EMEA Head of Sustainability, at CBRE
In a new, first of its kind, piece of research the British Council of Shopping Centres (BCSC) in partnership with CBRE can reveal that investing in sustainable features increases the market value of shopping centres in the UK, by up to and over 5%.
This is important given that retail property, including shopping centres, is the second largest consumer of energy in the UK. In 2013 alone, it cost the retail sector a substantial £3.3 billion. This represents a significant amount of money that is wasted through low awareness of energy use in retail environments.
The research analysed 35 shopping centres nationwide to ascertain the relationship between investing in energy efficient features and shopping centre market value. Key findings:
- Failure to invest in sustainable features decreases shopping centre values in the UK. It’s most defined for older shopping centres (those over 25 years) with up to and over 5% value gains to be made. For relatively modern centres (less than 5 years old), 1% value gains are still achievable
- Substantial savings are also realisable by investing in new energy efficient equipment, which outweighs the replacement cost. The biggest savings are derived from replacing shopping centre lighting, escalators, lifts, and heating, ventilating systems, and air conditioning (HVAC) units, in that order.
- Maintenance and operating costs are also reduced with investment in energy efficient features. This lowers the shopping centres’ service charge resulting in the increased likelihood of tenants paying higher rents which will provide gains to the landlord driving an increase in value.
- Shopping centre owners should embed analysis of energy performance within the asset’s investment philosophy and due diligence process. For long-term asset holders, regular life-cycle assessments including benchmarking of energy costs against total service charge, and monitoring energy costs as a proportion of rental income, should be instituted. In addition, medium-to-long term energy plans should be routinely incorporated into strategic asset management planning and a shopping centre’s energy credentials should be viewed with risk in mind. Without implementation, value erodes.
Click here to read the full report