Around the world, clients are under increasing pressure to make retail spaces and experiences more sustainable. Recently, industry experts attended roundtable discussions, hosted by @Pragmauk + @BenoyGlobal, in London and Singapore to explore this crucial topic.
Our Project Director, Doug Higgins attended a Futures Round Table event about ‘The New Sustainable Retail Experience’ and documented below are some of the key takeaways and insights from the two events.
According to Doug “forward-thinking investors” are prepared to the take the risk on environmentally friendly schemes. Such investors, he said, are willing to justify “a green premium” on the costs “in order to see a green premium on the values”.
A summary of the discussion is captured below.
The global retail landscape
Across Asia and Europe, retail is facing a perfect storm of “clicks, covid and climate”. The rise of online purchasing, accelerated by the pandemic, has hit in-store retail hard. In the UK, current retail stock needs urgent improvement to meet energy performance criteria, while in Asia retail tenants are also grappling with efficiency issues. As developers in both EMEA and APAC assess the challenges before them, one thing is clear: retail needs to act now to secure a more sustainable future.
Creating new funding models
Mike Wilson-MacCormack, Director at Benoy, spoke of the major oversupply of retail and the challenge developers face regarding redundant assets. “Demolish and rebuild or retain and repurpose?” he asked, outlining the environmental implications of each option, before urging participants to consider the most sustainable way forward.
Peter Barker, Senior Asset Manager at Catella APAM, commented that ‘One of the principal challenges, is that while everybody wants retail to be more sustainable, very few people are willing to commit the time, effort or money required to make it happen.’
What’s needed, said Barker, are different ways of funding projects, whether through expanded private sector roles, bigger pension funds, or government-led interventions to stimulate investment in sustainable retail.
Paul Eldred, Partner at Gardiner & Theobald, concurred, adding that the initial costs involved in enhancing sustainability performance is money well spent. “If you can improve your ESG scores on a job,” said Eldred, “then funding is generally cheaper, people are more willing to invest in it and tenants are happy to pay more rent on those buildings.”
Getting ahead of legislation
Participants also reflected on the need for increased legislation. “Retail hasn’t always prioritised U-values and sustainability,” said Eldred. What’s needed now, he suggested, is “legislation around improving existing stock”.
Perhaps developers should look to the commercial office sector, where according to David Richards, Director at Atelier Ten, “in the last 12-to-24 months carbon has become…as important a currency as money”. With many tenants “unwilling to go into a building if it doesn’t hit the right ESG criteria”, commercial developers are now linking management bonuses to the carbon performance of their projects.
Embedding targets and data
In order to make meaningful strides towards sustainability, participants agreed that retail projects need to have performance targets embedded into business plans from the beginning. “Whether it’s net zero carbon and operation,” said Doug Higgins, “or net zero embodied carbon, or net gain and biodiversity,” targets have to be included, ringfenced and protected from day one.
Data is also critical to shaping what Simon Wainwright, Director at Burro Happold, called a “science-based approach” to the debate on sustainability. Only through conversations underpinned by data and science can we help decision makers achieve understanding and consensus around “climate change, ESG and targets”, establish what’s practical and attainable, and “get everybody on the same page with an affordable agenda”.
Creating something for everyone
During the session, participants discussed a number of the core defining features of sustainable retail developments. These included projects that, in the words of Madeleine Hug, Senior Associate Director at Benoy, “enable genuine connection to landscape, context and community”. A long-term vision and a rich mix of uses were also highlighted as critical. As Toby Comerford, Founder of Beacon Retail Consulting, observed, retail developments have to offer “something for everyone and a reason to be there”. Which means that when we talk about retail, we’re really talking about “mixed-use”, with the standalone, monocultural retail model a thing of the past.
Expanding outdoor space and structural flexibility
Across Singapore and Asia, one of the major sustainability challenges for retail is how to break out of the airconditioned, brightly-lit box format while providing thermal comfort and convenience for shoppers. Not only are these airconditioned interiors highly energy intensive, they’re also out of step with people’s post-Covid behaviours and preferences. In the wake of the pandemic, there’s renewed urgency around access to sunlight, greenery, open air and space.
According to Henry Woon from Atelier Ten, requirements for outdoor space are becoming increasingly prominent in shopping mall designs and retailer feedback, with “the yoga movement and lifestyle-based retailers” driving an expansion of outdoor retail areas. “Indoor-outdoor space is definitely a trend,” added Woon, while the integration of renewable energy sources, natural lighting and ventilation will be key to creating more sustainable retail models in the region.
Shifting pressures and interests
Several participants observed how, at a corporate level, Chief Financial Officers in Asia have suddenly become interested in sustainability. But this, it was noted, is more about “ticking the box”. Whereas organisations used to go for gold in feasibility studies, nowadays they’re prepared to go for platinum.
However, consumer attitudes in the region are beginning to change, particularly among the younger generations. As Cheung Dee from Hongkong Land observed, younger consumers are becoming more informed about social and environmental issues, which is driving increased expectations around sustainability performance. “I think it’s at a tipping point,” , with the agenda beginning to evolve and young people really “pushing for it”, prompting “retailers [and] companies to look at sustainability”.