September 9, 2008
Retailers Helping Drive Green Building Movement
A growing number of brokerage and investment management firms have developed “green” standards that are becoming essential elements in the decision to purchase existing properties or build new ones, according to a report on the Shopping Centers Today (SCT) website.
Victoria Kahn, a managing director at ING Clarion in New York, told SCT, “We have a written commitment to bring sustainability to everything we do in terms of real estate activities. We created a whole set of guidelines for investments worldwide, and it applies to clients, whether they are domestic or offshore.”
Woody Heller, executive managing director and head of the capital transactions group at Studley, said, “Sustainability has not made its way into the mindset of all investors. Overall, I would say the movement has been a little slow out of the gate, because in the past the cost savings were modest and therefore not yet the primary incentive.”
David Pogue, national director of sustainability at CB Richard Ellis, told SCT, “We are just beginning to see a movement in the retail sector toward sustainability. It’s coming later than office buildings because in retail shopping centers, landlords typically do not control the contracting of services or control the utility meters. Much of the costs in retail real estate are borne by the retailers. They are the ones contracting for services like janitorial, cleaning, trash, so any sustainable kinds of activities would generally be done by the retailers themselves.”
“Tenants are saying they want to be corporate standard-bearers, they want to be in green spaces, they want green operations,” said Mr. Heller. “This is a very significant change.”
“A lot of the sustainability movement is being driven by the retailers – the ones paying the bills,” Mr. Pogue said. “Retailers have been sensitive to this for a long time, especially the big-box retailers. Walmart, as an example, has been trying to ‘green’ its real estate.”
Discussion Questions: At this point, how aggressive should retailers be in insisting on high sustainability standards for the buildings they occupy? Can most afford to invest in standards that may not have short-term ROI?
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Retailers are smart to insist on greener building standards with an eye on the long term. Over time, it will very much affect their ability to attract and retain shoppers, and those that understand the nature of behavior change understand that shoppers are expecting the retail leaders to be out in front of this trend. As more consumers become educated on the positive impact the building industry can make, and they start to care, it changes the way they think about retailers. Retailers can’t “push” the issue back to their landlords and they know it. They are the front line and the smart ones will stay ahead of the curve.
Green is more than “ecofriendly initiatives”. It’s about saving money. Most green initiatives come with a payback to the bottom line. To operate large stores, the energy cost to heat and cool, light and maintain is huge. Going green reduces that cost. Why shouldn’t all new buildings have a green initiative?
I agree with Anne. There ought to be an economic benefit as well although — as in all other technologies — the early adopters may find themselves saddled with decisions that are more expensive and less effective than the ones chosen by second wave adopters.
Retailers drive it, certainly… and who is driving their decision-making along the sustainability lines? They should all long-since have been influenced by the women’s market – the core customer for the majority of retailers in all shopping centers and developments. With their holistic, “it all matters” purchasing process, women started noticing green/sustainable measures long before any retailers started paying attention. Now that Walmart has taken a stand, and hopefully will continue to build a truly sustainable business, smaller retailers finally believe in the green/women connection (for middle American as well as coastal customers). Most retailers really need to catch up quickly to women’s impatient expectations.
“Green” is now pretty much part of everyone’s vocabulary. It should also be part of everyone’s lives (or, dare I say it, lifestyles). Any retailers wanting their business to continue growing should recognise this and make sure that they are seen to be doing what consumers are doing and want them to do. Referring to yesterday’s discussion about employees wanting to do more for their employers–this applies both upfront and behind the scenes. And I agree with the point made about how whatever is spent will result in savings. It may take a little while but money invested in making premises greener will reduce outgoings AND increase income.
I think retailers are having a huge influence. In fact, solar panels didn’t start going up on stores in California and Hawaii until the state incentives made it economically feasible to do so. Many areas of the country have 300+ days of sunshine a year: Southern California, Nevada, Phoenix, and Denver immediately come to mind.
Currently living in Phoenix, I can tell you that urban heat islands and global warming don’t take a whole lot of convincing out here. Temperatures at the airport sometimes don’t get below 90 degrees for a low at night and in the ’50s it used to cool down to the 70s. Last year there was an all time record for days over 110 degrees. Cement absorbs 2000 times the heat of the surrounding air which radiates at night. Reflective roofing (which is rarely used) would help in its own right. Also, less asphalt and smart landscaping would help reduce the humming of air conditioners 24/7 during 6 months of the year around here.
You don’t see solar panels on buildings out here. I can’t believe that it wouldn’t be cost effective to have solar panels on 200,000 square foot super centers when it’s 117 degrees.
My point is that in the hottest city in the nation, Phoenix, the most plentiful resource which is the sun–isn’t utilized on big-box stores. Retailers have a track record of taking massive action when financial incentives and tax breaks are given for going GREEN! They will jump on the bandwagon.
#1 sustainability move: open fewer stores. America has too many stores already. Stores hurt the environment. #2 sustainability move: tear down more shopping centers and turn the land into parks and farms. Fewer malls = fewer stores = less waste.
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Retailers are smart to insist on greener building standards with an eye on the long term. Over time, it will very much affect their ability to attract and retain shoppers, and those that understand the nature of behavior change understand that shoppers are expecting the retail leaders to be out in front of this trend. As more consumers become educated on the positive impact the building industry can make, and they start to care, it changes the way they think about retailers. Retailers can’t “push” the issue back to their landlords and they know it. They are the front line and the smart ones will stay ahead of the curve.
Green is more than “ecofriendly initiatives”. It’s about saving money. Most green initiatives come with a payback to the bottom line. To operate large stores, the energy cost to heat and cool, light and maintain is huge. Going green reduces that cost. Why shouldn’t all new buildings have a green initiative?
I agree with Anne. There ought to be an economic benefit as well although — as in all other technologies — the early adopters may find themselves saddled with decisions that are more expensive and less effective than the ones chosen by second wave adopters.
Retailers drive it, certainly… and who is driving their decision-making along the sustainability lines? They should all long-since have been influenced by the women’s market – the core customer for the majority of retailers in all shopping centers and developments. With their holistic, “it all matters” purchasing process, women started noticing green/sustainable measures long before any retailers started paying attention. Now that Walmart has taken a stand, and hopefully will continue to build a truly sustainable business, smaller retailers finally believe in the green/women connection (for middle American as well as coastal customers). Most retailers really need to catch up quickly to women’s impatient expectations.
“Green” is now pretty much part of everyone’s vocabulary. It should also be part of everyone’s lives (or, dare I say it, lifestyles). Any retailers wanting their business to continue growing should recognise this and make sure that they are seen to be doing what consumers are doing and want them to do. Referring to yesterday’s discussion about employees wanting to do more for their employers–this applies both upfront and behind the scenes. And I agree with the point made about how whatever is spent will result in savings. It may take a little while but money invested in making premises greener will reduce outgoings AND increase income.
I think retailers are having a huge influence. In fact, solar panels didn’t start going up on stores in California and Hawaii until the state incentives made it economically feasible to do so. Many areas of the country have 300+ days of sunshine a year: Southern California, Nevada, Phoenix, and Denver immediately come to mind.
Currently living in Phoenix, I can tell you that urban heat islands and global warming don’t take a whole lot of convincing out here. Temperatures at the airport sometimes don’t get below 90 degrees for a low at night and in the ’50s it used to cool down to the 70s. Last year there was an all time record for days over 110 degrees. Cement absorbs 2000 times the heat of the surrounding air which radiates at night. Reflective roofing (which is rarely used) would help in its own right. Also, less asphalt and smart landscaping would help reduce the humming of air conditioners 24/7 during 6 months of the year around here.
You don’t see solar panels on buildings out here. I can’t believe that it wouldn’t be cost effective to have solar panels on 200,000 square foot super centers when it’s 117 degrees.
My point is that in the hottest city in the nation, Phoenix, the most plentiful resource which is the sun–isn’t utilized on big-box stores. Retailers have a track record of taking massive action when financial incentives and tax breaks are given for going GREEN! They will jump on the bandwagon.
#1 sustainability move: open fewer stores. America has too many stores already. Stores hurt the environment. #2 sustainability move: tear down more shopping centers and turn the land into parks and farms. Fewer malls = fewer stores = less waste.