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Retail Industry Energy Efficiency Report ICSC RECON CONFERENCE 2009

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International Council of Shopping Centers launched Sustainable Energy ... Even at the consumer side, green can create a shopping center loyalty. ... – PowerPoint PPT presentation

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Title: Retail Industry Energy Efficiency Report ICSC RECON CONFERENCE 2009


1
Retail Industry Energy Efficiency Report ICSC
RECON CONFERENCE 2009
  • Jeff Grossberg, CEO
  • SkySite Property, LLC

2
MEEA Presentation Overview
  • About SkySite
  • The Impact of Retail Asset Class
  • Retail Industry Leader Snap Shots
  • General Challenges and Recommendations
  • LEED for Retail

3
About Skysite
4
Skysite property llc
  • Consultation company focused on helping others
    implement
  • Corporate Environmental Strategies (CES)
  • Municipal Environmental Strategies (MES)
  • Green Building Strategies (GBS)
  • Teach others to achieve environmental goals
    through
  • Education
  • Facilitation
  • Participation

5
ICSC Skysite Property
  • International Council of Shopping Centers
    launched Sustainable Energy Environmental
    Design Initiative
  • SkySite and ICSC formed partnership in 2007 to
    create Green Zone and Green Pavilion as part of
    initiative
  • ICSCSEED.org next evolution in organizations
    commitment to the environment
  • In response to Green Zone success, ICSC debuted
    RetailGreen 2008. RetailGreen to be held again
    October 15 16, 2009 at the Renaissance
    Hollywood Hotel Spa, Hollywood, CA

6
The impact ofRetail Asset class
7
Impacts of buildings in U.S.
Why Is Buildings Energy Use Important? Combined
residential and commercial Buildings sector is
the U.S. largest energy Consumer 40 of U.S.
Primary Energy Consumption 72 of U.S.
Electricity
Source U.S. Department of Energy (www.energy.gov)
8
Impacts of Retail Asset Class
The retail sector presents an immediate
opportunity to realize efficiency savings 20 of
the total site energy consumption of all the real
estate sectors (institutional facilities 32,
Office 17, Hospitality 9) Type of
Retail Energy Consumption Sq. Feet Warehouse
(big Box) 4 9.55 billion Retail
Stores 4 4.32 billion Food Service
(restaurants) 8 1,65 billion Food Sales
(grocers) 3 1.26 billion Refrigerated
Warehouse 1 0.53 billion Total 17.37
billion sq. ft.
Source U.S. Department of Energy (www.energy.gov)
9
Impacts of Retail Asset Class
The retail sector has disproportionately high
energy use per square foot (EUI) Type of
Retail Energy Use Intensity kBtu/sorft/year
(est.) Warehouse 30 Retail
Stores 75 Food Service 360 Food
Sales 200 Refrigerated Warehouse 85
Source U.S. Department of Energy (www.energy.gov)
10
Impacts of Retail Asset Class
The economic crisis is having a major impact on
the retail industry and will slow down green
building practices. A lot less development,
hence not as much new green centers, although
higher percentage going green. Capital
expenditures cut back, delays on capital
allowances- slowed down for the moment.
11
Retail Industry LeadersTenants, Developers,
Organizations
  • Wal-Mart
  • Starbucks
  • Simon Property
  • Regency Property
  • Retail Energy Alliance
  • International Council of Shopping Centers

12
Retail industry leaders snap shots
13
Wal-Mart
  • As of January 2007, Wal-Marts largest
    Supercenter prototypes for newly constructed
    stores were 6.9 percent more efficient than the
    most stringent of all U.S. energy codes,
    California Title 24. This includes all operating
    systems and building components.
  • More than 95 percent of newly constructed
    Wal-Mart Supercenters and Sams Clubs include a
    daylight harvesting system. Daylight harvesting
    can reduce up to 75 percent of the energy
    dedicated to lighting used in a Supercenter
    during daylight hours.
  • In newly constructed stores, Wal-Mart installs
    occupancy sensors in most non-sales areas. The
    occupancy sensors automatically turn the lights
    off when the space is unoccupied.
  • In 2007, LEDs in freezer cases became standard
    for all newly constructed Wal-Mart stores and
    Sam's Clubs. LED technology can provide a 52
    percent more energy efficient operation than
    fluorescent illumination. The total energy
    savings for LED lighting is more than 59,000 kWh
    per year for an average Supercenter.

14
Wal-Mart
  • Compared to ASHRAE 90.1-2001 (American Society of
    Heating, Refrigerating, and Air Conditioning
    Engineers), Wal-Marts standard lighting system
    for newly constructed Supercenters is 49 percent
    more efficient than the baseline minimum. ASHRAE
    90.1 is considered the benchmark for compliance
    with the Energy Policy Act of 2005. Compared to
    ASHRAE 90.1-2004, the Wal-Mart lighting system is
    38 percent more efficient than the baseline
    minimum.
  • Wal-Mart employs a centralized Energy Management
    System (EMS) to monitor and control the heating,
    air conditioning, refrigeration and lighting
    systems for all stores and Sams Clubs from
    Wal-Marts corporate headquarters in Bentonville,
    Arkansas.
  • Wal-Mart utilizes some of the industrys most
    efficient heating, ventilating and
    air-conditioning (HVAC) units available. Per
    ASHRAE 90.1-2004, retail stores HVAC equipment
    is required to achieve an overall minimum Energy
    Efficiency Ratio (EER) value of 10.3. Wal-Marts
    new HVAC equipment has an overall EER value of
    12.7, well above the standard.

15
Wal-Mart
  • Dehumidification Wal-Mart actively dehumidifies
    its newly constructed Supercenters and Sams
    Clubs, which adds to the comfortable indoor
    environment while using less energy.
  • White Roofs Wal-Mart uses white membrane roofs
    on its newly constructed stores and Sams Clubs.
    With a higher reflectivity and lower emissivity,
    white roofs help reduce building energy
    consumption in most climate zones and help combat
    the heat island effect unlike darker roofs which
    only contribute to the problem.
  • Heat Reclamation Wal-Mart reclaims waste heat
    from on-site refrigeration equipment to supply
    100 percent of the hot water needs for newly
    constructed Neighborhood Markets and 70 percent
    for Supercenters and Sams Clubs.
  • Energy efficient radiant heating in the floors
    and walls

16
Starbucks
  • Starbucks is in its early stages of executing its
    plans for executing energy efficiency, although
    it has made a very aggressive commitment
  • By 2010, all new stores will target 25 less
    energy consumption than existing baseline
  • All scheduled renovations of existing stores will
    strive to hit the 25 energy reduction
  • 12,000 plus existing stores will eventually
    achieve significant energy savings

17
Simon Property Group
  • Using a 2003 baseline, by 2007 Simon achieved
    reduction of energy in controlled areas by 12
    for lighting and cooling without compromising
    safety or incurring additional liability.
  • Within its major enclosed 200 malls, saved over
    18mil in operating costs per year.
  • Awards NAREIT's 2007 "Leader in the Light"
    awards. Energy Star Partner of theYear.
  • Utilizes various means to achieve energy
    efficiency
  • Lighting retro, inside and outside
  • HVAC maintenance
  • Energy Misers on vending machines
  • Sub-metering- Payback of one year of less
  • Energy management system

18
Regency CENTERS
  • While Regency is still in their early stages in
    developing and executing their energy and
    sustainability program, they have embarked on an
    aggressive commitment
  • New centers - LEED certification on all projects
    - C S
  • ASHREA advanced energy design for retail 15 to
    40 more efficiency than baseline ASHREA
  • 450 existing strip centers with an average of 30
    tenants makes it difficult to accomplish complete
    energy retrofits - leasing activity dictates
    timeline for improvements
  • Marketing benefit is there to be perceived
    industry leader. Even at the consumer side, green
    can create a shopping center loyalty.

19
Retail Energy Alliance
  • US Department of Energy Public/Private
    Partnership
  • Mission Investigate, evaluate, and deploy
    technologies and systems that significantly
    improve energy efficiency of retail buildings
    using the retailers business case.
  • Since 02/08 launch, growing quickly to include
    twenty five members that represents more than two
    billion square feet with a market penetration of
    14 based on total square footage with 816
    Billion in revenue and 52,804 stores.
  • Challenge Area LED Outdoor Area (Parking Lot)
    Lighting
  • Why LEDs make sense for retail parking lot
  • Save energy
  • Enhanced luminaire optical efficiency
  • Better total system efficacy (lumens per watt)
  • Control capability -dimming
  • Reduced maintenance costs
  • Improved uniformity
  • Environmentally friendly

20
International Council of Shopping Centers
  • Over the last 2 years, there has been an
    incredible transformation in terms of commitment
    to green
  • Incorporation of substantial green initiative at
    RECON Show
  • Dedicated green building event RetailGreen
  • Incorporation of green presence in internationals
    events (Panama City, Toronto, Barcelona, Macau,
    Dubai)
  • Launching of dedicated green portal
    www.ICSCSEED.org
  • Working closely with USGBC to establish more
    realistic certification for retail projects and
    stores
  • Most popular book ever published on greening
    retail

21
GENERAL CHALLENGES AND RECOMMENDATIONS
22
Triple Net Lease - Tenants vs. Landlords
  • For enclosed Malls in particular Recovery rate
    not 100. Fixed CAM cost. Triple Net perceived
    disincentive is a Red Herring competitive
    advantage in total cost of tenants occupancy.
  • Landlord does not have much incentive to get
    energy efficiency going for existing tenant
    paying their own utilities. Extending lease,
    renovations to lower operating expenses. Renewal
    rate increase, lower operating costs. Tenant has
    no incentive unless long term payback.
  • Landlord is key player in discussion. As tenants,
    businesses often have limited or no control over
    their impact on major energy items such as
    central HVAC. 

23
Triple Net Lease - Tenants vs. Landlords
  • Lease Language Lease terms are often written
    that prorate utilities on a square foot basis -
    like RUB for apartments. The property may not be
    sub-metered. And thus, there is often less
    financial incentive on the part of tenants to
    improve their own space. Actual usage cost
    through sub-metering would enable more incentive
    to make necessary improvements to leased space.
  • To achieve a common goal of reduced energy usage
    and operating costs, the language of lease
    agreement needs to reflect efficiency gains on a
    shared benefit. The way leases are written need
    to be oriented to include energy efficiency
    incentives for landlords and tenants. Cost of
    improvements and operational expenses often out
    of sync with energy efficiency.

24
Incentives - hitting the target
  • Rebates Consider concentrating rebates on longer
    term paybacks, not short term like lighting
    rebates that already make sense other items need
    assistance
  • Commissioning
  • HVAC replacement
  • Prefer rebate for 6-7 year payback projects to
    make it happen
  • More incentives from utilities that are easy to
    understand and work with. California is helping
    with rebates for new developments.
  • More cities carrying bigger sticks with new
    projects, not existing pressure.
  • Utility companies are offering most incentives
    for new construction. Need upwards of 25 - 40
    improvements of efficiency to get the best.
  • REITs dont have large tax liabilities so tax
    credits are not as advantageous

25
Mandates and building Codes - when and why
  • Mandates are OK as long as gradual, but carrots
    are a necessary balance. Carrots and sticks.
  • Municipality would be challenged to create the
    standard for the greening of their community.
    Knowledge of the basis behind the various
    certifications will enable more prudent judgment.
    What about long term sustainability beyond
    entitlement? Will drop those things that are not
    relevant or for the right reasons.
  • Municipalities can play a role in addressing the
    interaction between landlord and tenants. Some
    prefer not to support mandates by local
    governments, but rather work collaboratively with
    building owners, industry groups and local
    municipalities toward common goals.
  • Incorporating Green Building standards into local
    building codes helps level the playing fields
    increasing building efficiency through better
    standards such as those prescribed by ASHRAE. The
    role of the municipalities is to continually
    reestablish the energy efficiency baselines as we
    move toward a carbon-constrained economy.

26
Leed certification - Making it Work
  • Municipalities requiring LEED for Retail is not
    relevant.
  • LEED Each company will need to factor or weigh
    customers differences, access to money, different
    business models and different sub-asset class.
  • LEED for retail is huge - tough time making it
    work because difference of how retailers assess
    things. Kohls does not do skylight - task
    oriented on clothing-lighting expectation
    different than Wal-Mart. Not everyone should do
    Skylights - they might lose customers. Different
    clientele.
  • Cannot use a wide spread standard that does not
    take into effect the wide variability. LEED for
    retail has more points to choose from. Not one
    size fits all.
  • Tenants have a much wider range of requirements
    than a typical office tenant. LEED standards C
    S, energy model hard to demonstrate energy
    efficiency with the wider range of retail tenant
    improvements.
  • Municipalities often target LEED certification.
    LEED CS makes it impossible to certify the
    center. Dictation is tough. 90 tenant space can
    not be held accountable. Law makes problem for
    long term compliance.

27
LEED FOR RETAIL
28
USGBCLEED for Retail
  • New Green Building Rating Systems for Retail
    Spaces
  • Spaces include
  • Big Box
  • Boutique
  • Apparel
  • Banks
  • Restaurants
  • Pharmacy
  • Grocery

29
USGBCLEED for Retail
  • Two paths to achieve
  • LEED for Retail
  • New Construction type project that certifies a
    single building
  • Commercial Interiors-type project that certifies
    a single tenant space

30
USGBCLEED for Retail
  • Designed based on the USGBC LEED for New
    Construction and LEED for Commercial Interiors
  • Modifications
  • New prescriptive and modeling baselines for
    commercial kitchens refrigeration in optimizing
    energy performance
  • Alternative transportation credit provides 8
    options
  • Water use reduction updates regarding food
    preparation and health codes
  • Storage and Collection of Recyclables
    modifications
  • Controllability of Systems, Lighting and Thermal
    Comfort changes
  • Low-Emitting Materials modifications
  • Environmental Tobacco Smoke (ETS) Control
    Pre-requisite update

31
USGBCLEED Volume Build
  • Created to make review and certification process
    more efficient and cost effective for multiple
    LEED projects within the same portfolio
  • Three steps to filing for Volume Certification
  • Pre-certification
  • Initial certification
  • Maintenance Period

32
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