How Scentre and Vicinity are fighting to stay relevant

Like it or not, shopping centres are here to stay. Concrete monoliths offering consumerist delights, wrapped in a highly-controlled environment designed to keep us shopping for longer. What’s not to love? 

In a bid to stay relevant, shopping centre operators must adapt not only to rapidly changing consumer preferences of the internet age, but the growing push to cut emissions across the built environment and beyond. 

Westfield owner, Scentre Group, has already announced plans to achieve net zero by 2030 across its scope 1 and 2 emissions, and this week revealed it was on track to reach 50 per cent of that goal by 2025.

• Scentre Group flexes sustainability muscle with 2030 net zero target

In 2020, the company’s Scope 1 and 2 carbon emissions were 237,821 tonnes  — a 12.5 per cent reduction on the year before. 

“Operating our business as efficiently as we can and minimising our environmental impact is important to all of our stakeholders,” Scentre Group CEO Peter Allen said. 

“[We are] building on our existing environmental targets, energy efficiency initiatives (such as LED lighting installation across the portfolio and energy analytics and building management system enhancements) and targeted renewable energy generation and procurement opportunities.” 

Towards the end of last year the company also came out in support of the industry-led Taskforce on Climate Related Financial Disclosures (TCFD).

In many ways leading Scentre in upping sustainability performance is fellow shopping mall giant, Vicinity which owns 61 major retail assets across the country including behemoths at Chadstone and Chatswood Chase.

General manager of operations, Nick Irvine told The Fifth Estate his company was looking to the latest and greatest proptech innovations to help cover the basics of water, energy and waste efficiency across its centres. 

The company has been capturing data across it’s malls for around the past five years, using a Cisco converged network, and is in the process of virtually linking all of its building management systems (BMS). 

“We’re in the process, with our data science team, of working through creating automated energy demand management. So really, an end-to-end automated solution using machine learnings, predictive algorithms to manage that centres energy outcomes,” Irvine explained.  

“And a lot of that investment goes towards our net zero 2030 target.” 

The data helps get the most of rooftop solar investments, which are also a priority strategy of Scentre, with major environmental and financial savings to be made. 

“Outside of probably labour based services — things like security and cleaning — energy is one of the largest outgoings costs for a shopping centre. So it’s important that we’re able to manage that,” Irvine said. 

Irvine added there was the opportunity to onsell solar to tenants, although at the end of the day, the company was limited in how much it could directly impact tenant emissions profiles.

“We certainly discuss what areas that we’re working on to help improve our energy platform and if they want to explore that we’re more than happy to support them. But at the end of the day we can’t necessarily dictate to the tenants how to do things,” Irvine said. 

“What we can do is provide things like LED upgrades, smarter HVAC systems. So the things we can control, we try and control well.” 

With Shopping centres being not the most efficient structures in the built environment, Irvine said the cost of HVAC systems can be high.

Through a partnership with air conditioning provider, Airmaster, the company has also looked to apply data-focussed solutions to optimising HVAC usage and performance.

Currently the system is geared to identifying issues when they arise, but Irvine says the next step is to apply machine learning to data inputs such as weather and foot traffic to predict demand and automatically tweak operations.

Waste is another factor where shopping centres have a higher rate than normal, with food courts and high staff turnover large retail tenants making diversion from landfill a challenge.  

“We spent the past few years replacing most of our compactors with smartwaste compactors, giving us the ability to track and record where and what waste volumes are being put through from retailers,” Irvine said. 

With the internet and COVID-19 driving an unprecedented change in consumer expectations and behaviours, Irvine says shopping centres must be equally quick to adapt. 

From introducing click and collect to electric vehicle charging in parking lots, shopping centres are being forced to break the reputation of real estate industry as luddite. 

“In a real estate sense, yes there’s been a perceived slow uptake [of technology]. But I think in the retail sense, the pressures that we’ve experienced, certainly over the last few years, has really driven us to try and get ahead of that,” Irvine said. 

“What we do know is that we need to start offering different types of solutions, because shopping centres aren’t going away.”