There has, in recent years, been a marked rise in awareness of sustainability issues, mirroring public concern about climate change, according to surveys undertaken by GVA Grimley.
Much of the research carried out so far relates to property and the actions of investors and developers yet, according to the Carbon Trust, the retail sector has the greatest potential for improvements in building design and the adoption of renewable energy sources to meet targets for carbon reduction.
Shopping centres have in the past proved to be most susceptible to depreciation, so will they be most prone to sustainability-linked obsolescence?
GVA Grimley and Kingston University are carrying out joint research in order to find out how, through active refurbishment and management programmes, shopping centres can better respond to the sustainability agenda.
The study used the Future Proofing Property Questionnaire – developed by Kingston University – to analyse sustainability criteria and identify the potential for improvement.
Investor attitudes
Linked to this research is an investor survey, which was undertaken by GVA Grimley in the summer.
The chart (below) shows how investors rate the impact of sustainability issues by sector, and which sectors are considered most likely to be affected. Overall, investors see sustainability as having the largest impact on the office/business park sectors and not, surprisingly, on high street shops.
Shopping centres were considered to be the third most likely sub-sector to be affected by sustainability issues, ahead of industrial and warehouse/distribution properties, retail warehouses and unit shops.
Even so, with a rating of 3 (on a scale of 1-5), this is no more than an average degree of importance, which is perhaps surprising.
Interestingly, there was a difference between large investors and investors as a whole, with large investors more concerned about sustainability issues, particularly in respect of shopping centres.
This difference between large and smaller players is noticeable throughout the survey.
Another chart (above) shows a marked difference in how large investors and investors generally assess properties in their portfolios against sustainability criteria.
Only 11% of investors have assessed the majority of their properties against sustainability criteria, although a further 34% intend to do so over the next 12 months, giving a total of just 45%. For larger investors, the total figure is much higher at 73%. No doubt the exceptionally strong investment market of recent years has influenced investor behaviour towards sustainability issues, but now that the boom is over, attitudes are changing.
More telling, perhaps, is the importance attached to sustainability issues when investment purchases are considered – 93% of investors feel the factor to be of some importance or of equal importance with otherfactors, although only 1% considered it to be of overriding importance.
Attitudes are changing, led by larger investors. The survey indicates that 27% of larger investors now use sustainability investment credentials in their marketing material, while 73% are likely to do so in the future.
Hammerson’s sustainability statement, for example, is accompanied by a set of environmental objectives which provide the structure for a set of more specific targets.
Land Securities is consistently ranked as a sector leader in terms of environmental performance, and has been recognised with a series of awards from the Green Organisation for setting standards of quality for the UK commercial property sector.
LandSec is aiming to submit all new retail warehouse premises and retail shopping centre developments for independent assessment, with a target of a “very good” BRE Environmental Assessment Method rating.
PRUPIM, a subsidiary of Prudential, supported Kingston University’s work in developing a sustainability appraisal model, and aims to adopt sustainability principles to ensure the economic viability of its portfolio.
In fact, while the company’s previous efforts were collectively grouped together under the term Corporate Responsibility, it has now changed the term to Sustainability, better reflecting its priorities.
PRUPIM launched an “improver portfolio” earlier this year, founded on the premise that properties with a good sustainability rating will prove easier to sell and let.
British Land has launched a sustainability and climate change exhibition as part of its drive to reduce water and energy use. It is also offering employees a free home energy audit to help them reduce their own environmental impact.
Last year the company considerably reduced its environmental impact for the third consecutive year. It aims to become carbon neutral by 2008-09.
British Land is considering installing sources of renewable power, such as solar panels and wind turbines, at a number of its properties, including Broadgate, Denton shopping park, Meadowhall shopping centre, Eastgate shopping centre and Teesside shopping park.
In addition, the company says that since 2005, all electricity supplied to the common areas at Meadowhall, Eastgate and Peacocks shopping centres, as well as its multi-let properties at Broadgate, have come from renewable sources.
Sticks and carrots
Statements on sustainability are becoming more common, and the notion of corporate responsibility is gaining increasing importance, particularly among occupiers. Tesco, for example, highlights the fact that it aims to minimise its environmental impact by focusing on climate change, resources, emissions, waste and recycling.
Marks & Spencer “believes that building good relationships with employees, suppliers and wider society is the best guarantee of long-term success”, while Sainsbury’s is going to great lengths to highlight its CR policy. These companies will, therefore, take an increasing interest in the type of property they occupy.
One way in which properties will be compared is on their ratings in terms of energy use. Energy Performance Certificates are being phased in during 2008, as required under the European Directive on Building Performance.
They give buildings in England and Wales a rating from A to G. While an A rating shows that a building is very efficient, with low carbon output and low fuel bills, a G rating is inefficient, resulting in higher fuel bills. By April 2008, EPCs will be required for: z Sale or rent of buildings, other than dwellings with a floor area exceeding 500m2 z Construction of all non-dwellings
EPCs consider only energy and carbon. BREEAM Retail is a much wider measure and, using benchmarks and standards, can be used to assess the relative environmental impacts of retail development. It expresses the environmental performance of retail buildings as a rating, ranging from Pass, Good and Very Good to Excellent.
Aspects of environmental performance within the scheme include energy, transport, health and wellbeing, water, land use and waste.
Clearly, for existing shopping centres, performance will vary considerably between centres, depending on their age and location and whether they are covered, enclosed or open, but also on how they are managed. This fact is made abundantly clear by analysis of the survey questionnaire results.
The results show, disappointingly, that of the sample surveyed, not one centre achieved an overall Very Good score only three were even rated as Good, while five scored as Poor. The remainder fell within the broad band of Typical.
The three best performances in the sample ranged from a large out-of-town scheme to a refurbished city centre, while those with the poorest scores included a modern prime scheme in southern England, and a factory outlet.
The message coming through from the holistic scores would seem to be that age, location, size and type are less critical to sustainability performance than the incorporation of appropriate sustainability measures, many of which can be factored in at refurbishment.
Significant returns
Investors should be encouraged by the knowledge that careful inclusion and redesign during refurbishment can yield significant returns on sustainability, and this point will be tested in the next phase of the research.
The main issue, of course, is not what the overall picture reveals, but what is learnt through an analysis of centres against each criterion. This analysis reveals a picture of notably poor performance in some areas, including energy efficiency, water management and building management, but better scores for climate control, and good performance in terms of waste management and accessibility.
In terms of operational energy efficiency, the scores only just reached average, with many schemes scoring “poor”. Perhaps not surprisingly, smaller and slightly older schemes tended to have lower scores.
However, the measures now being introduced by some vanguard developer/investors in terms of renewables were not evident in this sample, and it would appear that this issue should feature extremely highly on the refurbishment agenda.
The scores for climate control were variable but concentrated towards the lower end of the scoring range, although this masks the fact that some large and recently refurbished schemes have been able to accommodate best practice.
However, moving forward, the development of design and technology to reduce the requirement for climate control may be more important than simply installing efficient systems.
By contrast, many centres scored quite well for waste management, which is a growing concern for shopping centres following implementation of the EU directive on waste.
Some centres also have sophisticated systems for both sorting waste on site and, in some cases, recycling on site.
Given the costs and implications of landfill, this may need to be a growing trend, although the ambition should always be towards waste reduction rather than product recycling. Water management systems such as rainwater harvesting and grey water recycling were present in only one centre surveyed, leading to low overall average scores.
However, it is clear that metering is almost universal the majority have controlled flush and other water-saving systems, and almost all claim that their supplies are leak-free.
Difficult to achieve
It is accepted that redesign to incorporate the reuse of water may be difficult to achieve, but this area is clearly one where improvements can and should be sought.
In terms of accessibility, most scores were Good or Very Good, which means that the centres can be accessed easily by public transport as well as by car.
However, a check against the centres’ publicity material reveals that most emphasis is placed on drawing shoppers in by car.
It also reveals that few have showers and other facilities for those travelling by foot or bicycle – or for their own staff.
Lastly, the questionnaire sought information about the presence or otherwise of modern building management systems, and asked if tenants are provided with handbooks to help them act sustainably.
The resultant average score of Poor reveals that many centres have either poor or no management systems, but there is some encouraging news – some are investing in such systems, and four of the sample do provide guidance to their tenants.
This is certainly an area in which quick and easy action is likely to produce dividends quickly.
In summary, the overall findings show a definite picture of “must do better”, particularly in relation to building management, water systems and energy.
The next stage of the research will, through interviews and detailed case studies, aim to provide advice to shopping centre investors, managers and tenants on how to improve their sustainability performance.
The full research findings for Sustainability and the Future Proofing of Shopping Centres will be available early next year
Shopping centre research
The survey that has been undertaken as a first stage in the research programme, has utilised a “future-proofing property questionnaire” developed by Kingston University. This survey tool, designed to be administered by a building manager or asset management surveyor, makes an assessment of the baseline sustainability profile of a property and then ranks it as Very Good, Good, Typical, Poor or Very Poor. A score is given against each of a range of sustainability criteria as well as providing an overall score.
The sustainability criteria in the questionnaire are
Operational efficiency including the source of energy
Climate control (if any) including both type and age
Water management, including efficiency and re-cycling measures
Waste management, including storage, separation and on-site recycling facilities
Accessibility, by mode of transport, as this impacts on likely future economic performance and
The presence or otherwise of an effective building management system.
The overall score is achieved, not through a simple summation of scores, but by a careful weighting of results in order to place greater emphasis on items that are considered to impact most heavily as the sustainability agenda unfolds. For example, energy efficiency is currently regarded as of greater concern than any other sustainability item other than accessibility.
Similarly, a building management system, while this can certainly be a very important driver to ensuring responsible operation of the centre, plays a lesser role – and hence is lower weighted – than either waste or water management systems.
The purpose of the questionnaire is to help building owners and managers assess sustainability across the whole or part of their portfolios monitor performance over time of differently rated assets identify potential areas of future performance risk and assist in identification of properties in need of active management. It can also be linked to a worth appraisal tool, but this has not been done in the current research.
The questionnaire, first developed as part of Kingston’s Sustainable property appraisal project, published in 2006, is adaptable to deal with differing types of properties: for example, it is recognised that what might be regarded as a ‘good performance’ feature in sustainability terms for a single shop unit would not be the same as for a multi-unit covered centre. For the former, natural ventilation would normally be the preferred option in sustainability terms, but for a large covered centre a modern, efficient air-conditioning system may be the most sustainable solution.
The questionnaire has been updated to take account of the changing environmental context and the updated version was piloted on a small sample of centres before it was used for a wider cross-section of some 20 centres. The centres chosen for the sample exercise ranged from a large modern, out-of-town centre to smaller town centre schemes, to a factory outlet scheme.
The analysis of performance will now form the basis for detailed discussions with centre owners and managers as to how their design and management support their sustainability scores.
