Centers, Retailers Have Green Opportunities

NEW ORLEANS–”Going green,” can bring in the green, as sustainable design and recycling programs can increase sales, cut costs and even improve property values, speakers said at the International Council of Shopping Centers fall conference, which concluded here yesterday. The trend toward incorporating sustainability initiatives is expanding exponentially, as retailers and developers learn that environmental benefits also can lead to financial gains.

“Global warming is not just heating up the atmosphere, it’s heating up the economy,” said panel moderator Ian Thomas, chairman of Vancouver, BC-based Thomas Consultants. “Our children and our society demand it.”

The danger is real and increasing, as the polar ice caps – the “giant HVAC system for the earth” – continue to shrink, said Jeff A. Grossberg, principal of Chicago-based SkySite Property. Yet adding “green” elements to a center need not be prohibitively expensive, Thomas noted. The price premium on sustainable design is just 2%, not the 20% many originally envisioned.

As a result, retailers and developers have launched programs and designs that will benefit shoppers, the planet and their own bottom line for years into the future.

“The shopping center arena has the opportunity to be the spokesperson for the entire industry,” Grossberg said. “Of any asset class, we’re in touch with the consumer on a regular basis. We can educate.”

Target Stores has long been a proponent of recycling, and what had been a $15-million corporate cost 15 years ago, is now an $85-million income stream, said David A. Luick, manager, strategic development initiatives for Target Corp. Indianapolis. “Target has been doing sustainable practices for years,” he noted.

Yorkdale Shopping Centre in Toronto has reduced its energy costs from C$1.2 million in 2002 to C$800,000 in 2004 through a number of initiatives, including adding skylights and using the latest lighting technology. In fact, 95% of Yorkdale’s lights are not on during the daytime, said John T. Crane, operations manager for the center.

“With a new expansion and our energy initiatives, our attendance increased by 10%,” Crane said. In addition, the center made a deal with its local utility to lease its backup generator during emergency periods, bringing in $100,000 annually – whether the generator is used or not.

But “going green” is not as easy as some might think. Target’s staff struggled to define sustainability, Luick says. “They weren’t sure what was a personal responsibility, a corporate or a global responsibility,” he said.

And some initiatives may have some unintended consequences – a “green” roof with plants on top of one Target store has helped energy costs, but attracts pigeons and their messes, Luick reported.

Even so, the measures also can help improve property values. Many of the tenants at Abercorn Commons, a first LEED-certified shopping center in Savannah, GA, had to be cajoled into the center, said Roman L. Stankus, VP of Atlanta-based Ozell Stankus Associates Architects, who worked on the project. Today, he said, many of those stores are reporting record sales levels.

“If you look at a better product, one that’s going to withstand potential energy cost increases, and water savings, you also could potentially attract a better tenant which could increase your value,” Grossberg said.