Retail Stores are using LEED for Greening Up!

The new face of retail by Debra Atlas

                                                                        - Sustainable Industries 4.8.08

---

The U.S. Green Building Council’s (USGBC) newest rating system—set to launch in 2008—could have significant impacts on the retail building market.Since 1998, Leadership in Energy and Environmental Design (LEED) standards have transformed the design, construction and operation of high performance sustainable buildings. The LEED for Retail program offers certification opportunities for retail spaces that are either new construction (NC) projects or commercial interior (CI) projects.LEED for Retail-NC encompasses new and newly renovated standalone buildings while the LEED for Retail-CI classification allows tenants of shopping centers, malls or other adjoined space to certify a face-lift or build-out of their retail space. The system’s evolution. A consensus-driven organization, USGBC realized from member feedback that credits for LEED-CI certification didn’t fit retailers’ varied needs, prompting the organization to launch the LEED for Retail pilot program.

While office buildings have long-term employees, fairly consistent water usage, and office-specific lighting, the energy and resource use in retail spaces are typically irregular: Customer traffic and water use varies, and some spaces, such as restaurants and grocers, often use refrigeration or other high-energy equipment. In particular, the lighting needs of retail—vastly different from offices—are critical for business.

In developing the LEED for Retail-NC rating, UCGBS recognized that equipment with high energy consumption unique to restaurants and grocery stores, including commercial kitchen equipment, refrigeration units, commercial dishwashers and washing machines—even the ventilation and hoods above a cooking area— needed to be incorporated in the rating system. Unique to retail, the components (which contribute to “process energy loads”) hadn’t been considered in any LEED rating before.

Similarly, retail stores pose a challenge in terms of what falls under the certification’s purview and what doesn’t. “If you took the roof off and turned the building upside down, whatever didn’t fall out is part of the certification,” says Ralph DiNola, principle at Portland–based consulting firm Green Building Services, which USGBC contracted to help manage the LEED for Retail pilot program. More than 80 project teams joined the pilot in 2007 to create and test the new ratings.

What’s in store? LEED for Retail’s new standards are important, as are their consequences. Companies utilizing the standards will impact the manufacturers of the products they stock. Sustainable Industries reports on the impact large retailers such as Coldwater Creek (Nasdaq: CWTR) are having on the marketplace. Read more

Many retail locations have large pieces of casework or furniture that aren’t exactly part of the building—they’re not built in or bolted down. Such features are not currently considered in the rating system, which DiNola says is an oversight. On the whole, however, the new LEED for Retail rating systems make it easier for retailers to renovate and achieve LEED certification requirements, says DiNola’s colleague, Nina Tallinger.

Inside the program LEED for Retail covers a wide spectrum of projects, accommodating any size building. Pilot program projects include quick-serve restaurants, large-format retailers, big stand-alone stores, small retail stores, banks—even a spa. They’re in both urban and rural areas across the United States and in Canada.

Like the other LEED ratings, LEED for Retail is scored on a point system, requiring rigorous documentation from conception, through the design and construction phase, to the finished building. Top-rated projects achieving Platinum certification can earn up to 70 points, while Certified-level projects must earn at least 26.

Parking and site access to public transportation are key elements of LEED for Retail. LEED offers credits when retailers provide preferred parking for employees, and offer incentives to employees that ride public transportation to work or that book time in a car sharing program for work-related driving. There are also credits available for retailers that provide preferred parking for low-emitting and/or fuel-efficient vehicles. While some retailers worry about pushing people farther from their entrances, a few retailers, including Wild Oats (now owned by Whole Foods Markets), PCC Natural Markets, and Recreational Equipment Inc. (REI) have all designated preferred parking spots for customers with alternative-fuel vehicles.

Pilot program participants also recognized the need to educate in-house sales teams on the LEED for Retail guidelines. Since many companies continue working with contractors with whom they have long-standing relationships; therefore, educating such partners about LEED standards, practices and requirements is vital for a project’s success. For example, San Francisco–based design firm Gensler worked with REI’s existing contractor to educate them on LEED.

As with other LEED certifications, cost can be a serious concern. While most retail-oriented developers can find cost-effective materials and see a quick payback on efficiency investments, undergoing LEED certification can add significant costs to a project. Registering a LEED project costs $450 for USGBC members and $600 for non-members.

The USGBC application fee for LEED certification is $1,750 for up to 50,000 square feet. Fees for large buildings (up to 50,000 square feet) are $0.035 per-square-foot. Smaller retail projects, or developers with numerous locations, can find the process pricey and LEED documentation difficult to justify on a cost basis.

To that end, USGBC is also testing out a volume certification program aimed at retail brands with a growing real estate footprint. The volume certification program allows companies to submit their prototype to a design review, verify the suitable execution of three projects for every 50 locations included in the program, and call all locations certified at the end of the process. While the final fees haven’t been determined, current participants pony up $45,000 just to enroll. However, for companies with 50 to 100 buildings, the program can bring per-building costs within a developer’s budget.

It also fits in with chain retailers’ business strategy, DiNola says.

“It’s serial repetition of the prototype,” he says. “It’s the whole idea behind a consistent brand. Customers will get the same product every time, everywhere they go.” If a company can green its prototype, it can streamline the reduction of its real estate’s overall carbon footprint.

Why stock green building principles? Why would developers or retailers put themselves through such a rigorous and intensive process? Where’s the payoff? The benefits start with the savings. Read more

Research shows a direct correlation between time and money spent by customers and increased levels of natural light through bigger windows, skylights or products such as Solatubes. Wal-Mart (NYSE: WMT) has reported higher sales in stores with increased natural daylight. In addition, many LEED projects qualify for a variety of financial incentives from state and local governments, including rebates from utilities, city rebates on investment costs, expedited permitting, state and federal tax credits and even federal grant programs.

“There’s a lot of ‘free’ money out there, says Scott Shippey, director of design for Chipotle Mexican Grill (NYSE: CMG). Chipotle, a well-known Mexican fast-food chain that offers customers sustainably raised meats, organic ingredients, and recycled paper products, has two projects in the LEED for Retail pilot program. The company expects to break ground on its Gurney Mills, Ill., site outside of Chicago, a free-standing building that’s part of the LEED for Retail-NC program.

A Chipotle outlet in Ridgedale, Minn., a tenant finish in an existing mall, is pursuing LEED for Retail-CI. The Gurney Mills project design includes a 6-kilowatt wind turbine, which could capitalize on Lake Michigan winds to offset 7 to 10 percent of the store’s energy needs, Shippey estimates. Both locations are expected to open by the end of the third quarter of 2008.

Building green wasn’t a big struggle for Chipotle, according to Shippey. He notes Chipotle’s management team led the process, as part of the company’s goal of operating responsibly. “What would it mean to have a more sustainable vision for development?” Shippey says, “You may need to start with small steps, building up to full LEED for Retail practices. Do your best for the company and increase towards sustainability.”

Kirstin Ritchie, regional director of sustainable design for Gensler, offers a different perspective. Gensler designs numerous LEED-certified buildings, including Toyota (NYSE: TM) dealerships, several Gold-certified REI stores, and the anticipated “Live in L.A.” facility, adjacent to the Los Angeles Convention Center. “If you want to influence green design, you have to do it at the prototype stage,” Richie says. “If you don’t get it in at that point in time, trying to modify the specs … is very difficult. When we’re working in prototype, we really try to push the envelope on green features before it goes to roll-out.”

REI’s award-winning retail store in Boulder, Colo.

Several companies have adopted this approach, and the last few years have seen a batch of prototype stores pursuing LEED certification: Best Buy (NYSE: BBY), Starbucks (Nasdaq: SBUX) and Toyota. A nationally known retail cooperative providing quality outdoor clothing and gear, REI received Chain Store Age’s 2007 Retail Store of the Year award; it’s Boulder, Colo., store—a prototype to test green design and building concepts—is the first-ever winner in the Environmental Sustainability award category.

As for many retailers, the feel of an REI store is critical for communicating the brand’s image. How do LEED-driven changes to store design, lighting and materials affect the customer experience?

For REI, lighting was a key issue. As a clothing retailer, the company is concerned with color rendering and product visibility. But that’s not all: “Lighting for this nature-oriented store is key,” says Ted Jacobs, director of design at Gensler. With custom-designed lighting, Solatubes and light monitors that automatically adjust lighting, REI’s 44,000-square-foot store has “blurred the lines between daylight inside and out,” he says.

REI’s Portland, Ore., store received a LEED-Gold certification in 2004. Later this year, the co-op anticipates earning a LEED-Silver rating for its Boulder retail store and plans to open a second prototype store in Texas. Looking to the future Ritchie says a growing number of progressive shopping center developers, designing for urban and suburban areas, will make it easy for tenants to get LEED certified or pursue greener retail strategies, from energy-efficient design to low-emitting paints and finishes. In part, she says, demand will help drive the market; brokers see LEED as an attractive benefit for retail leasing.

“Retailers are curious, watching their competition to see what they do in terms of sustainability and LEED certification,” says Tallinger. USGBC expects both LEED for Retail ratings to be completed in 2008—with LEED for Retail-NC projected to “go live” by August, and LEED for Retail-CI by November.

For retailers unsure about taking that first step, Justin Doak, manager of the LEED for Retail program, says the program is a great way to introduce companies to the LEED certification process and learn more about the costs and benefits of green building practices.

For those already incorporating LEED design principles into their business decisions, LEED for Retail is a practical next step. Whil the pilot program is closed to new participants, companies eager to get involved can register under current LEED programs, but certify under the LEED for Retail standard once it’s released for the regular market.

More information:
This article appeared as part of the “2008 Green Real Estate Guide,” a digital supplement to the April 2008 issue of the magazine. Download Sustainable Industries “2008 Green Real Estate Guide” for more information about LEED for Retail as well as complete listings of LEED-certified commercial and retail spaces on the West Coast.

Find the LEED for Retail Checklist and the LEED for Retail Policy Manual at www.usgbc.org.