Sustainability and landlord - tenant relations
The cocktail discussions at the recent ICSC Whister Conference on retail real estate frequiently turned to the topic of 'green' malls and retail development.
After some tentative steps by some retail property leaders such as Ivanhoe Cambridge in 2007, it seems that the topic of sustainability is now firmly on the radar of much of this sector. Predictably, much of the early initiatives concern green buildings and waste reduction.
These are great starting points, but much as I have counseled for retailers, I would advise the landlord community to elevate the discussion to one of strategy, rather than tactics (see www.dig360.ca/ItsNotEasySellingGreen). This involves stepping back at a senior level and assessing what 'sustainability' means for this sector and for your company. Integral is an assessment of outcomes, or impacts, you want to achieve and establishing a time frame. What would a fully sustainable (which includes profitable) shopping centre look like? What principles and criteria would shape green choices over time?
Quickly, one will realize that there are several stakeholders critical to action in this area: the mall management staff, retailers (store level and head office decision-makers), outsourced support (e.g., janitorial), and shoppers themselves.
Too often I hear from malls that their recycling initiatives, for example, would work wonderfully if only the tenants cared and did their part. But these procedures are rarely developed with the tenants, rather they are imposed on them. When I speak to retailers, I hear a similar complaint: "we'd love to do more, but our hands our tied by the mall and our lease". I am currently exploring co-creation models of sustainability strategy involving key stakeholders to close these gaps.
One strategic idea that could have tremendous long-term impact is that of reinventing the landlord-tenant relationship. Frustratingly, both camps have a sincere interest in doing more and doing better, but their relationship is too culturally focused on compliance with terms of a lease negotiated at a previous moment in time. Complaince models discourage ongoing innovation and joint initiatives. Yet sustainability is such a new area that it would be impossible today to anticipate in a 5-10 year lease what might be required in future.
Let the lease be the lease. Landlords should take the leadership position to invite interested tenants and other stakeholders to the table in an atmosphere of trust to jointly explore a common strategic vision for sustainability in the shopping centre. All will have goals, all will have fears. the focus should be on finding a common ground. Those who are reluctant to take part can remain on the sidelines, with energy expended on those who are motivated.
An attractive outcome might be the creation of a new relationship that features a culture of ongoing joint effort to seek continuous sustainable improvements. If successful to any degree, this ethic will without doubt spill over to many other ongoing operational improvements for mutual gains. And that can only be good for everyone's business.
