Energy Benchmarking Becoming New Reality for Shopping Center Owners

Boston, Chicago, Minneapolis and Philadelphia passed new energy benchmarking mandates this year, and others are seeking to do the same.  U.S. shopping centers owners already contending with European-style energy-benchmarking laws had better prepare for more of the same. Municipalities and environmental groups argue that these efforts will ease operating costs and boost property values. Critics say the measures cannot be applied equitably to multitenant retail buildings. But these laws are not going away, according to sources.

“Energy benchmarking and disclosure laws are now a reality for center owners with multiple locations in top metro areas,” said Will Teichman, director of sustainability at Kimco Realty Corp. The mandates require owners of midsize and large shopping centers and other commercial buildings to track and report energy-consumption and greenhouse-gas data. But because the laws fail to account for the high percentage of space controlled by the triple-net-tenant majority, they do not represent true energy use, some say. Most tenants are separately metered, says Teichman, and it remains a maddening challenge to access energy-consumption data from them. Regardless, the laws require “whole building” disclosure from owners responsible for producing data on both landlord (common area) and tenant (building interior) metrics, he says.

“In instances where utility providers can’t disclose such data directly to landlords, the steep hurdle of obtaining waivers and data from tenants could render such laws ineffective for large portions of the commercial-building stock,” said Teichman. A few cities have thought to include provisions requiring utilities to aggregate meter data without need for tenant release forms, he notes. “Unfortunately, this isn’t the norm yet.” Unless the regulations require such disclosures, though, inaccuracies and inefficiencies are likely to persist, he says. (For that reason, ICSC opposes city benchmarking measures.)

ICSC’s Property Efficiency Scorecard, a benchmarking system to be introduced at this month’s RetailGreen Conference, in Phoenix, enables shopping center owners to measure their own energy use and green operations against those of their peers; the gauge is intended to fill the gaps left by systems that fail to account for tenant control of triple-net lease spaces.

Many of those involved say they prefer for cities and states to craft benchmarking laws that factor in tenant control of retail spaces. “When tenants control any building, the owner is at a disadvantage even though he may be taking all the measures possible,” said Wood. “If the tenant doesn’t follow the same guidelines, that hurts the overall building performance.”

Read more about green benchmarking laws in the upcoming December 2013 issue of Shopping Centers Today. from the ICSC (subscription required).

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