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The next challenge facing our retail space is the need to reduce environmental impact versus economic sustainability. A cost now, but will inaction lead to a greater financial and environmental burden in the future?
Retail use has traditionally been at the heart of our towns and city centres. The rise of e-commerce, changing consumer preferences and the economic challenges brought about by Covid led to many empty redundant commercial property units.
Some areas have been successfully re-developed, providing flexible mixed-use property, supporting recovery and meeting the needs of communities and stakeholders.
But the repurposing of retail needs to go further, with the next challenge being the need for environmental sustainability to reduce the impact our retail spaces have on our planet.
There is good reason to believe that the future lies in green development projects leading to energy-secure, carbon-neutral, socially vibrant centres, generating greater financial prosperity and investment returns, with inaction leading to reduced financial and environmental returns.
Key themes emerging
Driving the change to reduce our impact on the planet are investors, developers, landlords and retailers who increasingly see economic and environmental sustainability as two sides of the same coin and have been devoting increasing time to the environment, social and governance (ESG) agenda.
Government policy with energy performance certificate (EPC) regulations has brought into focus the urgent need to improve the energy efficiency of commercial buildings, and we can expect to see the Government focus on the green agenda with a further tightening up of the Minimum Energy Efficiency Standards (MEES) regulations in the future.
Social and environmental initiatives
Social and environmental initiatives, which focus on the health and well-being of occupiers and the impact of property on the community, positively drive consumer loyalty.
The Private Sector (where ESG objectives are embedded in organisations) are leading the way.
A clear financial incentive, as well as an environmental one, is reducing our operational carbon from the energy we use to keep our buildings warm, cool, ventilated, lighted and powered, and it is a number one priority.
It is estimated that a 20% reduction in energy would be equivalent to a 5% increase in revenue. Many retail buildings are well suited to solar generation and cleaner energy sourcing.
Rebuilding or refitting
The argument for rebuilding or refitting is complex. Increased construction costs are putting the balance in favour of reuse, and refits can provide an ideal opportunity to make improvements, for example, EPC’s and other operational efficiencies.
How we design the built environment and the need for “Greener Development and Investment” and the “Circular Economy” are much talked about principles.
Buildings must be built to last longer and be flexible, reusable and alternative-use spaces, as well as constructed using lower embodied carbon methods.
Conclusion
While the challenges ahead must not be underestimated (it’s thought that over 80% of all retail spaces will not meet the Government targets by 2030).
Occupying or investing in environmentally or net zero carbon buildings can reduce energy costs, enhance brand value, and demonstrate a commitment to corporate social responsibility.
It seems clear that retailers who take a proactive approach to address ESG issues will be well-positioned to succeed in the future, and developments with green credentials have the best chance of providing economic and environmental sustainability.