Shopping Center Business
Feature Article: Greening Retail: Steps Toward Sustainability
November 2008

When it comes to green design, the retail industry has taken a “wait and see approach” for too long. However, several retailers and the companies who develop retail, even in foregoing the pursuit of LEED certification, are realizing the benefits of sustainable design.  James T. Viviano, AIA, LEED AP

An example of a green roof at the Medical College of Georgia. Dave Dawson Photography (dawsonphoto.net)
 
Many of the developers and design professionals of non-retail building types have been quick to join the green movement and embrace sustainable design. For example, institutional, education, hotel and office developers jump at the opportunity to be green at a much higher rate than retail and with much more success. According to the U.S. Green Building Council (USGBC), there are currently 1,585 LEED (Leadership in Energy and Environmental Design) certified projects, and 12,696 have registered their intent to pursue LEED certification. Of the 1,585 LEED certified projects, only two are shopping centers, and of the 12,696 registered projects, the retail sector can claim only 94.

Due to the limited number of completed green retail projects, there has been a gap in the data showing the cost benefits of sustainability in retail centers. In contrast, commercial office developments have statistics showing a higher percentage of leased space per sustainable or LEED certified office building than a traditionally constructed and maintained building. According to a recent survey conducted by Jones Lang LaSalle and CoreNet Global, nearly 77 percent of respondents were willing to pay a premium of 1 to 5 percent for sustainable office options. According to a CoStar study, LEED buildings command premiums of $11.24 per square foot over non-LEED office buildings, and enjoy a 3.8 percent higher occupancy rate. Similar leasing data for the retail sector is not readily available.

The design professionals and contractors who build sustainable and LEED certified projects estimate the increase in cost for a sustainable building to be between 5 to 7 percent, and with the highest levels of LEED certification, cost increases can be closer to 20 percent. Even with the new LEED for Retail standards that the USGBC has developed to ease the pain for developers, much of the cost increases are not in hard building costs, but result from increases related to filing a project with the USGBC for LEED certification.

According to Dougall McCorkle, senior vice president of commercial properties at The Lutgert Companies, the reason for the retail industry’s slow take on green design “has been economically driven primarily, and awareness driven secondarily. Both reasons are rapidly dissipating.” He adds that, “from an energy consumption standpoint, developers in the past haven’t had a great incentive to think about alternative energy and usage, largely because energy costs are typically passed through to tenants as CAM payments, or paid directly by the tenants since tenant electrical costs are typically metered directly to them.”

High energy costs are starting to change this attitude, and now developers must take the lead to keep tenant occupancy rates at a reasonable level. McCorkle adds that while the general public now considers the green movement a very important component to a development, “the rapid acceleration of worldwide oil demand and prices has forced a welcomed and long overdue change in how we do business.”

Regarding the need to conserve energy, Jane Davis, project architect for the Simon Property Group, agrees. “Simon is designing and renovating buildings to be as sustainable and efficient as possible in order to conserve energy.” Simon was recently named the 2008 ENERGY STAR® Partner of the Year for outstanding energy management and reductions in greenhouse gas emissions at its malls across the country. Largely due to its energy management efforts, the company has shown a consistent trend of reducing both electricity and natural gas use since 2003. As a result, the absolute corporate energy use for operations under Simon’s operational control has decreased by 9.7 percent from 2003 to 2006.

Scott Doksansky, Director of Portfolio Management for Melaver, Inc., a retail developer that is committed to sustainability, offers that “for the most part, the industry has been formulaic. There has been a natural aversion to changing what has worked for both developers and retailers. In the early days, certification programs like LEED were not easy to adapt to a building shell, which is the first step for retail development. There was also a lack of models or case studies for developers and retailers to examine that provided proof that there was nothing to fear, and return thresholds could be met, in building to a standard that is above code. And, finally, the customer, whether a retailer or consumer, was not demanding ‘green’.” 

Not being deterred by the costs and complexities of LEED certification, many in the retail industry realize the benefits of incorporating sustainable design elements into their projects without pursuing or achieving LEED certification. “While LEED is certainly a recognizable measure of a project, The Lutgert Companies would probably seek out aspects of sustainable and green development that make the best sense for the project,” says McCorkle. “We don’t want to fall into the behavior of doing things based primarily on scoring points for measurement of a certification.”

There are plenty of opportunities to incorporate green principles into both new and major renovations of retail center projects that save operational expenditure without substantial first time cost. Most of these opportunities can be found in the LEED categories of Sustainable Site Design, Water Efficiency and Materials/Resources. Although not always obvious, some opportunities include specifying reflective white roof materials, drought resistant landscaping, low-flow toilets and urinals, energy efficient light fixtures and the use of natural daylight. Other smart sustainable design principles not necessarily linked to higher costs and easily incorporated into retail projects are the use of locally manufactured building products, materials with recycled content, permeable paving and stormwater management, and retention for landscape irrigation.

A reflective white roof reduces the heat-island effect commonly resulting from large expanses of dark roofing materials and parking lot paving. Light colors reduce both surface temperature, and temperatures under the affected surface, resulting in reduced loads on a building’s HVAC system, and lower operating costs for both owner and tenant.

Daylighting techniques combined with energy efficient, fluorescent light bulbs can result in significant energy savings. Wal-Mart has reported an average energy savings of 15 percent since retrofitting stores with energy efficient lighting and incorporating natural daylighting in all its new stores. A report written for the Minnesota Office of Environmental Assistance suggests that calibrated daylight controls in retail building types could result in an average cost savings of 12 percent, and improved lighting design could save 33 percent in energy costs.

Landscape plans utilizing native and drought resistant plant materials can significantly reduce water consumption and save considerable dollars in irrigation and maintenance costs. Permeable paving, green spaces and water retention basins can greatly reduce storm water runoff, especially when designed with a system of bioswales using indigenous plant life. Efficient storm water management that filters pollutants and limits the runoff into local rivers and streams can also be used to retain water for irrigation and non-potable water for toilets and urinals.

Several high-profile developers have consistently used these environmentally responsible design elements. The Shops 600 at Abercorn Common in Savannah, Georgia, developed by Melaver, quotes an energy consumption reduction of 30 percent from using a tight building envelope, high-efficiency light fixtures and HVAC equipment. Porous pavement in the development’s parking lots has reduced storm water runoff volumes by over 30 percent. Melaver is currently the master developer in a public/private project called Sustainable Fellwood in Savannah, a mixed-use development that is being built to achieve LEED certification. “We look at everything from the three-legged stool approach: environmental, social and economic,” says Doksansky. “The impact we are having on the community as a whole is a critical part of our evaluation and our social metrics.”

Forest City uses energy-efficient lighting, large-scale recycling programs, water management, and parks and open space preservation in many of their building designs. And, because Forest City encourages their tenants to uphold their green principles, the company has established the “greenhouse program,” offering tenants advice on sustainability and green practices in retail centers. Forest City has also created the Sustainable Building Reference Guide, providing retail tenants with educational materials on green building practices. The company completed its first LEED certified shopping center near Denver at Northfield Stapleton and has completed several others.

Simon Property Group, the owner-developer of the Quaker Bridge Mall in Lawrenceville, New Jersey, is currently working to expand and renovate this existing mall. Plans for sustainable design elements include the incorporation of low-flow toilets and urinals, landscaping with native plant materials, the use of low-emitting materials for indoor air quality, and a reflective, insulated white roof. “Simon has been incorporating many sustainable elements, like efficient lighting and incorporating natural daylight, into our design for some time now,” says Davis. “We aim to achieve sustainability through efficient operation and design.”

The Lutgert Companies is currently developing the Mercato, a 500,000-square-foot, mixed-use project consisting of retail, office, theatre and residential components. In addition to white roofs, native plant landscaping and efficient lighting, the Mercato is also planned to fit into its surrounding community, providing connections to nearby neighborhoods. “The philosophical argument that I would suggest, when eyeing a vast landscape of over-developed real estate projects, is that the best way to minimize the impact on the environment is not to build unjustifiably in the first place,” says McCorkle, “After all, do we really need a drug store on every corner?”

As the demand for energy and natural resources continues to increase, it is clear sustainable design and green building principles are tools the development industry will use to satisfy the growing concerns of the communities they help create, and the tenants who use their buildings. By incorporating energy efficient, smart, low-cost sustainable design into their buildings, retail developers not only benefit financially, but also have the added benefit of improving their ecological image. This new, eco-friendly approach is already proving to pay dividends for some retailers and developers who use it in marketing and publicity campaigns to attract younger customers and high-profile tenants. Although it may still take more time before the entire retail world adopts green design, the reasons to take steps toward sustainability are mounting to a point where they can’t afford to be ignored any longer.