Steps to Sustainability in Retail Real Estate

“Going green” is a hot theme nowadays. Many people are becoming more aware of their surroundings and are opting to incorporate energy saving and green ideas in all aspects of their life; from their house, to car, and in new construction. Yet, what about commercial real estate? Retail property managers have an arsenal of tools to green a property. However, in most retail lease structures, tenants reimburse most pass-through expenses, also known as CAM or common area maintenance expenses. Herein lies the dilemma, spend more now to save later? And what changes are going to be worth the cost to your tenants and you? Here are a few ideas that can make a big impact on what you save.

LED Lights – Lighting accounts for 17% of primary energy used in commercial buildings and almost 18% of their carbon dioxide emissions, according to the U.S. Department of Energy’s (DOE) Building Energy Data Book. Each LED light bulb saves approximately $30 annually in energy costs and eliminates the equivalent CO2 as half a barrel of oil. For example, a 1,000 square foot store on average would save nearly $600 annually and eliminate the equivalent CO2 as 10 barrels of oil.

Xeriscaping – is defined as quality landscaping that conserves water and protects the environment. Designing or converting a property with reduced water consumption in mind doesn’t limit you to cactus and gravel. Rather than traditional turf and ornamentals, xeriscaping features a variety of drought-tolerant plants native to the region. By doing a little research to find out what plants will thrive on less water in your climate, not only is it saving tenants money, but saving property managers the expense of having landscapers come out to attend to the properties.

Recycling – Some property managers might struggle with wanting to pay for a recycle bin, fearing that they could be costly. Not always the case. Peter Pagano, Director of Asset Management at First Capital Advisors was surprised to find out it cost less to switch out a garbage bin at their retail property Kensington Shops in Plainfield, IL. “We started out with 3 dumpster containers and 1 recycle container. Our tenants expressed interest in substituting another recycle container for the amount of cardboard that ends up in the trash. I was surprised that switching out the garbage container for a recycle container would be less costly.” Not only did it result in a savings to property management and tenants, but became a great way to make the center more green friendly.” Not only did it save property management and tenants money, but became a great way to make the area more green friendly.

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