Note: This is Part 1 of a Two-Part Series on Green in retail.

Most people in the real estate industry are now familiar with the US Green Building Council and its LEED standards for sustainable building construction. A newer organization is now on the scene with similar, yet broader, goals. A group of business leaders and academics has founded the Responsible Property Investment Center. The group attempts to help investors “find and create value through improving the economic, social, and environmental profile of their investments.” Edward Lipkin, a member of RPIC’s steering committee and chief executive officer of Philadelphia-based EBS&L Development, spoke about his organization’s goals recently here at the International Council of Shopping Centers’ Conference on Mixed-Use Development. He later spoke with GSR about his group and industry sustainability trends. Is there any one particular push in society right now driving the existence of groups like RPIC?

Lipkin: To a degree, we have to take our hats off to the US Green Building Council. They truly raised America’s awareness of energy consumption. Man is the only animal on earth that creates a terrarium around him. Every other creature on earth lives on the earth. About 30% or 35% of all of the energy being consumed is in the buildings that man lives in. There is another large percentage that goes to cars. Between the buildings and the cars you have a huge amount of energy consumption.

The Green Building Council has to be credited with going forward and saying that you can make the buildings more energy efficient. They pioneered standards that now are the LEED standard. But the difference between the way RPI looks at the as-built environment versus LEED is that there are other features within the as-built environment that have to be evaluated, particularly the social responsibility of the development and also the financial metrics of what’s really working. If ideas won’t work commercially, they ultimately won’t be. In the green area, retail seems to have lagged behind other property types. Why is that?

Lipkin: LEED really started with office buildings and that’s why you’re hearing so much about those. LEED standards for retail have yet to be written. They’re in the process right now. The other side of that is that Wal-Mart began to look at the environment many years ago, and they probably have pioneered some of the greatest advances in construction and energy conservation that’s known today. Also, Target has a big program, and I assume there is a lot going on with many of the other retailers that we haven’t heard about yet. Until LEED turns its searchlight onto the retail sector, we’ll just hear less about it. Are there any types of retail chains that are more green-friendly than others? Or is it just innovators like Wal-Mart and Target making the push?

Lipkin: The big-box stores, due to their size and complexity, take up an amazing amount of energy consumption. It’s that they are such large energy consumers that it made sense for them to be the first to look at conservation. A lot of the techniques that they are using, like roofs and lighting systems, now harness the energy generated from the sun. Their roofs are also functioning as water traps, which contains the water and uses it for all of their irrigation. They’re also replacing lights in refrigeration with LED screens that only go on when a customer goes near that section. They have a huge amount of strategies that are now being used. I think we’ll see more of this as Wal-Mart shares this information with other retailers. You’re going to see this throughout retail as a coming trend. There are some municipalities that might start requiring developers to build nothing but LEED-certified buildings. How ready is the development community for that?

Lipkin: The development community will have to respond to it. Right now, depending on which LEED standard you try to achieve, the costs run between 2% and 10% more. There are people who claim that it is cost-neutral, but it has never been proven. It’s problematic in that if there is a recession and reduced demand, to foster more cost on the development community could be problem. But time will tell and the cost of doing this continues to come down. Is it difficult to attract retailers to mass-transit oriented developments, especially if there is less parking?

Lipkin: Retail is parking intensive. Most communities want to have four spaces per 1,000 sf. With residential, you can get down to one-and-a-half to one-and-three-quarters cars per residential unit, which is about 1,000 sf. With mass transit, the metrics of retail need to be looked at again. So this is an emerging area to look at.

Retailers are very interested in it. Target has a program specifically for mixed use, and a lot of the other lifestyle retailers look more favorably on transit-oriented mixed-use developments than anything else. People like to shop where they live and have access. The whole thing has a synergistic effect when you mix retail, residential, office and transit together. It’s just a smart way to live. What is the biggest challenge you see facing the industry in this area?

Lipkin: There are challenges all through it because it’s new. There are entitlement challenges because certain community’s codes don’t allow this. There are financing challenges because the various documents to enable these uses to exist are not standardized. It sort of reminds me, to a degree, of the beginning of the mall business. When malls were new, communities and lenders didn’t understand them. It will take another four or five years for the bug to begin to be worked out in this.

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