Shopping centres go the green mile
By placing responsibility for protecting the environment in the hands of big businesses, Carney pointed a finger at those he thought were not yet doing enough.
It is unlikely that Carney had the property industry down as a laggard when it comes to green issues. The sector has long had to consider the impact of its schemes on the environment and the reasons are clear enough, given the high public profile of property assets, as well as the political sensitivity surrounding development of all types - not to mention the huge contribution the built environment makes to carbon emissions.
To date much of the focus has been on housing and offices, but shopping centre developers are also taking huge strides to improve the sustainability of their buildings, with environmental initiatives now going far beyond recycling bins and LED lights. So what is driving this focus on sustainability?
“People are much more conscious of the ethical values of the places where they choose to spend their money,” explains Miles Dunnett, director of portfolio for fund management at Grosvenor, who has responsibility for the Liverpool ONE shopping centre.
Short-term fixes are no longer enough, he says: the centre is in the midst of a 20-year investment programme and is installing solar panels on its roof to drive down energy consumption.
Indeed, there has been a concerted effort by the big shopping centre owners and managers to significantly reduce energy consumption in the past five years.
For example, figures from Land Securities show that between 2006 and 2014, there was a 39% reduction in energy used at Bluewater in Kent. This year it has introduced lighting and heating initiatives to lower that further, including adjusting the back-of-house lighting to switch to 50% outside trading hours, and installing air barriers to prevent heat and cooling loss.
At Lend Lease and Invesco Real Estate’s Queensgate shopping centre in Peterborough, the ambition is to reduce energy consumption by 45% on the figures set in 2010. The mall monitors everything from water consumption to waste management, and has increased its recycling by 33% since 2010. It now operates at zero waste to landfill.
A new £20m development in the centre, starting in January 2016, will include extra energy efficiency and has the potential to include photovoltaic panels.
The issue of solar panels has sprung back into the news in recent weeks, after the government decided to slash feed-in-tariff rates - rewards paid to landlords for energy raised sustainably.
John MacDonald-Brown, director of environmental consultant Syzygy Renewables, says that despite the reduction, shopping centre landlords are still keen to use their building’s roof space.
“Shopping centres are a bit of a no-brainer for this sort of initiative,” he says. “Returns aren’t bad - they are 8%-9% now instead of 12%-13%, but I don’t think that’s putting people off. With these initiatives, there is an income return so that makes it easier to justify the initial cost.”
He explains that the next logical step is not only to put solar panels on the roof of the shopping centre, but to build a car park with solar panels on top.
“A lot of the big teams are on board with it. What we haven’t done yet, but I expect we will do, is a covered car park,” MacDonald-Brown adds.
Matthew Webster, British Land’s sustainability and wellbeing executive, says the company is just about to pilot photovoltaic panels on the roof of the St Stephen’s shopping centre in Hull.
“The pilot is about looking into an additional income stream,” Webster explains. “We were slightly disappointed that the government reduced feed-in tariffs, but we are still pushing ahead with our pilot.”
He points out that British Land set itself a target in 2009 of reducing its energy consumption by 40% across its portfolio, and has achieved 41% to date.
At Meadowhall shopping centre in Sheffield, the company has installed an on-site measuring system to keep track of the centre’s energy usage - making British Land the first landlord in the UK to undertake such a project.
Once landlords have increased sustainability in the shopping centres themselves, they can begin to encourage retailers to change business habits at a more detailed level.
For example, Hammerson recently built coffee company Costa’s first carbon-neutral store, using a timber frame made from wood sourced by the Forest Stewardship Council and a super-insulated façade creating excellent energy retention. Photovoltaic panels sit on the roof, and there is an underfloor heating system with passive ventilation.
“There were additional capital costs for the project because of all the new things put in,” says Louise Ellison, head of sustainability at Hammerson. “Costa agreed to pay for it, and its retail package is better because its operational costs are much lower. The only way we can do these deals is if the client is willing to work with us.”
Elsewhere, Intu’s Metrocentre works with the Tyne and Wear Local Sustainable Transport Fund to encourage fewer car journey commutes for those who work at the centre. More than 110 retailers across the centre have been engaged in the project, with more than 650 personalised travel packs delivered to staff.
In almost all landlords’ minds, sustainability has become far more than a vague green issue. “We take quite a holistic approach to sustainability,” says Anna Devlet, head of community at British Land. “One of our criteria is future proofing, and as long-term investors we really see the value in building strong relationships with the community.”
It is no longer enough to be ‘green’ - landlords are now thinking about how their shopping centres affect the communities they are in, both environmentally and socially.
This article originally appeared in Property Week.