Performance Measurement and Verification. (2002, March). Retrieved on December 26, 2008, from http://www.nrel.gov/docs/fy02osti/31505.pdf. 8. CERES. Facility reporting project. Retrieved December 26, 2009, from http://www.ceres.org/ Page.aspx?pid=436. 9. U.S. EPA. Environmentally preferable purchasing. Retrieved December 26, 2009, from http:// www.epa.gov/epp. 10. German environmental label: Blue Angel for several products. (2007, August) Retrieved on December 26, 2009, from http://www.cbi.eu/marketinfo/cbi/docs/german_environmental_ label_blue_angel_for_several_products.

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11. In the spotlight: the global e-waste problem. Retrieved on December 28, 2009, from http:// www.step-initiative.org. 12. EU legislation: Take-back electronics (WEEE). (2008, May). Retrieved December 28, 2009, from http://www.cbi.eu/marketinfo/cbi/docs/eu_legislation_take_back_electronics_weee. 13. Carpet America Recovery Effort web site. Retrieved on December 28, 2009, from http:// www.carpetrecovery.org. 14. Interview with Leo Pierre Roy, Vanasse Hangen Brustlin, Inc. (VHB) Engineers, Watertown, Mass., November 2008. 15. Case study—Stop & Shop. Retrieved December 28, 2009, from http://www.cleanaircoolplanet.org/information/pdf/StopShop.pdf.

Chapter 11

Marketing Sustainable Retail Development

One of the primary benefits of sustainable retail over the long run has to be the marketing gain from having something other competitors do not: lower operating costs, a more socially responsible public profile, ease of gaining planning approval for new projects, better access to certain investment pools, higher rents (in the case of developers), ease of recruiting and retaining key people. Each of these benefits needs marketing and public relations support; each benefits from a clear and consistent corporate message that promotes sustainable retail. To date, there are very few retailers or developers who have championed sustainability long enough, consistently enough and with enough actual demonstration of changes in standard operations to gain the benefits of green marketing. Based on the examples presented earlier in this book, one can point to a few examples such as Marks & Spencer in the U.K., Sonae Sierra in Portugal, and Office Depot and perhaps Wal-Mart in the U.S., but the very paucity of examples serves to underscore the point: the green marketing space is wide open for large retailers and developers. What can a retailer and developer do to take advantage of this wide-open marketing space? The author’s experience indicates that there are some key marketing initiatives that can and should be undertaken to establish a marketing presence in green building, green development and sustainability: 1. Make a commitment to reducing the center’s carbon footprint, through lowenergy store design and solar power systems on rooftops, or high-efficiency onsite power systems such as geothermal or geo-exchange systems, combined heat and power systems and the like. 2. Certify all new buildings and centers to the applicable national or international green building/green retail center rating systems. Without a commitment to certifying all new buildings, one is left with a rather weak marketing posture that always has a qualifying phrase. 3. Take the carbon footprint beyond just buildings to include all corporate operations, much as Wal-Mart and Marks & Spencer have done, making sustainability as much a part of the corporate DNA as profitability. (Increasingly, of course, they are linked both directly and indirectly.) 4. Tackle the issue of the energy and environmental performance of existing buildings aggressively, seeking where possible to have the buildings certified by an J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_11, C 2009 by the International Council of Shopping Centers Copyright

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existing national program such as ENERGY STAR, BREEAM, LEED or Green Star. After all, in this slowdown period for new store construction, many companies are focused on upgrading existing store performance. 5. Engage with an accepted sustainability tracking system such as the Global Reporting Initiative and begin the effort to document and report all actions, their benefits and the continuing challenges of a sustainable future for the organization. What would be the marketing steps that a company could take to benefit from its “sustainability focus?” The key to any marketing program is to differentiate a company’s actions from those of competitors and to do it along lines that its various stakeholders care about. This practice of differentiation is often expressed as “finding a difference that makes a difference, to someone who makes difference to you.” This can be retail tenants in the case of a shopping center developer or consumers in the case of a retail store operator. It is fairly easy to identify five key steps, all of them based around the sound concept of differentiation. For a retail store operator, the aim of differentiation is primarily the consumer, the person who must be drawn to the store for some reason. Green retail operators such as Patagonia and The Body Shop have benefited from this differentiation approach for a long time. For retail developers, the first differentiator should be to attract more and better tenants to all of their centers, tenants who value lower operating costs and the developer’s program of sustainable development and corporate social responsibility. But for the developer (and that could include stand-alone retail operators such as Wal-Mart), there may also be important stakeholder groups who can make or break development projects, including politicians, investors and the media.

11.1 Four Key Marketing Steps for Sustainable Retail 11.1.1 Differentiation Differentiation is an approach to marketing strategy that takes decisions regarding segmentation, targeting and positioning variables and focuses them on particular markets. This approach must be coupled with a specific project type: geographic (urban versus suburban); greenfield versus renovation/refurbishment; or other focus. Differentiation is the primary marketing approach recommended by most expects. The main green building differentiators for developers and retail store operators are: • Successful certified LEED, BREEAM, Green Star or ENERGY STAR projects. • Demonstrated corporate commitment to sustainability, through participation in accepted reporting organizations such as the Global Reporting Initiative. • Reduction in the company’s carbon footprint by a significant amount each year.

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Four Key Marketing Steps for Sustainable Retail

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• For a developer, the demonstrated ability to deliver green retail projects on conventional budgets so that rents are competitive, but operating costs are lower. A developer or retail operator usually needs to show high levels of attainment on several of these key variables to secure recognition for being a leader in sustainability in highly competitive situations. Developers can find one or more approaches on this list that will successfully differentiate their services over a three- to six-year period in the green development business industry. Research shows that the leading companies are particularly adept at using differentiation strategies such as advertising, public relations, new visual identities and attracting key people. Improving or evolving the company’s services typically takes place over the course of several green building projects.

11.1.2 Become a Low-cost Provider of Green Developments and Green Retail Stores Given the tight budgets of many building projects and competitive environment in most urban areas, the ability of developers and retailers to compete on price is a valuable asset. These costs may be based on prior project experience, accurate product knowledge, good research, local or state incentives or a willingness to pay to get the experience. Low cost of operations does not necessarily mean low profitability; instead, it gives a company more flexibility to negotiate profitable green building projects, even in a very competitive environment. For example, the ability to be creative with green building value engineering for energy and water savings, along with high levels of indoor air quality, might help an engineering company to create far more valuable green buildings for the same cost as a more conventional company. For example, David DeVos at Kohl’s cites the benefits of rapid learning about cost management that occurred by putting dozens of new stores through the LEED for Retail Volume Certification program in a relatively short period of time. Low-cost advantages might be even more sustainable than branding as a way to compete in the marketplace, but most companies do not have the discipline to operate in this fashion. A good example of the competitive advantage of lower cost of operations is the almost unblemished success record of Southwest Airlines. For Southwest, the low prices made possible by lower operating costs have become the primary brand, along with fun. Southwest has been profitable almost every year since 1972, a record unmatched in the airline industry. Southwest succeeds by being very focused on their point-to-point routes, not trying to be all things to all people, but offering simple air transportation to budget-conscious business and leisure travelers [1]. This approach may not work for every developer or retailer, but neither should it be dismissed out of hand.

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11.1.3 Focused Differentiation When embarking on a program of focused differentiation, remember that existing tenants or retail consumers already know your company and appreciate its strengths. Communicating a new message about green building or sustainability should not be at the expense of these relationships; instead, it needs to reinforce current perceptions of the developer or retailer as a cost-conscious, schedule-conscious, customerfocused organization. Key relationship managers need to be detailed to meet with existing tenants, for example, and explain how the new people hired, the newly accredited LEED professionals and the new green development focus of the development will benefit them. In turn, this requirement implies a need for strong internal communications before embarking on new green building marketing initiatives, so that everyone inside the organization understands how to communicate the benefits of the new direction. The essence of marketing wisdom lies in knowing which markets to compete in and which to ignore, which customers a company wants to keep and which it does not. Without proper focus, a developer often will try to serve too many potential tenants, at the expense of not securing the tenants it really wants. To derive an effective strategy, marketers need to combine a laser-like focus on market segments and key targets within those segments, with either low cost or differentiation. Points of focused differentiation can include: • Regional versus national focus. Many developers operate regionally and only in certain project size ranges or by trying to dominate a local niche. Firms that are very focused locally are often able to compete against much larger national firms or else to team with them on larger projects where there is room for more than one developer. • Building or project types (or vertical markets) such as enclosed malls, lifestyle centers and big-box retail stores. Likely to be affected in the future by higher peak-period electricity rates (up to $0.30 per kWh in some of the larger metropolitan areas in the eastern United States), these building types might be good candidates for energy efficiency investments, particularly in states or in utility service areas with significant incentives for energy upgrades. Therefore, a green developer can identify such project sites, make energy-efficient or zerocarbon operations a major marketing focus and direct most of its communications to that aspect of their business. • Signature green measures, such as photovoltaics or green roofs, that a developer or retailer commits to bring into play on each project. While it can be risky for developers and retailers to always bring certain technologies to their projects, it is more dangerous not to be known for anything in particular. Branding a company in the green building arena with specific technology solutions for particular building types and sizes can be an effective marketing measure, allowing such companies to secure other marketing and public relations benefits, as well as providing political cover against antidevelopment forces.

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• Project size can also be a focus, allowing smaller developers, for example, to compete with larger and more capable competitors in the “under 100,000 ft2 ” center business. An example might be a focus on maintenance and operations costs for existing centers, allowing one to accurately judge how much they can be cut and then to use that as a marketing tool for prospective tenants.

11.1.4 Name It and Claim It A particular method of differentiation lies in the ability of a shopping center developer or retailer to develop a particular approach to sustainability and then “put a box around it,” label it and claim that label for itself. For example, a commitment to zero-net carbon development or retailing could eventually translate into “Planet Friendly” or “Net Zero” labels. A major commitment to solar power at all centers could lead a developer to claim that they are the “Solar Center.” A developer focused on existing properties could pursue a LEED for Existing Buildings Operations and Maintenance certification for each center (this is easier for an enclosed mall) and then develop a claim that it is the only “Eco Center.” In 2007, I visited a LEED-certified center at the periphery of a major metropolitan area in the Western U.S. that abuts a major interstate highway, with traffic of about 100,000 cars per day. It was and is a great location for a center. But this center is also located in a very windy region. This could have been an opportunity to install a large wind turbine. In this flat terrain, it would be seen for miles and would instantly allow the center to claim the crown of the most sustainable development in the region, as well as to be an immediate tourist draw and attract the attention of passing motorists.

11.2 Build a Brand Image In today’s commercial world, the fifth major task is to create a brand that incorporates the key differences in a developer or retailer that make a difference in the mind of a tenant or consumer. A retailer and consumer electronics company like Apple might want to be thought of as a leading-edge designer and technology company or as dominating a large product category (such as Nike), to broaden its market appeal but at the same time sharply defining itself to consumers who value that experience or approach. To understand the branding opportunity, consider the following statement: “All marketers are liars” [2]. One way to read this statement is to understand that businesses are all creating stories about projects, capabilities, values and interests for themselves and their customers on a regular basis. The story about the green development project or green building you just finished is already manifesting in the minds of all project participants, readers of new stories about the project and the general client base (“It’s only a LEED Silver project, what’s the big deal?”). And it

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will continue to be permuted, just like a message in the parlor game of Rumor,1 if you don’t proactively shape it. Therefore, you must tell a story about your project: If it is significantly different from the contractor’s experience and the architect’s experience and the occupant’s experience, then one of you is a liar! The point is that green building branding is best done when it is a story about project successes and lessons learned. The essence of a brand is incorporated in how you deliver your services, in your company’s personality and core values (which in turn determine who you hire and who you encourage to seek another place to work), your culture (collaborative or confrontational, or something in between) and all the promises you want your client to believe (for example, clear and frequent communications on each project and the highest level of expertise and technological competence). A brand is something that creates a strong personal and professional relationship between your staff and the client’s staff, to build loyalty and lasting relationships. The marketing benefits of branding are multiple. It can shorten the decision cycle of a client and reduce your cost of marketing. If you’re always shortlisted by certain clients and client types, you have a brand. It gives you some pricing flexibility; after all, if they really want you, they’ll pay for all the special things you bring to the project, within reason. It helps you attract the kind of people who in turn reinforce the brand. This point deserves even stronger emphasis: Marketing and recruiting are two sides of the same coin. The same values and branding attributes that attract tenants and consumers attract good people, and a modern corporation is nothing if not a talent agency. Without talented people, you won’t be innovative, you won’t grow revenues and you will never be a market leader. You can see, therefore, that this is a positive feedback loop. The clearer you are about your sustainability positioning and corporate social values, the more likely you are to attract the talent that will help you grow market share and dominate various green development and green retail niches. And the successful execution of your brand promises also generates loyal tenants and customers, who in turn build your business. Since many tenants, for example, perceive retail developments as a commodity, and since many developers deliver them as a commodity (think of how much each shopping mall or lifestyle center resembles the competition, both nearby and nationally), a brand differentiates your projects in a significant way from those of the also-ran competitors. One large U.S. developer, Regency Centers, took a very proactive stance in 2007 to building a brand around its green initiative, one called “greengenuityTM .” According to COO Mary Lou Fiala [3]: Greengenuity is a natural extension of our value proposition and our brand. What you’re really talking about is delivering a higher-quality product, and one thing that is certain is 1 In

the game of Rumor, one person is given a short story to tell to another person; that person repeats the story to the next person in line, and so on. As the line progresses, the original story gets lost over time and space, until it is totally unrecognizable or even takes on the characteristics opposite to those of the original story.

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tenants want to lease space in high quality real estate. This initiative furthers our reputation of being a quality developer, owner, and operator. While it’s hard to put a value on this brand equity, it’s certainly not to be overlooked.

In terms of the benefit of a strong sustainability program and a strong brand for employee relations and recruiting, Fiala says, Employees have responded very favorably, from our executive team down to support staff. Everyone is enthusiastic, wanting to do his or her part. We feel this gives us a long-term advantage in recruiting and retaining human capital, especially younger talent, who place a high value on working for companies with a strong environmental commitment.

What makes a brand in the green building marketplace? • A brand is a story told between marketer and consumer, between developer and tenant. The story must resonate with the tenant or buyer to be effective. The storytelling focuses on specific features of the project, but translates those features into benefits that the recipient can clearly appreciate. • A brand sells an experience or a series of benefits to the consumer. People must be led from understanding the value of the features to understanding how they will benefit from them. Think of Starbucks: It sells a commodity product, coffee, you can buy in hundreds of locations in any big town, and at a significant price multiple. Starbucks has managed to create more than 10,000 permutations on the basic “cuppa java,” to give you a unique taste experience. • A brand delivers on its promises. For example, in my own LEED Gold-certified apartment building in Portland, the presence of a trash room with recycling bins, just down the hall, and on every floor, and the enforcement of the required “no smoking” policy, both reinforced daily the promise that the green building experience will be something different. • A brand “walks the talk.” Consumers expect sellers to live by the values of what they are selling. A green retailer or developer should have offices in a green building. A green developer or retailer should craft a LEED-EB or LEED-CI certification for its own offices. A green design developer or retailer should be promoting sustainability in all its activities, not just in a few projects here and there.

11.2.1 Green Power Consider Table 11.1, showing the top ten purchasers of green power in the U.S., a partnership between the U.S. Environmental Protection Agency and various retailers. Participating in this Green Power Partnership is a good way to convince both the public and a company’s employees that it is walking the talk of sustainability. At the top is Whole Foods, which in 2008 supplied 100% of its electricity needs from purchased green power. (Note that this does not mean Whole Foods generated any of this power, merely that it purchased electricity that was produced from solar and wind power.)

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Table 11.1 Top Ten Purchasers of Green Power in the U.S., 2008 [5]a Company

Annual green power purchase (kWh)

Percent of total electricity use

Green power sources

Whole Foods Market Kohl’s Starbucks Staples Lowe’s Office Depot Safeway Inc. Coldwater Creek, Inc. REI FedEx Kinko’s

527 million 259 million 205 million 127 million 101 million 100 million 93 million 81 million 64 million 62 million

100 22 22 21 2 16 3 100 104 24

Solar, wind Various Wind Biomass, solar, wind Biogas, solar Biomass, solar, wind Solar, wind Wind Biogas, solar, wind Various

a

Totals represent the most recent 12 months of purchases for each retailer

Two smaller retailers, REI and Coldwater Creek, also offset 100% or more of electricity use from renewable power. REI also has developed anumber of LEEDcertified stores in the U.S. REI’s prototype store in Boulder, Colorado, received the 2007 national sustainability award from a leading trade magazine [4]. A brand communicates its differences effectively. A common belief is that the average adult is subjected to more than 2,000 commercial messages daily. Getting through that fog with effective communications is a great art. Most savvy corporations engage a strong public relations firm to tell their story and support a continuing dialog with the marketplace as an integral part of their marketing effort. Of course, one can create differences for each market segment that one chooses to address: some might value innovation, while others value low-cost or specific technological choices, such as geothermal heat pumps, photovoltaics or roof gardens. The opportunity is enormous, because there are few established green brands in the retail developer and store operator marketplace today. Without a leading brand (and with due apologies to the major companies involved in this business), the average customer will not have a basis for making a purchase. Even in commercial situations, the lack of a brand can have drawbacks (for example, imagine the confusion in the commercial air conditioning market without major brands such as Trane and Carrier). While a home builder can sell ENERGY STAR, General Electric (GE) or Whirlpool appliances to residential buyers, the lack of name recognition for most green technologies forces the retailer or the developer to become the brand. This is a burden for most developers, but one well worth the effort, even if it takes five years or more.

11.3 Sustainability Marketing as an Evolving Strategy Developers and retailers need to understand how their sustainability marketing must evolve in order to compete effectively:

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• They must choose a strategy that incorporates higher levels of differentiation or lower overall operating costs (to attract tenants), with explicit focus on particular market segments that might include geographic location, project type, owner type, project size, specific technological approach or signature green measures. • This strategy must be reinforced internally and externally so that it becomes recognizable as a brand identity. Internal reinforcement includes training and certification of employees as LEED Accredited Professionals, for example; external reinforcement includes activities to increase the visibility of the company and its key executives in the chosen market niches. • Design firms must form close working alliances with contractors and clients to ensure that their green building projects will actually get built within prevailing budget, time, technology options and resource constraints.

References 1. Brancatelli, Joe. (2008, July 8). Southwest Airlines seven secrets for success. Wired. Retrieved from http://www.wired.com/cars/futuretransport/news/2008/07/portfolio_0708 . 2. Godin, Seth. (2005). All Marketers Are Liars: The Power of telling Authentic Stories in a LowTrust World. (New York: Portfolio Hardcover). 3. Interview with Mary Lou Fiala, January 2009. 4. REI Boulder Receives Chain Store Age’s Retail Store of the Year Award for Environmental Sustainability. (2008, February 7). Retrieved February 15, 2009 from http://www.rei.com/aboutrei/releases/08chainstoreage.html. 5. Top 20 retail. (2009, January 6). Retrieved February 15, 2009, from www.epa.gov/greenpower/ toplists/top20retail.htm.

Chapter 12

Sustainable Retail Organizations

There are many ways that retail developers and retailers can create a meaningful sustainability program. A developer’s detailed approach needs to be different from that of a retail store operator, yet common themes emerge in each program. Figure 12.1 summarizes some of the main themes from the various firms profiled in this book. In this chapter, we provide a framework for corporate sustainability efforts in the retail sector. The five common themes among the programs highlighted in this book are these: CEO leadership, internal and external communications, knowledge management, education and training, and corporate operations (walking the talk). These common themes contribute to the achievements of all retail sustainability programs and also underpin the successful approaches taken in other business sectors.

12.1 CEO Leadership CEO leadership is essential to any sustainability program. Without top-level leadership, nothing much happens beyond the operational adjustments that many firms are making to respond to higher energy prices and the greater focus of local governments on green building issues. Particularly in this time of retrenchment in the development industry, it is important for employees and stakeholders to know that the CEO regards sustainability as essential to the organization’s future and that they should be paying attention to this initiative. For Sonae Sierra, CEO Álvaro Portela made environmental responsibility a cornerstone of the company’s development program many years ago. The same holds true for Sir Stuart Rose at Marks & Spencer, whose Plan A certainly captures the imagination not only of his company’s associates, but also of the general public.

12.2 Communications If a tree falls in a forest and there’s no one around to hear it, did it make a sound? If the CEO wants to rapidly transform the organization toward sustainable ends, J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_12, C 2009 by the International Council of Shopping Centers Copyright

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Fig. 12.1 Corporate sustainability programs typically contain all of these five elements

will anyone notice without an active and effective communications program? So the second facet of this pentagonal program comprises internal and external communications plans, programs, strategies and tactics. All of the companies profiled in this book have been active at getting their employee-associates committed to the program and equally adept in getting external recognition for their sustainable achievements, especially through awards programs, sustainability reporting schemes and green building certifications. Internal and external communications need to reinforce a company’s commitment to green design and sustainable practices. At the beginning, it can be hard on the marketing staff to tell the company’s story because they may not really know what it is. As a result, an early activity should be to develop coherent statements about its approach to sustainable design, construction and operations, with a compelling story about commitment, process and achievements. Once a company makes a strong commitment to communicating its interest in and commitment to sustainability, it’s amazing how many opportunities arise to present them to current and prospective tenants, public officials and other key stakeholders. People inside the organization are also eager to hear this message, so it’s important that the company use all internal communication avenues, with frequent postings of interesting news and links about sustainability in general, as well as the ongoing story of the company’s actual achievements. Figure 12.2 shows a Woolworths distribution center in Midrand, South Africa, inaugurated in 2007, part of that company’s aggressive sustainability program. Woolworths’ goal is to reduce its carbon footprint by 30% in the near term [1].

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Fig. 12.2 Woolworths made a major commitment to green construction and operations in South Africa with their Midrand distribution center. Courtesy of Woolworths

12.3 Education and Training The third facet has to do with developing the skills, knowledge and aptitude for sustainability inside the organization, through a strong commitment to education and training of employees. In the case of the retail developers we’ve profiled, each company has a point person responsible for the success of its sustainability initiatives. For Multi Development, Technical Director Arco Rehorst has led the way by engaging the country managers to become advocates for the program through a training and monthly learning program. For Sonae Sierra, working with Elsa Monteiro on sustainability initiatives involved training its people in the ISO 14001 environmental management system as a critical element in gaining acceptance for the system. For SES Spar European Shopping Centers, Filipa Fernandes has been the sparkplug for directing their achievements. For Regency Centers, the path lay in hiring a new

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company officer, the chief sustainability officer. For several retail clients of Yudelson Associates, training a dozen or more people in each organization to become certified by the U.S. Green Building Council as LEED Accredited Professionals has been the way that training needs have been fulfilled. Extensive training may also be required in the development group, when a retailer or developer commits to a specific green building certification program. Kohl’s expects to certify more than sixty stores in the LEED volume build program for retail stores. David DeVos is director of architecture and sustainable design at Kohl’s. He discusses the dimensions of a training program to serve just the design, construction and certification function [2]. I think getting the training out to all of the people that need it is a challenge. Kohl’s trained over 600 people for the stores [currently undergoing certification]. Training store management, the management staff, operating staff engaged in real estate, construction and facilities, is also important. There’s a lot of anecdotal information out there on green building and trying to get the information that’s correct and accurate for your program is a challenge and is certainly a barrier [to widespread implementation of LEED].

Beyond training to get stores built, there’s also the issue of operating them correctly. We have also found that when store managers and others engaged in store operations understand and appreciate that the company is building healthier and more efficient workplaces, they can effectively communicate the benefits of green building to all employees, which in turn, helps them to communicate to the customer base.

12.4 Knowledge Management The fourth facet of the sustainability program requires the organization to be determined from the beginning to capture the lessons learned, as a developer, for example, through its attempts to build certified centers and to create green operations programs for existing centers. The organization needs to capture cost data and determine which of its existing design teams, contractors and vendors are most cooperative and knowledgeable about sustainability issues. For a retail store builder and operator, the ENERGY STAR program in the U.S., EPBD in the EU, LEED, BREEAM and Green Star programs offer clear opportunities for objective evaluations of achievements in store design and operations. In this case, capturing cost and performance data from various green building measures, such as weather-controlled irrigation systems, photovoltaics and green roofs, offers opportunities to learn from each project and develop a new prototype store that will perform at a much higher environmental level. Many larger firms have hired sustainability coordinators, managers and directors in the past few years, people whose main job is to maintain all of the information flowing through the firm about green products, green specifications, green design methods, new building systems and similar items. Often these people have technical backgrounds, but sometimes they do not. One key aspect of knowledge manage-

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ment is capturing the lessons learned from each project, whether or not the firm decides on a LEED certification. Some firms keep a LEED scorecard internally and ask both internal and external design teams to prepare documentation, so that they can judge how well the company is doing in its commitment to sustainable design. That way, it becomes easier to move the entire firm along and to present to management the cost and performance implications of their proposed project. In a large company, of course, this process can also set off a healthy internal competition between, for example, different regions of a large developer to be the most sustainable design group, or between different design consultants for a large retailer. The key with knowledge management is to capture the institutional learning, so that future projects can benefit from new technologies, systems or products or document mistakes on current projects that can be corrected in the future.

12.5 Corporate Operations Finally, the company needs to “green” its own operations. This includes such activities as engaging employees in “personal sustainability” projects, reducing overall fuel use, buying carbon offsets for travel (or reducing it through videoconferencing and other means), implementing environmentally preferable purchasing (EPP) programs, supporting employee car sharing and public transit use and a host of other programs that show a strong corporate commitment to sustainability. Typical sustainable operations involve such areas as recycling, transit subsidies, purchasing policies, analyzing overall use of paper products, green housekeeping and using the office as a laboratory for practices that can be brought to clients’ projects. More adventurous firms also have begun contributing their new expertise to the community by serving on advisory boards and commissions, getting involved with local schools and similar activities. And, as mentioned earlier, committed firms also seize on opportunities to green their own offices, either with a LEED-CI or a LEED-EB project. But a company can always do even more, if the corporate leadership and senior staff are fully committed. For example, look at what one 80-person design firm, SERA Architects in Portland, Oregon, has done [3]. Through a commitment to the “Natural Step” principles for sustainability, beginning in 1997, the firm engaged in a decade-long internal study of how to make their own operations conform to these principles. The Natural Step framework encourages dialogue, consensus-building and systems thinking (which are all key processes of organizational learning) and creates the conditions for profound change to occur. From a business perspective, the Natural Step framework enables corporations to intelligently, and profitably, integrate environmental considerations into strategic decisions and daily operations. Briefly stated, the Natural Step “system conditions” ask four key questions: • Can the earth replace what I take in the form of resources? • Am I poisoning the earth, water or air with my activities?

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• Do I respect the biodiversity of flora and fauna, with both my project work and my daily activities? • Are the choices I make fair and equitable—in other words, does everyone benefit from them? Taken seriously, these seemingly innocuous questions can cause a revolution at any company. Beginning in 2003, SERA Architects created an action plan that encompassed nine major areas: energy, chemicals, materials use, travel, paper, food, furniture/finishes/equipment, the firm’s design library and human resources. Choosing to pick the “low hanging fruit” made the actions more understandable to the firm’s staff and led to early “wins” that encouraged the process to continue. As a result, SERA matured as a sustainable design firm and began to win new business [4]. Interface, Inc. is the world’s largest manufacturer of modular carpet. After ten years of applied sustainable thinking on the part of the entire organization, Founder and Chairman Ray C. Anderson stated the business case for sustainable corporate operations simply, profoundly and forcefully [5]: Costs are down, not up, dispelling a myth and exposing the false choice between the economy and the environment; products are the best they have ever been, because sustainable design has provided an unexpected wellspring of innovation; people are galvanized around a shared higher purpose; better people are applying, the best people are staying and working with a purpose; the goodwill in the marketplace generated by our focus on sustainability far exceeds that which any amount of advertising or marketing expenditure could have generated—this company believes it has found a better way to a bigger and more legitimate profit—a better business model.

12.6 Case Study—SES Spar European Shopping Centers SES Spar is a major central European developer with a strong sustainability program in place since 1999 [6]. The sustainability program is called Triple-Branch Sustainability, and it addresses: • New Developments—The company implements baseline sustainability measures into all new developments. • Existing Centers—SES adopts baseline sustainable operating and maintenance practices throughout its existing portfolio. • Corporate Operations—SES uses sustainable practices throughout the corporate offices and uses them to build a culture and awareness of sustainability. In place since 1999, the program became more organized and structured with the expansion of the award-winning project EUROPARK Salzburg in 2005. For SES Spar the key elements for sustainability in constructing new shopping centers include consideration of the following:

12.7

• • • • • • • • • • •

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The Environment—Land Use and Ecology Health and Well-being Water—Efficiency, Conservation and Reuse Energy Materials and Conserving Resources Waste and Recycling Social and Community Inclusion and Integration Consumer Awareness of Sustainability Transport Pollution Management of the Center

Each of the projects carries out a very detailed checklist that covers all the points of the known assessment methods. SES Spar considers the checklist to be even more aggressive and stricter than LEED or BREEAM, since the checklists are controlled and certified by the Austrian government. Several of the recent projects have won major awards, including EUROPARK Salzburg, the winner of the ICSC Best Sustainability Project of the World 2007 and the Atrio project, the winner of the ICSC ReSource Award 2008, the Energy Global Award 2007 and the Trigos—CSR Award 2008. The project Q19 won the 2008 ICSC Resource Award, and SES won the ICSC Global Company ReSource Award in 2008.

12.7 The Sustainability Report Ultimately, all of the company’s sustainability programs need to become part of the DNA of the company. Each department has a role to play and an important contribution to make. The annual or biennial sustainability report becomes an important part of the program, a way to trumpet achievements, acknowledge shortcomings and set the stage for future activities. According to a 2008 study by KPMG, 200 of the 250 largest companies in the world already produce regular sustainability or corporate social responsibility reports [7]. The KPMG survey also looked at the largest 100 companies by revenue in 22 countries and found that overall uptake of sustainability reporting was 45%, with wide variation between countries. It seems clear that the retail sector will be moving decisively in this direction over the next five years. KPMG and the Global Reporting InitiativeTM (GRI) also studied 50 corporate sustainability reports. Their analysis, Reporting the Business Implications of Climate Change in Sustainability Reports, examines how companies are reporting on climate change to their stakeholders. The study summarizes the results of a survey conducted by the Global Reporting Initiative and KPMG’s Global Sustainability ServicesTM [8]. The survey’s main finding is that in reporting on climate change, many companies emphasize potential opportunities arising from climate change rather than the

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financial risks and other liabilities it could give rise to. This approach ignores new evidence that climate change presents a serious global economic threat. Just the rapid rise in gasoline prices in 2007–2008 showed retailers that people will trade off money spent on fuel with money spent on discretionary retail purchases, so there is clearly a direct link with climate issues, energy costs and availability, and retail sales. The GRI/KPMG study suggests that many companies view climate change not only as a threat but also as an opportunity for new products, services and trading. In this context, shouldn’t your sustainability reports and your corporate strategy be considering these opportunities as well? Brian Fleener of Mulvanny G2 Architecture says [9], My new advice to clients is to look at the opportunities that are in front of them for building sustainably and looking at the social implications of doing that. I think the retailers are beyond the nuts and bolts of it. Now, I’m trying to get them to focus on the social aspects. As development goes on and people are looking at new ways of living, these new developments will be part of that.

12.8 The Long-Term Benefit Sometimes, in the daily busy-ness of our business, we forget that the real purpose of our sustainability programs is to bring about a better world for ourselves and for our descendants. We forget how many people we influence through what we say, what we do and what we say about what we do. People need sustainability education, and the retail developer and retailer are in unique positions to provide this information and perspective for their customers. Crispin Burridge, head of sustainable construction at Marks & Spencer, puts the opportunity in these terms: We’ve got approximately 35,000 product lines and, as you cascade down, there are 2,500 factories, approximately 20,000 farms and 250,000 workers directly involved in producing those 35,000 product lines. We have about 75,000 employees and we see 20 million customers a week. You can imagine that if you could shift even 1% of all of those people, move their hearts and minds and the way that they run their own lives, the scope of influence is quite large [10].

12.9 Creating a Sustainability Program One of the hallmarks of corporate sustainability in the retail sector is that it keeps evolving rapidly. What worked two years ago to keep a company at the leading edge is no longer seen that way today. But there are certain core principles and activities that must be addressed in any sustainability program. Here is one example from a consulting client of Yudelson Associates, Edens & Avant, a midsize developer of grocery-anchored shopping centers, primarily focused on the Eastern Seaboard of the U.S., from Massachusetts to Florida [11]. Led by President Jodie McLean, the in-house corporate task force engaged all corporate departments in a wide-ranging

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Table 12.1 Corporate Departments Engaged in Sustainability Task Force Department

Role

1. Executive leadership

Create the task force, keep it on task, provide closure when done; oversee ongoing implementation; hire or appoint a Corporate Sustainability Officer or director to provide oversight and leadership to the effort Guidelines for new buildings; work on LEED for Core and Shell certification of new “shops” buildings; awareness of political benefits of a sustainability commitment Greening existing properties; LEED for Existing Buildings programs; waste management; utilize local incentive programs; connect with Energy Service Companies (ESCOs), which may upgrade energy performance in exchange for a share of the savings Sustainable purchasing; corporate travel; creating and tracking carbon footprint; check for insurers offering discounts for green buildings and green practices: provide support for personal sustainability projects by employees Work with tenants to get their buy-in; create and “sell” green leases to current and future tenants; sell the tenant guidelines to existing and new tenants Create an in-house sustainability web page using corporate intranet, wikis, blogs and other techniques Work with leasing department on green leases; watch for pitfalls in “promising” sustainable results; quantify risk mitigation benefits Branding and communications strategy; sell the program in-house; integrate marketing packages with sustainability programs; create external sustainability section of web page; develop signage and marketing materials for retailers and consumers; secure public relations benefits of sustainability achievements Sell the green program to potential investors; find new investment options with funds and investors committed to sustainability; evaluate each investment proposal with regard to sustainability objectives Investigate tax credits, tax deductions and other incentives for green shopping centers and green retail; investigate solar energy third-party partnerships for off-balance-sheet financing of renewable energy

2. Development

3. Center/Retail operations

4. Administration

5. Leasing

6. IT 7. Legal

8. Corporate communications

9. Investment officers

10. Finance

task force that drew on a wide range of expertise from within the company, shown in Table 12.1. Over a period of six months in 2008, the task force drew up a comprehensive sustainability program for implementation beginning in 2009. A typical shopping center developer should begin its sustainability planning efforts by addressing the four key functional areas shown in Table 12.2. Within each of these areas, you can see the opportunities for the five key elements for successful sustainability programs: leadership, operations, communications, knowledge management and education and training. Leadership comes not only from the president or CEO of an organization, but from each key functional area director or manager.

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Table 12.2 Key Functional Areas for Sustainability Planning Functional area

Examples of activities

1. Corporate operations

Travel, human resources, marketing, accounting, purchasing, information technology Green leases for tenants; operating guidelines for tenant improvements; encourage tenants to participate in waste recycling and reduced lighting power use Site selection; design and construction guidelines; commitment to LEED for New Construction certification Incorporate sustainable principles within the acquisition, operation, and redevelopment of existing buildings; commitment to LEED for Existing Buildings certification

2. Leasing

3. New centers 4. Existing centers

Each functional area presents specific and usually distinct operations issues for sustainability planning. Each requires communication both within and outside the organization, something that typically engages the skills of a corporate marketing group. As ideas are tried out, it’s important to start gathering lessons learned into a coherent framework. This information would typically be collected by both the development staff and the center or retail store operations staff; it needs to be “normalized” to apply to all future activities, for example by putting cost data into a coherent format that recognizes changing building costs over time and in multiple regions. Finally, employees need a continuing education program. In the case of Edens & Avant, there is a commitment to having about 5% of the staff become formally certified as LEED Accredited Professionals. Other key people in the organization will look for similar accreditations in their fields of specialization.

12.10 Summary Sustainable retail organizations are a work in progress. There are few companies to which one can point and say, “They have the perfect program.” But one thing is clear: Without a commitment to get started, an organization will see itself lagging farther behind with each passing year. In fact, if you review the discussion of the business case for sustainable retail development outlined in Chapter 4, you will see that the primary reason for engaging in this activity is to get and keep good talent. Without being competitive in the marketplace for good people, especially in the mature economies, it is almost impossible to grow revenues and profits on a consistent basis over the long haul. You might have your own “save the earth” reasons for wanting to promote sustainability, but the underlying reason must be to remain a competitive enterprise, as sustainability always balances economy, ecology and equity concerns, the triple bottom line.

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References 1. Woolworths web site. Retrieved on February 15, 2009, from http://www.woolworthsholdings. co.za/sustainability/journey.asp. 2. Interview with David DeVos, November 2008. 3. SERA Architects. A Natural Step Network case study. Retrieved on March 17, 2009, from http://www.thenaturalstep.org/en/usa/sera-architects-portland-oregon-usa. 4. Oregon Natural Step Network. (2005, January). Retrieved December 29, 2008, from http://www.ortns.org/documents/seracasestudyfinal_000.pdf. 5. Interface. Toward a more sustainable way of business. Retrieved December 29, 2009, from http://www.interfaceglobal.com/Sustainability.aspx. 6. Email interview with Markus Wild, CEO, December 2008. 7. Majority of global companies embrace sustainability reporting—Survey. (2008, October 27). Retrieved December 28, 2008, from http://www.sustainablebusiness.com/index.cfm/ go/news.display/id/17021. 8. Climate change & sustainability reporting. Retrieved December 28, 2008, from http://www.kpmg.com/Global/WhatWeDo/Industries/FoodDrinkConsumerProducts/Pages/ Climate-change-sustainability.aspx. 9. Interview with Brian Fleener, March 2009. 10. Interview with Crispin Burridge, November 2008. 11. Edens & Avant web site. Retrieved December 21, 2008, from http://www.edensandavant.com. Information used with permission.

Chapter 13

The Ten-Point Program for Retail Sustainability

Let’s move now from description to prescription. What should a retail developer do? How should a retailer respond to the sustainability imperative in these difficult economic times? Figure 13.1 shows some of the elements of sustainability programs and illustrates the benefits. Clearly, news media are going to continue to report the claims of those who say retail is not doing enough to “save the planet.” Consumers will continue to be exposed to these allegations, whether they are fair or not. Throughout this book, we’ve shown you what some of the early adopters are doing in the retail real estate sector. So, what should other developers and retailers be doing? This chapter presents a simple, straightforward and effective approach to retail sustainability by setting out a ten-point program. 1. Setting the Vision: This is the job for the CEO and senior management. Where does management want sustainability to take the company? Is the goal to aim at “zero net impact” by 2020, like Interface, Inc.? Or, alternatively, is the goal to become “carbon neutral,” just like Dell Computer? [1] The leadership team must scout the terrain and chart the course, as well as inspire the team to start down the path. Sir Stuart Rose did this at Marks & Spencer with his Plan A. Metro Group is a European retailer with more than 2,200 locations in 31 countries in Europe, Asia and Africa. Eckhard Cordes is CEO and chairman of the management board. He states the vision and rationale for sustainable retail development in these terms [2]: To continue our profitable growth and optimize our investments, we have to ensure that we manage our core business in a sustainable manner. For us, corporate social responsibility (CSR) means acting responsibly towards the people we deal with and the environment—in our stores and operations and along the supply chain. We can thus secure the future foundation for our business and potential competitive advantages and contribute to the sustainable development of society. We use CSR as a tool to structure our business processes even more efficiently and increase the benefits for our key stakeholders. It has also become clear that the only way to secure economic stability and social prosperity over the long term is through sustainable corporate management.

J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5_13, C 2009 by the International Council of Shopping Centers Copyright

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Fig. 13.1 The benefits of adopting sustainable retail solutions are multifaceted and long-lasting. Courtesy of Palladeo

Sonae Sierra was profiled in Chapter 1. It’s worth mentioning again how important corporate (social) responsibility (CR) is as a guiding principle for the company’s actions. The company’s CEO says [3]: In our CR management system we have identified nine areas that represent the greatest business challenges and opportunities in the short and medium term: energy, climate change, water, waste, land use, the business chain (suppliers and tenants), communities (including visitors), employees, and health and safety. The CR Steering Committee, chaired by the CEO, oversees the CR strategy pursued by Sonae Sierra. This steering committee sets the long-term objectives and goals for the company and agrees on annual plans for performance monitoring, target setting, and reporting and communicating. A number of individual CR working groups have been established to govern each of the material impact areas. These groups prepare the decision proposals for the CR Steering Committee, and coordinate their implementation and delivery. A member of the CR Steering Committee chairs each working group.

The involvement of the CEO in the CR Steering Committee is critical for reinforcing the vision that sustainable retail development is the mission of the company. Figure 13.2 shows the company’s Freccia Rossa project in Brescia, Italy. 2. The Task Force: Once the vision is set, then the real work begins. Typically and effectively, a corporate task force is formed, with the goal of developing a plan within a 12-month time frame. At Regency Centers, the task force comprised ten people, chosen from the vice-presidential and senior staff level of the development, construction, operations, leasing and investment departments, and with well-thought-out geographic diversity. With strong internal leadership and an outside consultant, the group delivered a set of recommendations that were adopted

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Fig. 13.2 Freccia Rossa is a green shopping center in Brescia, Italy. Courtesy of Sonae Sierra

with little change by senior management and the board of directors.1 At another company, the president acted as chair of the task force, effectively translating vision into recommendations, along with senior staff. 3. Examining Green Options: Now the tough work begins; what should the company do? Typically, there are three areas of consideration: new construction and major renovations; existing properties; and corporate operations. Within these three spheres of continuing activity, there are multiple options to be considered. Should the company focus on green building certifications, upgrading the energy performance of existing properties, tracking its carbon footprint, increasing its purchases of environmentally preferable products or some combination of all of these? The

1 Full disclosure: The author served as the outside consultant to Regency’s internal task force during

2007.

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developer also has to take into account its tenants and customers—what are they willing to pay for and what will they support in the years ahead? 4. Adopting Sustainability Initiatives: At some point, choices must be made and the team must move forward. All options involve budget considerations. Seen as a major strategic initiative, sustainability isn’t free. In fact, it may be a costly initiative at the beginning, if major changes are made to new construction designs, fitout guidelines and product specifications. Ideally, the suite of initiatives would be incorporated into a multi-year plan, with funds set aside for the first 3 years of activity. Office Depot’s program, “Buy Green, Be Green, Sell Green,” initiated under the leadership of Yalmaz Siddiqui, director of environmental strategy, provides a telling example [4]. This environmental vision statement is stated in all communications about our program. It sounds like a simple slogan but it’s a lot more, because all of our metrics are tied directly to that vision statement. For example, under “Buy Green” we track the products we resell—the number of stock-keeping units (SKUs) with green attributes—against the goal of increasingly buying green. So if we increase the SKUs with green attributes, that shows that we are being successful against that strategic intent. That direct line is very important and, in fact, is often missing in [other companies’] environmental position statements. Usually there’s a sort of goal established or a high level statement about wanting to follow good environmental practices, but it’s rare to find the linkage between that overall goal and a measurable performance indicator. In the dashboard [on Office Depot’s corporate citizenship report], you’ll see that there’s a very clear line between the goal, the type of initiative it implies and the owner within the organizational context (e.g., merchandising, supply chain, logistics, sales teams). That full alignment is part and parcel of our environmental strategy.

Office Depot uses its green stores to promote their green initiatives. Office Depot also buys green power for 16% of its annual electricity needs (Table 11.1). 5. Staffing the Green Initiative: Who’s going to do the work? In a typical development or retail organization, everyone is working hard and long hours already. Often, someone needs to be hired, or someone from the in-house task force needs to be put into a different position, to act as the corporate sustainability director. This position must have enough clout to get things done, but can’t just be a staff position, removed from the daily work of the company. Many companies continue the consulting relationship from the task force, so that initiatives will be properly advised and the balance of the company’s work force can be engaged over a multiyear period. Crispin Burridge is sustainability manager at Marks & Spencer and has been in the job since late 2006. Regarding the relationship between sustainable construction and the company’s overarching Plan A, he says, Twelve of the 100 targets outlined in Plan A could be attributed to having a direct impact on the built environment. The business wants to become carbon neutral and to reduce energy consumption in head offices, stores and warehouses by 25% compared with 2006 levels. So many of the decisions we make in relation to the built environment influence our ability to

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achieve these targets. The starting point for us, when I first took on my role 2 years ago, was to write a detailed document called “The Marks & Spencer Sustainable Construction Manual.” We started with Plan A at the very top and then looked at the impacts of carbon, water, waste, materials, biodiversity, travel and access, supporting community, archeology and heritage, procurement and their impact on the built environment. We’ve mirrored the Plan A process by aligning all of those areas over the same 5-year period and to setting targets and KPIs for each.2 We broke down each of those targets into incremental annual targets to assist both our internal colleagues and our supply base in ensuring that they can take bite-sized steps. Some people had an expectation that we would meet our targets quite early on. What we have to realize, in terms of sustainable construction, is it’s a very immature industry. Hearts and minds and required skill levels are not where they need to be. It is also about the language that you use. If you talk about zero-carbon buildings, everybody turns their backs and runs to the hills. However, if you ask somebody to get involved in a low-carbon project, you are almost run over by the rush. We have to find a common language and make it incrementally easier for people to approach [5].

6. Internal Education and Training: There must be a commitment to education and training. For many staff, this means literally “going back to school,” for example, studying to become a LEED Accredited Professional or some other certified sustainability professional. For others, it’s training in how to apply BREEAM or Green Star to current design and construction projects. For property management, it might be training in the LEED for Existing Building: Operations and Maintenance program. For the leasing and legal staff, it might be training in constructing and selling green leases to tenants. 7. Green Building: At some point, the outside world is going to ask the company how it is expressing its sustainability values in its buildings, both new and existing. Is it certified green by some independent third party? Is it significantly lower in energy use, water use and waste disposal? The company should be prepared to spend real money in this area of sustainability until the entire system is reworked so that green becomes the norm. This process will probably involve rewriting your standard specifications for new construction, refurbishments and tenant improvements, for starters. 8. Green Operations: There is much to do on the property management side. In the arena of commercial offices, CB Richard Ellis, the largest such property manager, has committed nearly 100 of its managed properties to certification through the LEED for Existing Buildings program [6]. Your efforts may involve negotiating national waste recycling contracts, engaging with Energy Service Companies (ESCOs) in shared-savings contracts, negotiating third-party solar energy investments on larger properties, renegotiating janitorial and landscape maintenance contracts, recycling mercury from fluorescent lamps and a host of other activities that go well beyond compliance with local and national energy and environmental regulations. The authors of “Greentailing” comment [7]:

2

KPI is corporate-speak for key performance indicators.

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Because green is comprehensive, it needs multiple looks and multiple touches to align aspects of real estate, merchandising, operations, procurement and other functions. It won’t happen, however, if there isn’t a mandate. In a similar way, retailers need to get suppliers involved early. Best-practice sharing is a highly effective way to learn and find quick wins.

9. Communications: Every serious sustainability effort requires effective communications, but the “story” can’t outrun the achievements, so there has to be a close linkage between the communications function, typically housed in a corporate marketing department, and the operations sides of the business. Companies should be tracking and reporting their carbon footprint, issuing an annual or biennial sustainability report, taking part in conferences and industry forums, having a green or sustainability web site and other activities that tell both the internal and external stakeholders what you’re doing and where you expect to be in a year or two. Figure 13.3 provides an example of the type of communications vehicle—the green website—that most retailers and developers will be using to sell their sustainability programs to consumers and to provide continuing information. 10. Continuous Improvement: What has impressed me in preparing this book is the number of developers and retailers who are using continuous improvement tools, such as the ISO 14001 environmental management standard (EMS), to set goals, reengineer processes and track progress toward explicit goals. As demonstrated by Sonae Sierra (Chapter 1), as a continuous improvement tool, an EMS can be a strong part of a quality management program, in addition to delivering sustainability monitoring benefits.

Fig. 13.3 Communicating your sustainability progress is an essential part of every successful program. Courtesy of Forest City

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13.1 Looking to the Future In today’s difficult economic climate, there would be little discussion about sustainable retail development were it not for important, larger issues facing people everywhere: planetary issues of global warming and unpredictable climate change. People would just say, “Well that’s a nice idea; we’ll get to it when things pick up again.” Instead, the push for corporate social and environmental responsibility has picked up steam in the past 3 years and is likely to continue, no matter the temporary economic situation. Sustainability is about looking beyond, not just the next quarter or the next year, but the next quarter-century. After all, most of the buildings we put in place today will still be here 25 years from now, whether they’re energy hogs or lean, low-carbon machines. Michael Nates is head of environmental, health, safety and sustainability for Nakheel, the largest developer in the United Arab Emirates, until late 2008 the busiest place on the planet for new retail construction. Here’s his perspective [8]: The biggest issue for me with sustainability in a word is time—it’s not just about now, it’s about inter-generational ideas, 20–40 years ahead. You can build a mall today or a retail experience today, but how do you “future-proof” it, so its adaptable, renovatable, open but yet still has an essence, something unique, while still being functional and comfortable in 20 years time?

In many ways, Wal-Mart’s sustainability efforts aim at meeting this test of the long term. According to Don Moseley, director of sustainable facilities at Wal-Mart: Wal-Mart’s sustainability program has some basic goals: to be supplied 100% by renewable energy, to create zero waste and to sell products that sustain our resources and the environment. Those were set out and publically initiated in a speech that Lee Scott, Wal-Mart’s president and CEO, gave in October of 2005, entitled the “Twenty-first Century Leadership Speech.” Those were three specific elements of his speech that framed the objectives of our sustainability efforts.

In terms of implementation of sustainability initiatives, Moseley says that there are a lot of variations one can make even on a simple theme, such as creating zero waste. There are a lot of different approaches towards the three primary goals. We’ve looked at zero waste and applying it to a lot of things such as the trash that you can physically see or the water that you might be utilizing and we’re trying to take unnecessary resources out of our footprint by being more efficient.

Zero waste might be a good starting point for a sustainability program, and it is a good ending point for this book. Anyone who has studied the Toyota production system knows that it is grounded in the concept of “muda,” or eliminating seven types of waste, and engaging the entire company in eliminating waste—of

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materials, of energy, of other resources, of people’s time and so on [9].3 Retailers and developers could start by looking at the entire retail concept through the lens of zero waste, from the beginning of product design, manufacturing and distribution, to store design, construction and operations and seeing where there is waste that can be eliminated. Finally, it’s likely that zero-net-energy developments—including stores and shopping centers—will become more prevalent over the next 5 years, spurred on by EPBD disclosure requirements in the E.U. and by competitive pressures to stand out in a cluttered retail environment. Paul Appleby of URS Corp. has watched this development as a green building and sustainability consultant for many major companies in Europe [10]. It’s a changing market place. There is competition in trying to get tenants to take up units in any new shopping center. There are a lot of shopping centers going up across Europe and developers have to attract tenants. The fact is that a well-designed shopping center that is highly sustainable should also be significantly cheaper to run. The hook is that you bring people in and sell them energy for far less than they would be buying it elsewhere. And if they’ve got a CSR policy, it helps them meet their energy and carbon objectives. If you ignore the economic environment—I know it’s hard to, but there’s absolutely no doubt—and I think President Obama in the U.S. is going to have a big impact on this—that people will be forced down the road of reducing carbon emissions associated with buildings. They’ll be forced into generating electricity on-site. Internationally, the role of the feed-in tariffs4 is absolutely fundamental in encouraging people to generate a surplus of energy from their development, making it like a mini-power station. We’re involved in a positive-energy office building on the outskirts of Paris that is covered in photovoltaics. We’re involved in a number of them here in the U.K. because that’s the way our government is thinking and that’s the government’s strategy towards building regulations. As we’re looking at drivers, things that will drive down carbon emissions, people will have stronger and stronger CSR policies to meet these carbon objectives, and we’re heading toward the zero carbon shopping center within the next 10 years.

Sustainable development and operations represent the future of green retail, a point made throughout this book. Within 5 years, it is likely that every major developer and retailer will have a significant sustainability program. Now is the time to create a point of sustainable differentiation that can be expanded over time. Sustainable retail development is a journey that many leading companies have begun, while some are just starting and others are yet to begin. The journey toward sustainability promises to provide challenges and rewards for the company and for every person in it who participates in sustainability initiatives. It is a journey of discovery. Many companies have found profitable changes that can be made within existing 3 As stated by Toyota, the core principles that emanate from this zero waste philosophy are “just in

time” (no waiting) and “automation with a human touch” (prevent defects). See, for example, the company’s description at www.toyota.co.jp/en/vision/production_system/, accessed December 30, 2008. 4 A feed-in tariff is a direct payment for electricity generated on-site. Many feed-in tariffs are greater, sometimes by 500%, than current retail prices for electricity, to encourage people to make the investment in on-site power generation.

References

187

organizational conditions, while others have found it necessary to review all their assumptions about the business. No one has found this journey without drama or challenge, or without substantial rewards. Isn’t it time to begin or accelerate your company’s journey toward sustainability?

References 1. Ball, Jeffery. (2008, December 30). Green goal of ‘carbon neutrality’ hits limit. Wall Street Journal. Retrieved March 17, 2009, from http://online.wsj.com/article/SB123059880 241541259.html. 2. Metro Group. 2007 Sustainability Report. Retrieved December 30, 2008, from http://www.metrogroup.de/servlet/PB/menu/1000174_l2/index.html. 3. Sonae Sierra interview, Álvaro Portela, November 2008. 4. Interview with Yalmaz Siddiqui, Office Depot, December 2008. 5. Interview with Crispin Burridge, November 2008. 6. David Pogue, February 2009, National Director of Sustainability, CBRE, personal communication. 7. Stern, Neil and Ander, Willard. (2008). Greentailing. p. 114. (Hoboken, NJ: John Wiley & Sons). 8. Interview with Michael Nates, November 2008. 9. Ohno, Taichi. (1988). Toyota Production System (Portland, OR: Productivity Press). 10. Interview with Paul Appleby of URS Corp., November 2008. Mr. Appleby is now retired from URS, so these viewpoints represent his personal observations and not the company’s.

Appendix A Green Building Rating Systems Around the World

A.1 Australia The Green Building Council of Australia (GBCA) developed Green Star as a rating system for evaluating the environmental design of buildings. This system is used to assess buildings across a number of environmental impact categories. The nine categories are as follows [1]: • • • • • • • • •

Building management Indoor environmental quality Energy Transport Water Materials Land use and ecology Emissions Innovation

Within each of the categories listed above, there are credits that measure various dimensions of environmental performance. Points are achieved when the specified actions for each credit are successfully performed and demonstrated. The number of credits for each category is totaled and a percentage score is calculated as follows [2]: Category Score(%) = (Total number of points acheived/Total number of points available) × 100 Environmental weighting is applied to each category score, which balances the inherent weighting that occurs through the differing number of points available in each category. The weights reflect issues of environmental importance for each state or territory of Australia, and thus differ by region. The weighted category score is calculated as follows [2]: J. Yudelson, Sustainable Retail Development, DOI 10.1007/978-90-481-2782-5, C 2009 by the International Council of Shopping Centers Copyright

189

190

Appendix A: Green Building Rating Systems Around the World

Weighted Category Score(%) = Category Score(%) × Weighting Factor(%)/100

Table A.1 Australian Green Star Rating Levels Green star rating

Points

One star Two star Three star Four star (Best practice) Five star (Australian excellence) Six star (World leader)

10–19 20–29 30–44 45–59 60–74 75 +

The sum of the weighted category scores, plus any awarded innovation points, determines a project’s rating. Only buildings that achieve a rating of four stars and above are certified by the GBCA. The rating levels and their respective scores are listed in Table A.1 [2]. Green Star can be used to rate a variety of buildings. The GBCA recently released the Green Star—Retail Centre v1 rating tool to assess the environmental attributes of new and refurbished retail centers in Australia. It includes benchmarks and calculators tailored for the shopping center industry. The tool is best suited to the design phase of a project (Fig. A.1) [3].

Fig. A.1 Australia’s Green Star program is a credible rating system used also in New Zealand and South Africa


191

A.2 Canada The Canada Green Building Council seeks to transform the built environment by developing best design practices and guidelines for green building. It has adapted the USGBC’s LEED rating system to Canadian climates, construction practices and regulations (see “U.S.” below). Currently LEED Canada has New Construction and Commercial Interiors rating systems. Core and Shell and Existing Building rating systems are being developed. The system is so similar to the USGBC’s LEED system that it is not profiled further here. The prerequisites and credits in the LEED Canada system are organized into six principal categories [4]. 1. 2. 3. 4. 5. 6.

Sustainable Sites Water Efficiency Energy and Atmosphere Materials and Resources Indoor Environmental Quality Innovation and Design Process

Project ratings are determined by the number of points awarded for the successful completion of credit requirements. Depending on the number of points awarded, there are four possible levels of certification [4]. 1. 2. 3. 4.

Certified Silver Gold Platinum

A.3 France Since 2004, French projects have used the voluntary Haute Qualité Environnementale (HQE, or high-quality environment) standard to assess green and highperformance buildings. HQE features two interconnected components, defined as follows [5]. • Explicit Definition of Environmental Quality (EDEQ)—This component defines environmental targets for building development and operations. • Environmental Management System (EMS)—This is the benchmarking component of HQE, and it is closely tied to the format of standard ISO 14001. It is designed to guide project owners through the implementation of the fourteen targets that HQE emphasizes.

192

Appendix A: Green Building Rating Systems Around the World Table A.2 French HQE Targets

Impact mitigation on the external environment

Creation of a satisfactory internal environment

• Eco-construction 1. Relationship between buildings and their immediate environment 2. Integrated choice of products, systems and construction processes. 3. Low-impact work sites.

• Comfort 8. Temperature and humidity comfort 9. Acoustic comfort 10. Visual comfort 11. Olfactory comfort

• Eco-management 4. Energy management 5. Water management 6. Industrial waste management 7. Maintenance and facility repair management

• Health 12. Healthy living spaces 13. Healthy air 14. Healthy water

Like the CASBEE system in Japan (see “Japan” below), the fourteen targets in the French HQE system are divided into the external environment and the internal environment. The targets are listed in Table A.2 [5].

A.4 Germany The German Sustainable Building Council (Deutsche Gesellschaft für Nachhaltiges Bauen, or DGNB) was formed in 2007 and is the leading authority on voluntary sustainable design in Germany. The German certification system (Deutsches Gütesiegel Nachhaltiges Bauen) for green buildings is modeled after the American and British standards, but includes some very German touches. The German system covers more than fifty sustainability criteria, and the certification levels are named after the Olympic bronze, silver and gold medals. A numeric rating is given to each building, with 1 being the highest rating and 6 being the lowest rating. Upon certification a building will be given a German Sustainable Building Certificate (GSBC) [6]. The system also allows for precertification, something which should interest retailers. One of the main differences for the German rating system is its target orientation; there are target values for each sustainability criterion. A building achieves 10 points when it fulfills the highest target value in each category. Proportionately fewer points are achieved for lower target values. A minimum of five points must be achieved in each category [6]. The first certificates were issued in June 2009 by the DGNB.

A.5 Hong Kong The Hong Kong Building Environmental Assessment Method (HK-BEAM) develops and implements standards for “building assessment, performance improvement,


193

Table A.3 HK-BEAM Performance Categories and Available Points Performance categories

Total points available

Site aspects – Land use – Site design appraisal – Pollution during construction Materials aspects – Building reuse – Rapidly renewable materials – Demolition waste Energy use – Annual building energy use – Embodied energy in building structural elements – Air conditioning, appliances and lighting – Testing and commissioning Water use – Annual water use and monitoring – Effluent Indoor environmental quality – Safety and security – Indoor air quality and ventilation – Thermal comfort – Lighting – Acoustics and noise – Building amenities Innovation and performance enhancements – Innovative techniques – Performance enhancements

25

23

78

14

49

5 (Bonus credits)

certification and labeling” in Hong Kong. The HK-BEAM Society is a nonprofit organization that oversees the rating system. The Business Environment Council (BEC) conducts HK-BEAM assessments on behalf of the Society. The assessment tool can be used for new and existing buildings. The performance categories in this assessment tool cover a wide range of environmental concerns. The categories, subcategories and total points available in each category are listed in Table A.3 [7]. The number of credits earned compared to the number of credits available determines a building’s overall rating. This is a percentage referred to as the Overall Assessment Grade. Given the importance of Indoor Environmental Quality (IEQ), the HK-BEAM system requires that projects obtain a higher minimum percentage of IEQ credits to qualify for the overall grade. The rating levels and their respective grades are listed in Table A.4 [7].

A.6 Japan The Japan Green Building Council (JaGBC)/Japan Sustainable Building Consortium (JSBC) were organized in 2001 and together form the leading authority on

194

Appendix A: Green Building Rating Systems Around the World Table A.4 HK-BEAM Rating Levels Rating level

Overall percentage (%)

IEQ percentage (%)

Bronze (above average) Silver (good) Gold (very good) Platinum (excellent)

40 55 65 75

45 50 55 65

sustainable design in Japan. They have developed the Comprehensive Assessment System for Building Environmental Efficiency (CASBEE), a green building rating system now used in many projects throughout Japan. The following four basic sustainability criteria are covered by CASBEE [8]. • • • •

Energy efficiency Resource efficiency Local environment Indoor environment

The CASBEE system is unique in that it separates construction projects into internal and external spaces by a hypothetical boundary. The internal space is evaluated on the basis of “improvements in living amenities for the building users” and the external space is evaluated on the basis of “negative aspects of environmental impacts.” The internal and external spaces are also referred to as private property and public property respectively. The core concept of this rating system is an equation that is comprised of an internal or “quality” category in the numerator and an external or “loadings” category in the denominator. The equation is labeled as follows [9]. Building Environmental Efficiency (BEE) = Q (Building Environmental Quality and Performance)/L (Building Environmental Loadings) The four basic criteria listed above are further broken down into assessment items that pertain specifically to the numerator (Q) and denominator (L), as shown in Table A.5 [9]. Projects are graded according to the BEE ratio. The higher the Q value and the lower the L value, the more sustainable a building is. For instance, when Q Table A.5 BEE Criteria Q-1 Indoor environment Q-2 Quality of service Q-3 Outdoor environment on-site

Numerator of BEE

L-1 Energy L-2 Resources and materials L-3 Off-site environment

Denominator of BEE


195

Table A.6 CASBEE Grades CASBEE grade C (poor) B– B+ A S (excellent)

Ratio 0.5 0.5–1 1–1.5 1.5–3 >3

is equal to L, the ratio is 1. However, when Q is greater than L the ratio is greater than 1. CASBEE gives buildings the following grades according to their BEE ratio (Table A.6) [9]. There are four different assessment tools in the CASBEE system. They are geared toward various aspects of the building market [10]. • • • •

Predesign New construction Existing building Renovation

A.7 United Kingdom The Building Research Establishment (BRE) is the leading authority on sustainable design in the U.K. In the 1990s, BRE developed the Environmental Assessment Method (BREEAM), which assesses buildings against various sustainability criteria (referred to as sections in BREEAM) and provides an overall score that falls within a certain rating level. The sections and their respective weightings are listed in Table A.7 [11]. Within each BREEAM section there are numerous environmental attributes for which a project can receive credits. The number of credits for each section are summed and compared to total number of credits available as follows: Table A.7 BREEAM 2008 Sections and Weights Section

Weighting

1. Building management 2. Health and well-being 3. Energy 4. Transport 5. Water 6. Materials and waste 7. Waste 8. Land use and ecology 9. Pollution Total

12 15 19 8 6 12.5 7.5 10 10 100

196 Table A.8 BREEAM Ratings

Appendix A: Green Building Rating Systems Around the World Rating

Score (%)

Unclassified Pass Good Very good Excellent Outstanding

< 30 ≥ 30 ≥ 45 ≥ 55 ≥ 70 ≥ 85

Section Score (%) = (Total number of points achieved/Total number of points available) × 100 The resulting percentage is then weighted (according to the weights listed in Table A.7) as follows: Weighted Section Score (%) = Section Score (%)× Weighting Factor/100 This produces a weighted section score. These section scores are summed, as well as any innovation credits that have been achieved. This produces the final BREEAM score, which translates to a particular rating level. The rating levels and their respective scores are listed in Table A.8 [12]. BREEAM can be used as an environmental assessment tool for any type of building, in the U.K. or internationally. This system can be applied to single units or whole developments, and it can also be tailored for various stages in the life cycle of a building. For instance, BREEAM Retail can be applied at four different stages in the building life cycle [13]. • • • •

New build Major refurbishment Tenant fitout Management and operation (for occupied existing buildings)

There are several types of retail developments that BREEAM Retail is well suited for, such as [13]: • General display and sale of goods (showrooms and general retail outlets, shopping centers, etc.) • Food retail (supermarkets, stores with food retail sections, etc.) • Customer service retail

A.8 United States The United States Green Building Council (USGBC) introduced the LEED Green Building Rating System in 2000. Since its inception the system has evolved and expanded and is now considered a leading method of measuring and rating building


197

performance throughout the world. There are nine different rating systems that apply to particular building market segments. The LEED rating systems that apply to retail buildings are: • LEED Retail: New Construction (expected release autumn 2009) • LEED Retail: Commercial Interiors (expected release autumn 2009) • LEED for New Construction and Major Renovations (LEED-NC)—for standalone buildings • LEED for Commercial Interiors (LEED-CI) • LEED for Existing Buildings: Operations & Maintenance (LEED-EBOM) • LEED for Core & Shell (LEED-CS)—for in-line or “vanilla shell” retail stores These rating systems are currently undergoing a multifaceted initiative that involves streamlining and increasing capacity for project execution, documentation and certification. This initiative is referred to as LEED version 3, or LEED v3. Several key advancements are taking place through this initiative. The rating systems are being updated and revised, the prerequisites and credits are being aligned and reweighted and regional environmental priorities are being added. One of the biggest changes being made through LEED v3 is the weighting assigned to various LEED credits. The available points in the LEED rating systems were redistributed so that a given credit’s point value “more accurately reflects its potential to either mitigate the negative or promote the positive environmental aspects of a building” [14]. The USGBC used an environmental weighting method developed by the U.S. Environmental Protection Agency. The LEED for Retail rating systems recognize the unique nature of the retail environment and address the different types of spaces that retailers need for their distinctive product lines. In 2009, the USGBC is working to unveil two new rating systems out of the LEED for Retail Pilot program, New Construction and Commercial Interiors. These rating systems will be aligned with LEED v3 and they are expected to be ready for market launch in the fourth quarter of 2009. The LEED for Retail: New Construction Pilot gathered feedback from more than forty pilot projects receiving public comments. The LEED for Retail: Commercial Interiors Pilot is gathering feedback from pilot projects and the public. The expected LEEDNC for Retail rating system is shown in Table A.9. Certification levels and total possible points for each credit category are shown at the bottom of the table. Highlighting indicates cumulative points. Innovation points can be earned for exceptional performance in most of the credit categories points with cumulative points. LEED-NC is intended to guide the design and construction of high-performance commercial and institutional projects. These projects include, but are not limited to, government, retail and service establishments and commercial offices. This rating system provides a set of performance standards that ensures that certified buildings are healthy, durable and environmentally sound. LEED-CI is a set of performance standards intended to guide tenant improvements. This rating system is typically used in office, retail, restaurant, health care,

198


Table A.9 Credit Categories and Points for LEED for Retail: New Construction 2009 Rating System LEED credit category

LEED for Retail: NC 2009

Sustainable Sites Prerequisite: Construction activity pollution prevention Site selection Development density & community connectivity Brownfield redevelopment Alternative transportation – Public transportation access – Bicycle storage & commuting – Low emitting & fuel efficient vehicles – Parking capacity – Delivery service – Incentives – Car-share membership – Alternative transportation education Site development – Protect or restore habitat – Maximize open space Stormwater design – Quantity control – Quality control Heat island effect – Non-roof 25% shade – Non-roof 50% shade – Roof Light pollution reduction Water Efficiency 20% water use reduction Water efficient landscaping – 50% reduction – 100% reduction Innovative wastewater technologies Water use reduction – 30% reduction – 35% reduction – 40% reduction Energy & Atmosphere Prerequisite: Fundamental commissioning of the building energy systems Prerequisite: Minimum energy performance Prerequisite: Fundamental refrigerant management Optimize energy performance: 12–48% less use Renewable energy: 1–13% on-site Enhanced commissioning Enhanced refrigerant management Performance measurement & verification Green power Emissions reduction reporting

Total points: 26 Required 1 5 1 Up to 10

1 1 1 1 1 1 1 1 1 1 1 1 1 2 Total points: 10 Required 2 2 2 1 1 1 Total points: 35 Required Required Required Up to 19 Up to 7 2 2 3 2 –


199

Table A.9 (continued) LEED credit category


Materials & Resources Prerequisite: Storage & collection of recyclables Building reuse – Maintain 55–95% of interior non-structural components – Maintain 50% of interior non-structural elements Construction waste management – Divert 50% from disposal – Divert 75% from disposal Materials reuse – 5% salvaged, refurbished or reused materials – 10% salvaged, refurbished or reused materials Recycled content – 10% (post-consumer + 1/2 pre-consumer) – 20% (post-consumer + 1/2 pre-consumer) Regional materials – 10% extracted, processed & manufactured regionally – 20% extracted, processed & manufactured regionally Rapidly renewable materials Certified wood Indoor Environmental Quality Prerequisite: Minimum IAQ performance Prerequisite: Environmental tobacco smoke (ETS) control Outdoor air delivery monitoring Increased ventilation Construction IAQ management plan – During construction – Before occupancy Low-emitting materials – Adhesives & sealants – Paints & coatings – Flooring – Composite wood & agrifiber products – Furniture – Ceiling & wall systems Indoor chemical & pollutant source control Controllability of systems Thermal comfort – Design – Employee verification Daylight & views – Daylight for 75% of spaces – Views for 90% of spaces Innovation & design process Innovation in design LEED Accredited Professional Regional Credits Total rating system points available

Total points: 14 Required 1–3 1 1 1 1 1 1 1 1 1 1 1 Total points: 15 Required Required 1 1 1 1 Up to 5 1 1 1 1 1 1 1 1 1 1 1 1 Total points: 10 Up to 5 1 Up to 4 110

200

Appendix A: Green Building Rating Systems Around the World Table A.9 (continued) LEED credit category


Certification levels (minimum points) – Certified – Silver – Gold – Platinum

40 50 60 80

hotel and educational facilities. In the LEED system, tenants are defined as leaseholders or occupants who pay rent to use a building. LEED-EBOM helps building owners and operators measure operations, improvements and maintenance on a consistent scale. The goal for project teams employing this rating system is to maximize operational efficiency while minimizing environmental impacts. This rating system was designed to allow ongoing certification for buildings throughout their lifetime. Buildings can be recertified every one to five years under this system. LEED-CS addresses sustainable design criteria for building structures, envelopes and HVAC systems. This system encourages green design and construction practices in areas over which the developer has control but acknowledges the limitations that developers face for the ongoing sustainable operation of a building. This system is designed to complement the LEED-CI rating system. The LEED 2009 versions of these four rating systems are compared in Table A.10. Certification levels and total possible points for each credit category are compared at the bottom of the table.

Table A.10 Comparison of Credit Categories and Points Across LEED Rating Systems

LEED credit category Sustainable Sites Prerequisite: Construction activity pollution prevention LEED-certified building or other sustainable sites credits (LEED CI only) Building exterior and hardscape management plan

LEED-NC points

LEED-CI points

LEEDEBOM points

LEED-CS points

Required

–

–

Required

–

Up to 5

4

–

–

–

1

–


201

Table A.10 (continued)

LEED credit category Integrated pest management, erosion control, and landscape management plan Site selection Development density & community connectivity Brownfield redevelopment Alternative transportation/commuting reduction Site development: habitat/open space Stormwater management Heat Island Effect Light pollution reduction Tenant design & construction guidelines Water Efficiency Prerequisite: 20% minimum indoor water savings Water performance measurement Water efficient landscaping Innovative wastewater technologies Water use reduction Cooling tower water management Energy & Atmosphere Prerequisite: Energy efficiency best management practices

LEED-NC points

LEED-CI points

LEEDEBOM points

LEED-CS points

–

–

1

–

1 5

– Up to 6

– –

1 5

1

–

–

1

Up to 12

Up to 10

3–15

Up to 13

Up to 2

–

1

Up to 2

Up to 2

–

1

Up to 2

Up to 2 1

– –

Up to 2 1

Up to 2 1

–

–

–

1

Required

Required

Required

Required

–

–

Up to 2

–

Up to 4

–

Up to 5

Up to 4

2

–

–

2

2–4 –

6–11 –

Up to 5 Up to 2

2–4 –

–

–

Required

–

202

Appendix A: Green Building Rating Systems Around the World Table A.10 (continued)

LEED credit category Prerequisite: Fundamental commissioning of the building energy systems Prerequisite: Minimum energy performance Prerequisite: Fundamental refrigerant management Optimize energy performance Optimize energy performance, lighting controls Optimize energy performance, HVAC Optimize energy performance, equipment and appliances Renewable energy production (on-site) Enhanced commissioning Enhanced refrigerant management Performance measurement & verification Green power purchases (off-site) Emissions reduction reporting Materials & Resources Prerequisite: Sustainable purchasing policy Prerequisite: Solid waste management policy

LEED-NC points

LEED-CI points

LEEDEBOM points

LEED-CS points

Required

Required

–

Required

Required

Required

Required

Required

Required

Required

Required

Required

Up to 19

Up to 5

Up to 18

3–21

–

Up to 3

–

–

–

5–10

–

–

–

Up to 4

–

–

Up to 7

–

Up to 6

4

2

5

Up to 6

2

2

–

1

2

3

2–5

Up to 3

Up to 6

2

5

–

2

–

–

1

–

–

–

Required

–

–

–

Required

–


203

Table A.10 (continued)

LEED credit category Prerequisite: Storage & collection of recyclables Sustainable purchasing program Building reuse Construction waste management Solid waste management Materials reuse (salvaged/reclaimed) Recycled content Regional materials Rapidly renewable materials Certified wood Indoor Environmental Quality Prerequisite: Minimum IAQ performance Prerequisite: Environmental tobacco smoke (ETS) control Prerequisite: Green cleaning policy IAQ management program Outdoor air delivery monitoring Increased ventilation (30% more) Reduce particulates in air distribution Construction IAQ management plan Low-emitting materials Indoor chemical & pollutant source control Controllability of systems, lighting and temperature Thermal comfort Daylight & views

LEED-NC points

LEED-CI points

LEEDEBOM points

LEED-CS points

Required

Required

–

Required

–

–

Up to 6

–

Up to 4 Up to 2

Up to 3 Up to 2

– –

Up to 5 Up to 2

–

–

Up to 4

–

Up to 2

Up to 3

–

1

Up to 2 Up to 2 1

Up to 2 Up to 2 1

– – –

Up to 2 Up to 2 –

1

1

–

1

Required

Required

Required

Required

Required

Required

Required

Required

–

–

Required

–

–

–

1

–

1

1

1

1

1

1

1

1

–

–

1

–

Up to 2

Up to 2

1

1

Up to 4

Up to 5

–

Up to 4

1

1

–

1

Up to 2

Up to 2

1

1

Up to 2 Up to 2

Up to 2 Up to 3

Up to 2 1

1 Up to 2

204

Appendix A: Green Building Rating Systems Around the World Table A.10 (continued)

LEED credit category

LEED-NC points

LEED-CI points

LEEDEBOM points

LEED-CS points

Green cleaning

–

–

Up to 6

–

Up to 5 1

Up to 5 1

Up to 4 1

Up to 5 1

–

–

1

–

Up to 4

Up to 4

Up to 4

Up to 4

26

21

26

28

10

11

14

10

35

37

35

37

14

14

10

13

15

17

15

12

6

6

6

6

4

4

4

4

110

110

110

110

40 50 60 80

40 50 60 80

40 50 60 80

40 50 60 80

Innovation & Design Process Innovation in design LEED Accredited Professional Documenting sustainable building cost impacts Regional Priority Credits Summary—point totals Total available points for Sustainable Sites Total available points for Water Efficiency Total available points for Energy & Atmosphere Total available points for Materials & Resources Total available points for Indoor Environmental Quality Total available points for Innovation & Design Process Total available points for Regional Priorities Total rating system points available Certification levels (minimum points) – Certified – Silver – Gold – Platinum


205

References 1. Green Building Council of Australia. Retrieved November 5, 2008, from http://www.gbca.org.au/green-star/what-is-green-star/1539.htm. 2. Green Building Council of Australia. Retrieved November 5, 2008, from http://www.gbca.org.au/green-star/green-star/green-star-rating-calculation/1542.htm. 3. Green Building Council of Australia. Retrieved November 5, 2008, from http://www. gbca.org.au/green-star/rating-tools/green-star-retail-centre-v1/1757.htm. 4. Canada Green Building Council. Retrieved November 5, 2008 from http://www. cagbc.org/leed/what/index.php. 5. Arene Ile-de-France. Retrieved on November 7, 2009, from http://www.areneidf.org/ english/pdf/sb08english.pdf. 6. Yudelson, Jerry. Green Building Trends: Europe (Washington, DC: Island Press, 2009). 7. HK-BEAM Society. Retrieved on November 7, 2008, from http://www.hk-beam.org.hk/ fileLibrary/_4-04%20New%20Buildings%20(Full%20Version).pdf. 8. CASBEE web site. Retrieved on November 4, 2008, from http://www.ibec.or.jp/ CASBEE/english/index.htm. 9. CASBEE web site. Retrieved on November 4, 2008, from http://www.ibec.or.jp/CASBEE/ english/methodE.htm. 10. CASBEE web site. Retrieved on November 4, 2008, from http://www.ibec.or.jp/CASBEE/ english/overviewE.htm. 11. BREEAM web site. Retrieved on November 6, 2008, from http://www.breeam.org. 12. BREEAM web site. Retrieved on November 6, 2008, from http://www.breeam.org/ filelibrary/Non%20Domestic%20Manuals/Issue%202/BREEAM_Retail_2008_Issue_2.0.pdf. 13. BREEAM web site. Retrieved on November 6, 2008, from http://www.breeam.org/ page.jsp?id=19. 14. USGBC web site. Retrieved on November 4, from http://www.usgbc.org/ ShowFile.aspx?DocumentID=4121.

Author Biography

Jerry Yudelson is Research Scholar for Real Estate Sustainability for the International Council of Shopping Centers. He is a “National Peer Professional” for the U.S. General Services Administration. From 2004 through 2009, he served as chair of the U.S. Green Building Council’s Greenbuild conference, the country’s largest. He holds an MBA with highest honors from the University of Oregon. A registered professional engineer in Oregon, he holds degrees in civil and environmental engineering from the California Institute of Technology (Caltech) and Harvard University, respectively. Currently, as principal for Yudelson Associates, a green building consultancy based in Tucson, Arizona, he works for property developers, architects, builders, and manufacturers to develop sustainability programs and green building solutions. He works with developers and building teams to create effective programs for largescale green projects, as well as with product manufacturers to guide them toward sustainable product marketing and investment opportunities. Jerry served for eight years as one of the original LEED national faculty members for the U.S. Green Building Council (USGBC). In that capacity, he trained more than 3,500 building industry professionals in the LEED rating system. His passion for green building and green development makes him an in-demand speaker for conferences all over the United States, Canada, Australia and Europe. Jerry is the author of nine previous books on green buildings, green homes, green marketing and green development. He lives with his wife in Tucson, Arizona, in the Sonoran Desert bioregion.

207

208

About the ICSC Research Scholar Program ICSC’s Research Scholar Program was launched in 2007 to provide members with a deeper understanding of specific issues affecting the retail real estate industry. ICSC Research Scholars work with ICSC to author books and articles, to speak at meetings, conferences and teleconferences, and to make educational videos. Their research includes policy and technical analysis, as well as best industry-practice recommendations. Research scholars usually hold their positions for two to three years.

About SEED In March 2007, ICSC launched the Sustainable Energy and Environmental Design (SEED) initiative to survey and support green construction practices. The SEED program encompasses education, best practices, recognition, conferences, publications and legislation to promote green building and business practices. In May 2007, ICSC hosted its first-ever Green Pavilion and Green Zone at the annual RECON conference, showcasing product and service providers who are committed to the environment. In May 2008, the ICSC and SkySite Property, LLC unveiled the next evolution in the SEED initiative, ICSCSEED.org, a new retail knowledge-based web portal. ICSCSEED.org is a knowledge-based web portal providing the most comprehensive online green news and sustainable best practices for the entire retail real estate industry. ICSCSEED.org provides a wealth of information for anyone interested in learning about the greening of retail stores and shopping centers, or their company’s operations. Visitors to the site will find the information they need to advance their corporate environmental and green building strategies and have a single point of access to premium content, including the latest green news, research, white papers, case studies and best practices.

209

About the International Council of Shopping Centers The International Council of Shopping Centers (ICSC) is the trade association of the shopping center industry. Serving the shopping center industry since 1957, ICSC is a not-for-profit organization with more than 60,000 members in approximately 100 countries worldwide. ICSC members include shopping center: owners developers managers marketing specialists leasing agents

retailers researchers attorneys academics public officials

architects contractors consultants investors lenders and brokers

ICSC holds approximately than 250 meetings a year and provides a wide array of services and products for shopping center professionals, including publications and research data. For more information about ICSC, please contact: International Council of Shopping Centers 1221 Avenue of the Americas New York, NY 10020-1099 Telephone +1 646 728 3800 Fax +1 732 694 1755 [email protected] (for general ICSC information) [email protected] (for information about ICSC publications) www.icsc.org

Index

A Aaronson, Glenn H., 4, 5, 6 Abercorn Common, 24–25, 106 AEON Co. Ltd., 33–34 AEON Laketown Shopping Center, 34 Ahold, 150, 152 Air quality, 17, 37, 43, 46, 54, 55, 56, 119, 132, 133, 134, 149, 150, 153, 159, 193 Altoon + Porter Architecture, 81 American Institute of Architects (AIA), 59 American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE), 49, 149 Anderson, Ray, 1, 172 Appleby, Paul, 101, 186 Architecture 2030 Challenge, The, 59 Arrabida Shopping Center, 12 ASDA, 124 ATRIO Center, 100, 101 B Bedell, Jeffrey, 109 Bournemouth Shopping Center, 13, 130 Brand image, 161–164 Branding, 15, 71–72, 94, 159, 160, 161, 162, 175 BREEAM categories, 61 certifications, 60 for retail stores, 61, 62, 63 Building Design & Construction, 80 Building Information Modeling (BIM), 84 Building Research Establishment (BRE), see BREEAM Buildings, 2, 3, 4, 6, 8, 9, 12, 14, 15, 16, 17, 21–39, 41–64, 67, 68, 70, 71, 72, 74, 75, 79–86, 90, 94, 95, 99–106,

113–127, 138, 140, 142, 144, 145, 149, 152, 183, 186 carbon dioxide emissions of, 33 Burridge, Crispin, 174, 182 C Cabot Circus, 29–32 Callison, 38, 39, 133, 134 Canada Green Building Council (CaGBC), 25, 43, 191 Canadian Environmental Quality Guidelines, 10 Carbon dioxide emissions, 2, 33, 61, 70, 125, 126 Carbon neutral, 12, 13, 58, 179, 182 CASBEE rating system, 33 Central Walk Shopping Center, 38–39 Centro Colombo, 9, 11 Centro Vasco da Gama, 12 Certified wood products, 46, 54, 147 Chipotle, 118 City Square Mall, 36, 37 Cleaning, green, 7, 28, 35, 122, 135, 138, 141, 142, 149, 153, 203, 204 Climate change, 2, 9, 13, 59, 70, 125, 173, 174, 180, 185 Comfort, 29, 32, 46, 54, 55, 56, 57, 76, 83, 84, 120, 133, 135, 150, 153, 185, 192, 193, 199, 203 Commissioning, building, 46, 50, 55, 68, 81, 82, 122, 130, 145, 153, 193, 198, 202 Cooling tower, 70, 100, 140, 143, 201 water conservation, 143 Cordes, Eckhard, 179 Cornes, Paul, 104 Corporate Social Responsibility (CSR), 1, 3, 22, 77, 89, 158, 173, 179

211

212 Corporate sustainability, 1, 3, 8, 12, 17, 33, 85, 89, 167, 168, 173, 174, 175, 182 Costco, 89 Costs drivers, 83–84 hard, 81–83, 84 offsets, 70 premiums, 81 soft, 81–83 D Daylighting, 5, 6, 22, 32, 38, 46, 54, 56, 57, 62, 107, 115, 120–121, 123, 133, 150 affect on retail sales, 120–121 Deer Springs Town Center, 15 Design charrettes, 84 eco-charrettes, 81 integrated, 55, 58, 84 process and scope, 83–84 team capabilities, 83 DeVos, David, 122, 123, 159, 170 Differentiation, 29, 76, 158–159, 160–161, 165, 186 Doak, Justin, 57, 58 E EBL&S Development, 107–108 ECE Project Management, 102–103 Ecological footprint, 2, 4 Economy, U.S., 3, 38 Edens & Avant, 174, 176 Edwards, Paul, 29, 31 El Rosal, 11 Emission reduction reporting, 145–146 Energy incentives, 71 photovoltaics, 11, 33, 53, 88, 90, 93, 95, 114, 126, 141, 160, 164, 170, 186 power, green, 46, 54, 89, 118, 122, 131, 145, 163–164, 182, 198, 202 renewable, 2, 21, 35, 46, 59, 71, 87, 88, 89, 91, 94, 95, 96, 119, 124, 126, 134, 144, 145, 175, 185, 198, 202 Energy efficiency, 5, 9, 15, 25, 26, 29, 38, 46, 49, 50, 55, 59, 67, 81, 91, 94, 103, 113, 114, 117–119, 121, 122, 124, 126, 130–131, 134, 143–146, 151, 153, 160, 194, 201 Energy modeling, 82 Energy Performance of Buildings Directive, 9, 105 Energy Performance Certificates (EPCs), 61 Energy Service Companies (ESCOs), 175, 183

Index ENERGY STAR, 43, 47, 50, 54, 55, 58, 67, 118, 119, 122, 131, 144, 146, 147, 151, 158, 164, 170 Entitlement, 17, 68, 70, 79, 94, 108 Environmental Management System (EMS), 8, 9, 12, 119, 169, 184, 191 Environmental Standards for Retail Development (ESRD), 9, 11 Ernst-August-Galerie, 102 EUROPARK Shopping Center, 100, 172, 173 Evaluation, post-occupancy, 45–53, 55, 151, 170 F Feldman, Joseph, 74 Fernandes, Filipa, 99–100, 169 Fiala, Mary Lou, 14, 15, 16, 17, 162, 163 Financial incentives, 72–73 First Capital Realty, 25–26, 27, 72–73 Forest City Stapleton, 76, 107 Forum Duisburg, 5, 6, 101–102 G Galashiels, 13, 14 Giant Eagle Supermarket, 23, 27–28 Gillis, Jaap, 63 Global Reporting Initiative (GRI), 158, 173, 174 Global warming, 2, 22, 33, 59, 185 Greenbuild conference, 84 Green building, initiatives, 21–23, 35, 39, 85, 113 Green Circle Shopping Center, 107, 108 Green cleaning, 7, 122, 135, 149, 153, 203, 204 Green, David, 81 GreengenuityTM , 15, 162 Greenhouse gas, 9, 59, 88, 94, 100 Greenhouse Gas Protocol, 9 Green retail benefits of, 68, 69 challenges of, 76–77 consumer demand for, 75–76 drivers, 83 six key areas of focus, 75 Green roofs, 6, 24, 35, 36, 38, 54, 101, 102, 113, 116, 122, 129, 141, 160, 170 Green Star certification, 21, 22, 34, 35, 43, 48, 59, 110, 154, 158, 170, 183, 189, 190 Green Travel Plan, 9, 11 Grocers, 14, 23, 57, 88, 107, 113, 116, 120, 134–135, 144, 150, 151, 153, 174

Index H Hammerson, 29, 30, 31, 61 Healthy buildings, 56 Highcross, 31, 32 High-performance buildings, 43–45, 53, 55, 58–59 characteristics of, 43–45 Home Depot, 28–29, 75, 82, 121 I Indoor air quality, 17, 37, 43, 46, 55, 56, 119, 132, 133, 134, 150, 153, 159, 193 Indoor environmental quality, 21, 45, 119–120, 121, 132–133, 134, 189, 191, 193, 199, 203, 204 Integrated design, 55, 58, 84 Interiors, 21, 41, 46, 49, 50, 51, 52, 54, 55, 57, 61, 63, 64, 69, 76, 116, 118, 119, 123, 129–135, 141, 153, 191, 197, 199 International Council of Shopping Centers (ICSC), 6, 15, 32, 43, 63, 100, 173 International Standards Organization (ISO), 6, 8, 11, 12, 104, 106, 169, 184, 191 Investment, return on, 2, 5, 6, 7, 12, 14, 15, 16, 29, 32, 56, 58, 61, 68, 69, 74, 81, 85, 90, 92, 93, 94, 96, 103, 104, 105, 109, 115, 145, 160, 175, 179, 180, 183, 186 J John Lewis Partnership, The, 124–125 K Kohl’s, 71, 76, 88, 89, 122–123, 159, 164, 170 KPMG, 173, 174 L Landscaping, 31, 38, 51, 79, 110, 117, 137, 138, 140, 142–143, 153, 198, 201 water-efficient, 117, 142–143 Land use, 10–11, 61, 70, 173, 180, 189, 195 Leahy, Sir Terry, 125 R (Leadership in Energy and LEED R Environmental Design) growth of, 42 LEED 2009, 45, 47, 49, 50, 57, 60, 121, 137, 200, LEED for Commercial Interiors (LEED-CI), 41, 42, 49, 50, 51, 52, 57, 72, 76, 116, 117, 129–133, 134, 163, 171, 197, 200, 201, 202, 203, 204 credit distribution, 198–199

213 LEED for Core and Shell (LEED-CS), 22, 23, 24, 37, 41, 42, 49, 50–51, 76, 81, 82, 107, 108, 175, 197, 200, 201, 202, 203, 204 credit distribution, 198–199 LEED for Existing Buildings Operations and Maintenance (LEED-EBOM), 41, 51–52, 137, 138, 146, 150, 152, 161, 197, 200 credit distribution, 198–199 LEED for New Construction (LEED-NC), 22, 26, 41, 42, 43, 45, 46, 47, 49–50, 51, 53, 54, 57, 60, 76, 82, 121, 129, 176, 197, 200, 201, 202, 203, 204 categories, 121 credit distribution, 198–199 LEED for Retail Commercial Interiors, 57, 129, 197 LEED for Retail New Construction, 57, 197, 198 number of certified projects, 43 project results, 121–122 volume certification, 122, 133, 134, 151, 152, 159 LeSong Mall, 37–38 Life-cycle assessment, 44, 45 Lifestyles of Health and Sustainability (LOHAS), 75 Lighting day, 5, 6, 22, 32, 38, 46, 54, 56, 57, 62, 107, 115, 120–121, 123, 133, 150 design, 51, 54, 103, 118, 130 productivity gains, 56 Light pollution, 46, 54, 138, 141, 198, 201 reduction of, 141 Lipkin, Ed, 107 Low-toxicity finishes, 56–57 Luz del Tajo, 12 M Macerich Company, The, 108, 109 Macy’s, 89 Marketing, 13, 16, 22, 50, 68, 69, 71–72, 79, 95, 123, 152, 157–165, 168, 172, 175, 176, 184 five key steps for sustainable retail, 158 Marks & Spencer (M&S), 12–14, 61, 75, 76, 99, 130, 157, 167, 174, 179, 182, 183 Plan A, 12, 13–14, 182, 183 Materials, resource conservation, 21, 119, 131–132, 146–149 Melaver, Inc, 24, 84, 106

214 Melaver, Martin, 24, 25, 84, 85, 106 Metro Group Asset Management, 35 Meydan Shopping Center, 35, 36 Mirvac Group, The, 34 Morningside Crossing, 26–27, 73 Moseley, Don, 113, 114, 115, 185 Multi Development, 4–7, 16, 63, 101, 169 Mulvanny G2 Architecture, 113, 174 N Nakheel, 185 Nates, Michael, 185 Net Present Value (NPV) factor, 93 Net Zero Energy Commercial Building Initiative, 17 Northgate Mall Redevelopment, 108–109 O Office Depot, 48, 75, 76, 91, 92, 131, 132, 157, 164, 182 Open space, 38, 46, 51, 140, 198, 201 Orion Springfield Mall, 34, 35 Otto, Alexander, 102, 103 P Parque D. Pedro, 12 Payback period, 35, 80 Percy, Jerry, 99 Peternell, Mark, 15, 17 Photovoltaics building-integrated (BIPV), 90 cost of, 11, 33, 53, 88, 90, 93, 95, 114, 126, 141, 160, 164, 170, 186 current market for, 90–92 economics of, 92–93 financial benefits of, 93–94 non-economic benefits of, 95 Plan A, 12, 13–14, 167, 179, 182, 183 ´ Portela, Alvaro, 8, 11, 167 Post-occupancy evaluation, 45–53 40 Princess Street, 106 Productivity, 17, 22, 55, 56, 57, 68, 69, 133 PRUPIM, 103–105 Public transit, 6, 116, 130, 134, 171 Purchasing (sustainable), 45, 52, 96, 104, 119, 131, 146–147, 171, 175, 176, 202, 203 R Rainwater harvesting, 10, 30, 31, 35, 116, 129 Rapidly renewable materials, 54, 146, 147, 193, 199 Real estate, 2, 15, 17, 29, 37, 63, 67, 68, 83, 91, 99, 103, 163, 170, 179, 184

Index Recycling durable goods, 148 waste, 9, 28, 32, 46, 81, 176, 183 Redevco, 63, 105–106 Regency Centers, 14–17, 162, 169, 180 Rehorst, Arco, 6, 169 REI, 58, 89, 164 Renewable energy, 2, 21, 35, 46, 59, 71, 87, 88, 89, 91, 94, 95, 96, 119, 124, 126, 134, 144, 145, 175, 185, 198, 202 energy credits, 87, 89, 94, 96 energy incentives, 71 materials, 54, 146, 147, 193, 199 Reputation, 7, 29, 73, 74, 152, 163 Retail challenges of applying LEED to, 57–58 interiors, 63, 129–135 opportunities for, 22 Retail buildings, 22, 45, 51, 58, 61, 62, 63, 67, 80, 113–127, 197 Return on investment (ROI), 2, 16, 69, 71, 85, 92, 93, 109, 115 Rio Sul Shopping Center, 9, 10 Rose, Stuart, 12, 13, 167, 179 S SES Spar European Shopping Centers (SES), 32, 99–101, 169, 172–173 Shopping centers, 2, 4, 6, 7, 9, 10, 11, 12, 14, 15, 17, 21, 23, 25, 26, 27, 31, 32, 33, 34, 35, 37, 39, 44, 62, 63, 64, 68, 69, 70, 71, 73, 75, 79, 89, 96, 99–111, 113, 117, 129, 137, 138, 139, 141, 143, 144, 145, 154, 158, 161, 169, 172–173, 174, 175, 181, 186, 190, 196 Shops at Northfield Stapleton, 23–24 Siddiqui, Yalmaz, 182 Simple Food Stores, 196 Singapore Building and Construction Authority (BCA), 36 Site restoration, 53, 54 Solar energy, 34, 71, 87, 91, 94, 95, 175, 183 investment partnerships, 93, 94, 96 power, 23, 59, 68, 71, 87–96, 114, 116, 129, 145, 157, 161 technology, 90 thermal systems, 35, 38, 46 Solar Services Model, The, 95 Sonae Sierra, 7–12, 63, 139, 167, 169, 180, 181, 184

Index Stafford Park, 144 Station Park Green, 107–108 Stop & Shop stores, 151 Stormwater management, 46, 51, 67, 81, 131, 140, 153, 201 Subway, 123 SunEdison LLC, 87, 90 Sustainability communications, 184 guidelines, 182–183 initiatives, 182 planning, 175, 176 reports, 180, 182, 184 ten-point program, 179–187 Sustainable design, 21, 22, 41, 45, 76, 99, 107, 108, 122, 168, 170, 171, 172, 192, 194, 195, 200 T Tanger Outlet Center at the Arches, 110 Target, 7, 9, 29, 33, 62, 63, 69, 89, 99, 103, 104, 105, 109, 110, 121, 122, 125, 148, 151, 158, 160, 180, 182, 183, 191, 192 Tax incentives, 22, 74, 92, 93 Telsey Advisory Group, 74 Tenant guidelines, 7, 24, 50, 76–77, 175 Tenants, 7, 10, 11, 14, 15, 16, 17, 23, 24, 26, 29, 30, 35, 44, 46, 50, 51, 56, 57, 60, 61, 67, 68, 69, 72, 73, 76, 85, 89, 99, 100, 103, 109, 111, 116, 130, 131, 132, 137, 142, 144, 148–149, 150, 158, 160, 161, 162, 163, 165, 168, 175, 176, 180, 182, 183, 186, 196, 197, 200, 201 Tesco, 61, 75, 125–126 Training, 15–16, 29, 30, 55, 68, 84, 85, 104, 143, 149, 154, 165, 169–170, 175, 183 staff, 104, 143 Triple Bottom Line, 3, 4, 5, 176 Turner Construction Company, 80 Green Building Market Barometer, 80

215 U Uptown Monterey Shopping Center, 107 Urban heat island effect, 46, 54, 109, 140–141 U.S. Conference of Mayors’ climate change initiative, 59 U.S. Department of Energy, 17 U.S. Environmental Protection Agency, 58, 163, 197 U.S. General Services Administration, 44 U.S. Green Building Council (USGBC), 21, 26, 43, 44, 45, 49, 52, 54, 57, 60, 81, 82, 84, 122, 133, 134, 151, 170, 191, 196, 197 V VHB Engineers, 152 Volume certification, 122, 133, 134, 151, 152, 159 W Wachovia Bank, 133–134 Wal-Mart, 23, 74, 76, 82, 87, 88, 113–116, 124, 157, 158, 185 Waste responsible disposal, 147 stream audit, 148 Water efficiency, 46, 67, 107, 114, 117, 121, 130, 134, 173, 191, 198, 201, 204 efficient design, 9 efficient landscaping, 117, 142–143, 198, 201 metering, 142 reclaimed, 143 recycling, 10 Welling, Derk, 105 Wild, Marcus, 99 Woolworth (South Africa), 168–169 World Business Council for Sustainable Development, 8, 9, 146 Z Zero net energy buildings, 58

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