Landlords are finding smart ways to save weather as the resource gets more costly and less plentiful »

Landlords are finding smart ways to save weather as the resource gets more costly and less plentiful.

Courtesy of Shopping Centers Today
by Steve McLinden
In parched, drought-afflicted San Antonio, home of General Growth Properties’ The Shops at La Cantera, water restrictions have grown increasingly draconian over the past few years. This would seem to bode
very poorly for the 1.2 million-square-foot shopping center’s landscaping and other water needs, of course.

But happily, in 2012, following the worst drought year in the state’s history, the shopping center’s managers stumbled upon an internal water source that would green the grounds and fill up the water features and then some: the HVAC units. Yes, those persistently humming air conditioners, it was discovered, were generating about a gallon of condensation per minute — enough to fulfill La Cantera’s yearly gray-water needs, with 20 percent to spare.

To move this recaptured water to target areas, the shopping center devised a gravity-based system that will operate maintenance-free for up to 30 years. And the water required no filtration, it was also discovered, because it is “pH-perfect.” The bottom line: This $194,000 system saves some 4.3 million gallons of water and about $65,000 annually, and it will probably have paid for itself by 2015. The system also earned a Refreshing Ideas Award last year from the San Antonio Water System, which helped fund the program with a $15,700 grant.

Drought, usage restrictions and rising water prices are forcing shopping center owners and retailers throughout the world to seek creative ways to conserve a commodity that is otherwise often taken for granted. “This is an accelerating trend in cities,” said Larry Levine, senior water attorney for the National Resources Defense Council. “Not only does investing in efficient water systems serve the public interest through conservation and pollutant removal, it adds to property value.” Green roofs, which filter storm water, reduce runoff and lower HVAC costs while mitigating the so-called heat-island effect — whereby human activity allegedly makes metropolitan areas hotter than the surrounding areas — have been topping off commercial buildings outside the U.S. for decades, Levine says. In recent years, green roofs have been built atop dozens of shopping centers worldwide. Among these are China’s Jiutian International Square, whose roof features employee villas with adjacent gardens, and Istanbul’s Shopping Square Meydan. Four Target stores in Chicago are among several the retailer has built green roofs for.

One of the world’s largest and most discussed roofs was built atop Sweden’s Emporia mall, which opened in Malmö in 2012. At 27,000-square-meters (about 290,600 square feet), this roof not only keeps heating and cooling costs down and rain runoff at bay, it also doubles as a public park — with trees, terraces and about 30,000 plants.

U.S. cities are driving water-management reform in part to recoup infrastructure costs. “Municipalities around the country are under increasing regulatory pressure, and they’re on the hook for what comes out of their pipes,” said Levine, who is lead author of a National Resources Defense Council report titled The Green Edge: How Commercial Property Investment in Green Infrastructure Creates Value (story, page 39). “That means they must invest billions in upgrading sewer systems, so they’re telling the real estate community that it must meet new storm-water design standards if it wants to build.”

Water-use standards are even more stringent in drought areas such as the San Francisco Bay Area, says retail architect Maureen Boyer, a senior associate at architecture firm Gensler. The Gensler-designed Market Street Place, now under development in San Francisco by Texas-based Cypress Equities, will utilize collected storm water for watering and for toilet flushing and should be able to realize water-cost reductions of about 40 percent in the process, says Boyer. “It’s likely that even stricter measures will be considered, due to the looming drought,” she said. Gensler’s developer clients, among them General Growth, Macerich, Simon Property Group and Westfield, have all created resource efficiencies in lighting and other areas and are now focusing more intently on water conservation, says Boyer. “They realize it’s pretty much a win-win when cost savings are coupled with enhanced and improved customer experiences.”

Melaver’s Abercorn Common, in Savannah, Ga., the first LEED Silver–certified shopping center in the U.S., was a trailblazer when it opened in 2007 with its green roof, pervious pavement, water-conserving appliances and runoff-collecting cisterns. The latest industry buzz surrounds Regency Centers’ underground storm-water-management system at The Market at Colonnade, in Raleigh, N.C. This $1.1 million, first-in-the-industry system was built in lieu of an aboveground retention pond, in part to maximize the shopping center’s 6.3-acre parcel. The system’s detention tank holds runoff from the parking lot after it has been filtered through 2,500 feet of pipe, water that is then reused for irrigation and for the restrooms.

Regency’s $16 million, Silver LEED–certified center also has landscape elements that remove silt and pollution from surface runoff water, and retention areas where this water may be stored. With the aid of a $560,000 state grant, the developers have built a system that has helped change Regency’s thinking about return on green investment, according to Mark Peternell, Regency’s vice president of sustainability. Lost runoff from the 57,000-square-foot shopping center is now a fraction of what it is at an adjacent retail complex with a conventional system, according to North Carolina State University researchers who monitor both sites. Nitrogen, phosphorus and other pollutants in the shopping center’s water tank are 1/32nd or less than at the adjacent center, Peternell says.

But not even government grants and incentives are sufficient to ensure that such projects pay for themselves, though derivative benefits will help elevate property values over time, says Paul Davis, a sustainable finance fellow at the Center for Market Innovation of the National Resources Defense Council. “Owners can look at these features as risk-mitigation aspects for flood control and competitive assets that benefit the top line,” he said. “Though they may not be included on the balance sheet, developers are looking at them closely.”

Increasingly, publically traded developers are feeling pressure from investors to report such resource savings. Westfield is now reporting water costs for its Australia, New Zealand and U.K. shopping center portfolios, and no water efficiencies are too small to account for, the company says. At Westfield West Lakes mall, in a suburb of Adelaide, Australia, the company persuaded two Asian food-court tenants to replace conventional wok stoves with waterless woks. Westfield had determined that the eateries were using 32,000 liters of water daily (roughly 8,300 gallons) for cooking and cleaning at a cost of $5,600 per wok yearly. The new woks help cut usage by about two-thirds, saving the two restaurants a combined $15,000 annually. At Westfield Doncaster, outside Melbourne, a water audit of the specialty stores uncovered a leak in a gray-water tank. A rebuilt pump and a $1,900 investment in flow-rate restrictors brought water savings of about $16,000 yearly, Westfield said.

London-based Land Securities, one of the U.K.’s largest ­retail landlords, issues a guide to mall tenants requesting that they equip their stores with meters that connect to a buildingwide monitoring system and with controllers that regulate water usage.

Shopping centers need not spend heavily to temper water use, says Lisa Stanley, vice president of product management at the U.S. Green Building Council. Such methods as drought-tolerant native plantings and use of irrigation-control devices that adjust with the weather require minimal investment, she says. The Green Building Council’s latest version of LEED-certification criteria, called LEED v4 and introduced last November, offers credits for efficient water usage in cooling towers — structures that remove waste heat from buildings through use of recirculated water. “But there’s more to all of this than just straight dollar-for-dollar payback,” Stanley said. “The retail industry is looking for ways to do the right thing, because we’re using water faster than it can be replenished,” she said. And consumers increasingly want to patronize businesses using the triple bottom line of “profit, people and planet,” she says.

Meanwhile, water bills keep rising. Already, rates have increased by 25 percent since 2010 in 30 U.S. cities, jumping by about 7 percent last year alone, according to Circle of Blue, a natural-resources monitoring organization. Sewer charges are escalating at about the same rate, the organization says. Because any retail construction or renovation is likely to occur in densely populated regions, “those cities will be pushing this issue further by demanding greater efficiency,” said Larry Kilduff, vice president and retail leader for Jones Lang LaSalle’s Chicago–Midwest market. “In parts of the country where water is even more precious, water initiatives are being embraced widely by planning and zoning departments.”

Eight cities, including Boston, Chicago, Minneapolis and Philadelphia, have created energy benchmarking laws for commercial buildings, and others are following suit, says Tracy Quinn, a water-policy analyst at the National Resources Defense Council. Many of the laws include mandatory water-use benchmarking, a requirement that ICSC’s Property Efficiency Scorecard — a gauge that helps retail owners track resource usage and compare efficiencies industrywide — is soon to address.

Philadelphia offers property owners an 80 percent monthly reduction in storm-water bills in return for introducing runoff-reducing infrastructure, but several cities have yet to enact any related building and plumbing codes, and the EPA is long overdue in updating its storm-water regulations, the council says.

In Europe, the days of flat-fee billing for commercial water usage appear to be numbered. The European Union is pushing system change, arguing that flat-fee programs encourage overuse. And the European Environment Agency says countries should adopt pricing that reflects actual water use as well as transportation and purification costs. Price increases of between 5 and 10 percent for water and sewer use were common in the U.K. and elsewhere in Europe last year.

At some point, retail real estate owners may have the option of leasing mobile water-treatment facilities. The creation of such systems is an unexpected consequence of the boom in global hydraulic fracturing, says Peter Adriaens, professor of environmental engineering and entrepreneurship at the University of Michigan.

There are other novel conservation approaches out there. Developer Daryl Ng Win Kong, an executive director of Hong Kong–based Sino Land, set up a system in that city’s Olympian City mall channeling excess pressure to spin a turbine that then powers various sections of the shopping center. He has pitched this idea to the governments of Hong Kong, Beijing and Singapore.

Meanwhile, the faster that shopping centers can adopt water-conservation measures, the more attractive such properties will become to future investors and to environmentally conscious consumers, says Quinn. “These types of measures,” she said, “are really a mitigation for business risk.”

From the March 2014 issue of Shopping Centers Today

SAVING MONEY LIKE WATER
Retail owners have complained that it is nearly impossible to quantify the benefits that come from water conservation and other green practices. But a report from the National Resources Defense Council advocacy group — titled The Green Edge: How Commercial Property Investment in Green Infrastructure Creates Value — outlines the potential long-range benefits of water-saving measures and strategic landscaping in an existing retail center. The results are eye-opening.

Savings from water-conservation measures on a one-story 40,000-square-foot shopping center can amount to as much as $24 million over 40 years, according to the report. The potential savings were arrived at using the following assumptions: a building situated on a 128,000-square-foot lot with a landscape area of 4,000 square feet, and with 15 retail tenants that generate nearly $2.2 million in yearly revenues each, on average, and pay rents of $17 per square foot. By creating a 40,000-square-foot green roof planting 50 trees and adding bioswales and rain gardens, all strategically located, and then investing in cisterns to capture runoff from a 5,000-square-foot impervious section of the roof, owners may reap the following benefits:

• Annual savings from reduced heating and cooling demand: $3,560
• Savings from not adding another conventional roof: $607,750
• Storm-water fee reductions and reduced water costs: $14,020 — projected to increase by 6 percent yearly
• Tax credits: $100,000 (onetime)

Because numerous city, state and federal incentives are available for water-efficiency measures, as well as technical grants from the EPA, additional savings are possible, says Larry Levine, the report’s chief author. “Property owners can take advantage of these and capture some of these broader values on the process.”

From the March 2014 issue of Shopping Centers Today

RETAILERS TURN OFF THE TAPS
Some high-profile retailers are enacting aggressive water-saving measures on their stores and suppliers. Walmart, which uses water controllers, drip-irrigation systems and similar gadgetry on its store landscape, started in 2010 to press its poultry suppliers to find ways to scale back their water consumption. These vendors transitioned to high-pressure, low-flow nozzles and increased their use of recycled water, saving about 1 billion gallons of water a year.

H&M last year teamed up with the World Wildlife Foundation to implement an aggressive water strategy for its suppliers and workers worldwide. H&M designers and buyers are persuading their 750-plus suppliers to go easy on the water, particularly those tapping into China’s receding Yangtze River and Bangladesh’s Brahmaputra River. H&M is planning a communications blitz on water use and sustainability this year, geared to its 94,000 workers worldwide.

Meanwhile, British supermarket chain Waitrose and its department-store sister company John Lewis are calling on suppliers to reduce water use. The John Lewis Partnership, owner of the chains, says it will ease water consumption at the two concepts by some 20 percent this year, relative to 2011 water bills. U.K. supermarket chain Sainsbury’s unveiled its first “water-neutral” store in October, in the Weymouth Gateway center, Dorset, England. This store meets most of its water needs through rainwater harvesting and a water-efficient infrastructure. A second water-neutral Sainsbury’s store opened in Leicester in November. Sainsbury’s says it has cut companywide water consumption by some 50 percent versus 2005–2006 water bills.

In the U.S., grocery chain Fresh & Easy is reducing water use at its stores by about 30 percent, the company says, through an efficient water-treatment system for its cooling towers and condensers. And Starbucks reports that a water filtration system it created in 2011 has cut back on water waste at its shops by roughly 50 percent.

From the March 2014 issue of Shopping Centers Today.