29 November 2012 – The recent revamping of the NABERS retail rating standard coincides with a watershed era for retail as the sector battles against online shopping, fickle consumers and a changing perception of the role of shopping centres.

The ratings could well have to change again in the near future to keep up with social and technology trends that are altering the design, function and energy use of shopping centres.

Released in late October, the new NABERS retail ratings benchmarks have been welcomed by the owners of large shopping centres who believed the previous standard disadvantaged them. Because of their larger range of services, longer operating hours and number of lifts and escalators, large shopping centres use more energy per square metre, which was impacting on their NABERS ratings.

The NSW Office of Environment and Heritage, which administers the NABERS scheme, has added four new factors to shopping centre benchmarks to allow for these differences:

  • Area adjustment: to provide a meaningful peer-comparison against the average performance of shopping centres of similar size.
  • Vertical transport: an adjustment for retail floors, to take into account differences in energy use by vertical transport (lifts and escalators) between multi storey and single storey shopping centres.
  • Trading days: there are major differences in allowable trading days between different jurisdictions
  • Extended hours: addresses hours of operation of centrally serviced tenancies.

Under the new ratings some large shopping centres will be able to achieve higher ratings, while smaller ones are likely to see their ratings drop. The graphs below show how the changes will affect the ratings of a sample of shopping centres.

  • Figure 1 shows the current rating results from 69 Australian shopping centres rated under NABERS Energy for shopping centres, sorted from smallest to largest. The results obtained are strongly related to the size of each centre, with large shopping centres obtaining unexpectedly poor rating results (gaps represent zero star ratings).
  • Figure 2 shows the rating results for the same centres under the revised NABERS for shopping centre benchmark which NABERS believes is a more meaningful comparison of shopping centres
  • Figure 3 shows the change in the star rating result of those 69 centres, as a result of the benchmark revision. Oct 2012

Embracing future changes in energy use
But shopping centres along with the whole retail industry are undergoing major upheaval as a result of changing shopping patterns and technology.

And as shopping centres evolve to cater to these changes over the next few years there will be new factors to consider when measuring energy and water use, say the consultants who reviewed the new standards.

PC Thomas

PC Thomas, director of building energy consultancy, Team Catalyst, which did an independent review of the new NABERS ratings, told The Fifth Estate the new ratings were now much fairer but social and technology trends may drastically change the physical design of shopping centres over the next few years. And if this happens the way water and energy is used will also change.

“We feel there is going to be quite a change in what a shopping centre is over the next few years. Multi-channel shopping and the use of shopping centres for community interaction, with more eating and meeting places will change their design and the way they use energy,” says Thomas.

In its report, commissioned as part of an independent peer review of the NABERS changes by the Shopping Centre Council of Australia, Team Catalyst emphasised three main emerging trends likely to impact on shopping centre design and energy use.

These include:

  • Community focus – with shopping centres increasingly positioned as the centre of community activity they will need more informal meeting  areas and café spaces that blur the boundaries between outside and inside. Facilities such as prayer rooms, children’s activity rooms are likely to increase. This could impact on NABERS Energy rating, depending on whether they are treated as Gross Lettable Area Retail or non-GLAR.
  • Activation of mall areas – centres that aspire to enhance the community experience will have more services operating in the mall area such as “meet and greet” cafe type establishments  that blur the distinction between mall area and enclosed restaurants. This will impact energy use intensity of common area services. A higher percentage of mall in the mall+GLAR area is already evident in larger, new centres.
  •  Emerging technologies – the emerging uptake of technology within shopping centres and the use of multi?channel retailing could see traditional shopping centres becoming pick-up points for online purchases. Technologies such as sophisticated 3D scanners are being developed to assist shoppers to  “virtually” try on a huge range of outfits, buy them online either at home or in-store and pick up at a collection point. In?centre smartphone applications may also alert customers to specials within shopping centres. There will also be more use of digital panels (such as tenant finders), advertising screens and WiFi areas.

But do the changes to NABERS to accommodate the high intensity energy use of large centres simply reward them for being more energy intensive

both now and in the future?

Currently, shopping centres are one of the biggest energy users in the built environment, accounting for around half the energy use in the commercial sector and four to five percent of Australia’s greenhouse gases, according to industry experts.

PC Thomas believes there is enormous potential to change this, claiming he could knock 30 per cent off the energy use of many centres by changing the way the mechanical plant is set up and the way lighting is used.

Airconditioning is another major culprit, with systems massively over specified.

“Most airconditioning systems are over-sized by 20 to 30 per cent even for a peak day, which means for a normal or average day it is three to five times that,” says Thomas.

In addition major tenants often have their own airconditioning, which is too often inefficient and outdated.

“Some centres are trying to encourage majors to use the central plant. If they have their own, majors are likely to use air-cooled rather than water-cooled air conditioning. All of these will be direct expansion systems and will use refrigerants, which has enormous global warming potential.

“We don’t have a log of refrigerants in Australia. In many countries every time a system is refilled with refrigerants it is logged so there is a record of the amount of refrigerant going into the atmosphere, Here it is not mandatory, which puts us way behind,” says Thomas.

Shopping Centre Council
Shopping Centre Council of Australia deputy director Angus Nardi says the council is keen to keep abreast of the issues likely to impact its members in the future and welcomed the forecasts from Team Catalyst in its report.

“We were keen to find out from Team Catalyst what the upcoming energy issues for retail. This allows us to also signal to NABERS that these are likely to be future factors impacting on energy use. They need to be on our and NABERS radar,” Nardi says.

The SCCA was very happy with the outcome of the NABERS review of the ratings.

Nardi says the ratings now allow a meaningful comparison of centres.

“The changes have a technical underpinning – a strong evidence and technical base,” Nardi says.

“In the original ratings centres of 100,000 square metres were compared to small centres with completely different built form and attributes. The database also did not include a lot of large centres.”

GPT Group development manager – sustainability and operations Angus Gordon, says the cooperation between NABERS and the industry was “fantastic”.

GPT is a member of the Technical Advisory Group for the NABERS retail ratings, along with other major shopping centre owners and developers.

“We believe the new ratings address concerns that the initial data range was disadvantaging larger centres so that they were getting low ratings,” says Gordon.

GPT does not always get a NABERS rating for its centres but believes they are important for the retail sector.

“The ratings aren’t compulsory and we use them more as a management tool. A rating is not going to be a reason a tenant comes to our centres. They are motivated by the potential for higher sales,” says Gordon.

And while GPT does log its customer statistics including traffic in centres, the link between more energy efficient centres and customer satisfaction is not yet at the same level as office. The drivers are also very different.

“Sustainability is pretty much a licence to operate in offices but you don’t get the same market value link in retail.

“Major retailers are becoming more focused on sustainability and as they become more conscious of its importance it will play more of a part in their decisions. But retail is driven by demographics and we don’t get two major centres competing side by side as you do in the office sector.

“In my view we’re certainly moving into a phase where we have to demonstrate value. And we are more than comfortable about being held accountable.

“Making a centre more sustainable not only improves the customer experience and operational costs,

it future proofs the asset,” Gordon says.

If mandatory disclosure of energy efficiency is introduced to the retail sector, as floated in the framework for National Strategy on Energy Efficiency with possible introduction by 2015, NABERS ratings will become very relevant to the sector.

The SCCA’s Angus Nardi says that any move to mandatory disclosure for leasing must consider retail tenancy legislation.

“Retail is not like office. It is highly regulated and these regulations are different in each state. Unlike office, tenant demand in retail is driven by the quality of shopping centres and volume of foot traffic, tenancy mix and precincts and availability of car parking spaces.

“That’s not to say NABERS and environmental performance won’t feature more prominently in the future from a tenant and consumer perspective,” says Nardi.

What about small centres and a tenancy rating?
It’s also important to keep in mind that NABERS ratings only apply to shopping centres larger than 15,000 square metres, which accounts for only 23 per cent of centres and 68 per cent of gross lettable area. So what about the multitude of small strip shopping centres and individual retailers?

Matthew Clark, director Water and Energy Programs, Regional Operations Group in the Office of Environment and Heritage, said that while there were no immediate plans to introduce a NABERS rating for smaller centres or a tenancy rating, it could be a possibility further down the track.

“It has been challenging coming up with a rating for shopping centres. There are many differences between different types of centres, which makes it complex. Smaller centres are even more diverse and getting to the point of introducing a tenancy rating will be particularly challenging,” Clark says.

The role of NABERS, says Clark, is to provide a fair and meaningful comparison between like buildings, so that they can understand how much better they could do on an impartial scale, and give them an incentive to improve. To apply the ratings to tenancies would therefore require a comparable standard.

“We have looked at the possibility of rating larger supermarkets and chain stores but it is not on our development pathway right now. Perhaps if we had a tenancy rating it may be possible to apply it to strip shopping centres. If we do though it is certainly a way off.”