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Saving Water Like Money

Saving Water Like Money – Centers are sporting elaborate systems to catch rainwater for irrigation and other non-potable uses.
By Steve McLinden

All around the world now retail landlords and their tenants are getting ever more creative about conserving water; strategies include rainwater cisterns, leak sensors and smart-irrigation controls.

Regency Centers’ $20 million Market at Colonnade shopping center, under construction in Raleigh, N.C., will have surface and underground filtration systems, plus equipment to help retain more than half the site’s storm water. Three cisterns on the edges of this Whole Foods–anchored complex will capture up to 300,000 gallons of rainwater and condensate for irrigation and other non-potable uses.

Regency has installed smart-irrigation controllers at nearly a fourth of its roughly 400 centers, primarily in Arizona, California, Colorado, Florida, Oregon, Texas and Washington. Savings at those centers, many of which use HydroPoint Data Systems’ WeatherTRAK equipment, are as high as 40 percent, with a blended average of 28 percent, says Mark Peternell, Regency’s vice president of sustainability. Payback on the equipment and installation costs generally takes from six to 36 months, he says. “If it takes any more than 36 months, it probably doesn’t make [financial] sense.” Irrigation accounts for 60 percent of Regency’s total water use.

Now that a stream of local, state and federal funds have become available to subsidize 10 to 50 percent of the costs of water-conservation equipment, landlords welcome not having to fully foot the bill for such ventures, Peternell says. The Market at Colonnade’s water project, which accounts for about $1 million of the $20 million center’s construction cost, received a $562,000 grant through the city’s Clean Water Management Trust Fund, with Regency pitching in $509,500.

Edens & Avant has been steadily ramping up its water-conservation programs in the past few years and is realizing reductions of up to 25 percent, says Robbie Robertson, the firm’s communications director. In 2008 the developer established a usage baseline by measuring its common-area water use systemwide. The following year it performed comprehensive water audits of all properties that use irrigation. “With these audits we learned to better monitor our irrigation systems based on growing cycles and weather conditions,” Robertson said. Usage adjustments were made biweekly throughout 2010. Any new plantings are carefully selected using drought-tolerant species, Robertson says.

Though water conservation is a relatively recent phenomenon at commercial buildings in the U.S., some retail REITs have been at it for a while. Simon Property Group, for example, enlisted Acequia, which specializes in leak detection and rainwater management, in 2002 for help reducing water use. From September 2002 to December 2006 Simon was able to cut irrigation costs in half at properties in Colorado, New Mexico and Texas.

In 2009 LEED certification regulations began requiring a 20 percent reduction in baseline water usage. This applied to all retail projects. “Those measures have about a five-year payback, and that’s pretty quick,” said green-building consultant Jerry Yudelson, principal of Yudelson Associates, who has written several books on green-construction practices. “If that gives you a $1 per square foot less operating cost, that’s money in your pocket.”

Because the U.S. appears headed for a water crisis, building owners can expect even more stringent regulations, Yudelson says. At the end of last year, water supplies in the Las Vegas and Atlanta areas were at 50-year lows, he says.

With more international groups investing in U.S. retail real estate, questions relating to the issue are apt to come up during due diligence, says Peternell. “The increasing number of sustainability-minded institutional investors from the European Union and elsewhere are likely to drive more and more such initiatives in the retail REIT space.”

This story is from the February 2011 issue of Shopping Centers Today.

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