By Adam Siegel, VP sustainability and retail operations, Retail Industry Leaders Association Adam.Siegel@RILA.org
The Retail Industry Leaders Association (RILA), together with other retail associations, has organized a group of retailers and landlords to improve the environmental performance of leased retail space. That work resulted in the development and recent launch of RILA’s Retail Green Lease Primer, created in partnership with the Institute for Market Transformation.
Through best practice sharing, collaboration, and tool development, the concept of “green leasing” is steadily gaining recognition within a Working Group composed of both retailers and developers.
RILA recently surveyed the group to assess the progress that the industry is making toward leases that incentivize more efficient operations. The results show that significant progress has already been made in the last couple of years, and that retailers and landlords are steadily moving ahead with green leasing initiatives.
Existing leases pose a barrier to operating more efficient spaces
If a retail store is leased, the ability to make decisions concerning resource management is often dependent on collaboration between the tenant and landlord. For example, the tenant can usually make certain upgrades within its own space, but if the store isn’t submetered, it is difficult to measure the investment payback. Also, the tenant or landlord may not have the ability to pursue more sustainable strategies in areas that the other controls, such as the roof, waste hauling, and base energy systems. The question emerges: what can be done to overcome this barrier and achieve the cost savings associated with energy and waste reduction?
Green leasing is a process to identify lease provisions that can potentially be modified to address both landlords’ and tenants’ sustainability goals. These provisions tend to foster efficiency improvements that can save both parties money.
Potential “green” lease modifications fall into five broad types, and seek to:
Retailers and developers can learn more about green leasing through RILA’s two-page Retail Green Lease Primer, which demystifies the concept of green leasing.
The industry is on the cusp of green lease adoption
Retailers and landlords involved in the Working Group have had access to the Primer for several months, and some retailers and landlords were exploring or implementing green leasing even before joining the Working Group. RILA’s survey revealed that green leasing is getting more attention than ever:
Notably, over half of respondents viewed their internal construction & maintenance, facilities, and legal teams as being “willing” partners in internal green leasing conversations. That is a crucial step, since those are the key audiences for adoption of green provisions.
While green leasing adoption in the retail sector still lags behind that of the office sector, it is clear that green leases are becoming an established strategy for enabling more environmentally and financially efficient operations in all types of shopping centers.
To learn more, I recommend you join us at RILA’s upcoming Retail Sustainability Conference in Orlando, Fla., on Sept. 30 - Oct. 3. Now in its sixth year, the Retail Sustainability Conference is the best way for those in retail real estate, facilities, and sustainability roles to learn about how sustainability applies to them.
For more information, contact Adam Siegel, RILA’s VP sustainability & retail operations, at email@example.com.