Brasil is the first country of reference in the BRIC group of fast growing developing economies - together with Russia, China, and India, hold over twenty-five percent of the world’s land and forty percent of the world’s population. Recently, I was in a meeting with a global luxury retailer who referred to Brasil as unaffected by the global recession. Surely, no country is completely unaffected – though in relative terms, Brasil is experiencing a powerful convergence of forces - political stability, optimism, natural resources and enlightened corporate leadership that is unprecedented.

  

Sao Paulo - the largest and wealthiest city in Brasil, from the rooftop of Hotel Unique

Yesterday, a panel of Brasilian retail developers at the ICSC conference in Las Vegas presented their case for the great opportunities that abound in this country that is emerging from a long period of economic and political turmoil. Though there are effects of the global economy in play, there has been so much catching up to do that it is hard to feel the recession in play.  

Carbon-neutral corporate headquarters of a 4 billion dollar beauty products company

From The Economist “In some ways Brazil is the steadiest of the BRICs. Unlike China and Russia it is a full-blooded democracy; unlike India it has no serious disputes with its neighbors. It is the only BRIC without a nuclear bomb.” The Heritage Foundations’s Economic Freedom Index, which measures factors such as protection of property rights and free trade, ranks Brazil (“moderately free”) above the other BRICs (“mostly unfree”).

 

  

Team exercise break at the manufacturing facility

I had the opportunity of working with some of these retail companies over the past year, and I met business leaders who spoke of their increased alignment with the liberal democratic leadership of the country. I developed the deepest respect for the level of commitment to enlightened and sustainable business practices that far exceed any I have experienced. 

 

Oscar Niemeyer's cultural center - modern master architect

The cultural richness is vibrant, creative, modern, yet deeply connected to nature – which I discovered in a great variety of built environments – from stores, workplaces, cultural centers, and hotels. Watch Brasil go forward, into the future. I think it will be fascinating, and illuminating for us all.

  

 

 

Commissioning has long been an integral part of green building and the LEED green building rating system, and basic commissioning was built into LEED for New Construction as a prerequisite for certification. Commissioning is often misunderstood, especially among owners with no commissioning experience who often avoid the practice due to fears of initial high costs.  The commissioning process offers benefits to both building owners and occupants through improved building performance and heightened occupant satisfaction.

ASHRAE Guideline 0-2005 defines commissioning as a quality-focused process that focuses on verifying and documenting that the facility and its systems and assemblies are planned, designed, installed, tested, operated and maintained to meet the Owner’s Project Requirements (OPR).  And while many believe that commissioning is for new buildings only, it can be applied to existing buildings as well, as long as stabilized occupancy conditions are in place. LEED for Existing Buildings: Operations & Maintenance includes a credit focused on continuous commissioning, which incorporates monitoring and analysis of building performance data between the regularly performed operation and equipment reviews.

Any added cost of commissioning is justified by the energy savings that can be realized through corrective actions identified in the commissioning process. LEED specifically focuses on this aspect by having a credit specifically regarding implementation of no-cost and low-cost measures related to energy efficiency identified in the analysis. LEED for Existing Buildings: Operations & Maintenance also provides the option of performing an ASHRAE Level II Energy Audits as the first part of the retrocomissioning investigation component for existing buildings. Upfront commissioning and energy audits costs are recouped within only one to two years and helps building owners avoid unnecessary operating expenses, which is critical in this economic environment.

There are many comprehensive resources and guides to commissioning and retrocomissioning available online including A Retrocommissioning Guide for Building Owners, compiled by Portland Energy Conservation Incorporated and the EPA’s Energy STAR program.

Do you have experiences and specifics from commissioning or performing energy audits in your buildings? Let me know at mheisterkamp@usgbc.org.

 

 

  

Attending events over the last decade organized by the IGDS – Intercontinental Group of Department Stores, the Zurich based organization of more than 30 flagship stores worldwide, has always been an illuminating global snapshot of the pulse of leading retailers across the globe. I’ve met with them in Dusseldorf, Hong Kong, London, and Manila. The summit last week in Moscow at the historic GUM department store (shopping center) adjacent to Red Square included presentations by 14 leading CEOs. 

  

 

 

  

 

Through the lens of the financial crisis and falling revenues, forward thinking leaders at the summit were focused on two important issues – engaging their customers emotionally, and the forces of online shopping. Understanding the impact of the digital universe on shopping behavior is considered critical for success and survival.

 

 

One of the most compelling talks was Andy Rubin, the CEO of Pentland Brands – UK, “Chief Emotional Officer”, who focused on the importance of truly engaging the consumer as the key to success. His take on major trends:

 

Economy – the downturn is not over, and may go on for years – plan for worse.

 

 

Polarization – growth in value and steady in luxury – most challenges are in the middle of the market.

 

 

GUM Department Store, Moscow

Internet Wave 3 – the new internet is mobile, unlimited, free, and accessible from anywhere. New websites take advantage of this new kind of mobility and access, such as asos.com, for younger consumer, or net-a-porter.com that offers premium service, free delivery anywhere, free returns, etc.  (I would add sites like closetcouture.com and gilt.com as new models in fashion)

 

 

Sustainability – environmental responsibility and ethical sourcing are forces of change that will fundamentally change retailers on a global scale.

 

 

Mr. Rubin believes that brands love flagships. Why?

 

 

Flagships tell stories 

If consumers identify with the story they identify with the product. Mr Rubin’s brand stories – Speedo on Michael Phelps winning 8 gold medals, Rene Lacoste creating the crocodile legend, Berghaus with Leo Houlding’s base jumping para-alpinist adventures.  His flagship stores allow him to fully tell the story through images, video, events, and activities.  

 

 

Flagships are brand laboratories 

Flagships are labs for new product development and testing, for bold cross-merchandising.  A flagship allows for consumer insight – regular thorough feedback from consumers is essential.  A flagship is a place to build customer service – qualified product experts and service are critical. It is particularly important in specialized gear stores – choosing a wrong sized suit in a Berghaus store can cost you a life. New brand propositions, brand educations, ethical messages, community connections, media venues, event stages, parties, celebrities – flagships are entertainment venues.

 Other talks included Mr. Alberto Alessi, on Italian design factories and the market niche that they occupy – not quite mass production, very high quality design and manufacturing, producing ‘art multiples’, and the importance of poetic and spiritual value of things in addition to functional value (relative to the history of craft).

 

 

Mr. Allan Namchaisiri, President of ZEN lifestyle store in Thailand. ZEN is an 8 story hybrid containing a wide range – from very well organized and top of the line shopping experience, to cafes, restaurants, to spas, medical offices, childcare, clubs, movies. On Friday, while presenting at the conference, he was missing a DJ night that sold 4000 tickets to the club at the top of ZEN store… he believes that a successful store is a place where people come for everything – entertainment, socializing, medical treatment, good music, food, and, of course, shopping!

 

In general many presenters talked about the importance of entertainment and events (cultural, parties, special causes) taking place in the flagship stores as a way of emotionally engaging the consumers and building customer support. Flagship stores more and more become a stage for brand, showing a brand’s history and personality for customers to experience.

 

 

Mr. Michael Gould, CEO of Bloomingdales talked about identity as primary importance for their multiplying stores. The use of characteristic black trim and black & white floor patterns are critical to the identity of the stores in their various locations and sizes. It allows a distinctive connection between a much smaller downtown Soho store and a much larger 59th street location. Bloomingdales also is making a shift toward more upscale merchandise.

 

Mr. Teymuraz Guguberidze, CEO of GUM thinks differently – he believes that mixing the upscale brands such as Chanel or Hermes with more budget brands such as Zara or Sasch is a key to the most important and biggest luxury – freedomfreedom of choice (today you may want to go to Chanel and tomorrow to Zara).

 

  

Given the shopping activity at GUM in the morning of a work day – he seems to have it right…

  

Summit report contributions by Anya Bokov, Director – Moscow Office, NBBJ 

 

For retailers, very little other than the product or service being sold can say as much to their customer about their environmental commitment than their retail space. In an increasingly environmentally-aware world, savvy retailers understand how buildings can add value to their brand and are also wary of compromising the brand with greenwashing claims. These retailers are turning to green building strategies and the LEED green building certification system to demonstrate and support their corporate social responsibility commitments, educate their customers and verify their accomplishments through third-party certification.

Green building is not a new concept – but it’s relatively new to the retail market. LEED was developed by the U.S. Green Building Council (USGBC) in 2000, and for the last several years, USGBC has been working with the retail industry and a committee of industry experts to develop LEED credits that are more specific to retail building types.  LEED for Retail New Construction and LEED for Retail Commercial Interiors, built on the experience from 95 pilot projects, is currently undergoing member ballot. Once the system passes ballot, it will provide certification paths for both ground-up retail  construction and retail commercial interiors.

LEED for Retail is aligned with the new LEED 2009 rating system and is anticipated to be available for use in July 2009. The 100-point scale covers the same key environmental areas as the LEED 2009 rating system. Key technical differences in the rating system include adaptations to account for both employees and customers in transportation and daylighting strategies. Additionally, LEED for Retail addresses process water and energy, both of which now have baselines created with the help of retailers and the food service technology industry.

Despite the economy and the slow-down of construction in the retail market, there is tremendous market transformation occurring within the retail sector. A number of retailers have already built LEED into their standard prototype designs and plan to seek certification on future stores.  Since 300 retailers are already in the process of using LEED, the scalability of this market provides huge opportunities to minimize this sector’s environmental impact.

How can I not write about the economic recovery package? The talk of
Washington, DC, the economic recovery package is being closely followed by many
business leaders.  USGBC has been
actively working to ensure that the economic recovery package moves the U.S.
toward the new green economy and related long-term economic and environmental
benefits. While the possibilities are many and the opportunities for the real
estate market are complex, there are a few key areas that our industry will
want to watch closely.

The Commercial Building Tax Deduction was established by the Energy
Policy Act of 2005 and permits building owners to deduct expenditures on energy-efficiency
improvements to commercial properties. Many real estate groups are actively
seeking the expansion of funding for this program and other tax incentives within
the economic recovery package.

Additionally, USGBC supports robust funding for the Energy Efficiency
and Conservation Block Grant program through the economic recovery package.
This program, which was created as part of the 2007 federal energy law, is set
up to provide billions of dollars for states, localities, and tribes for energy
efficiency and conservation projects. If funded, this program will empower
states and localities to develop and expand energy efficiency-related programs
and investments. Such funds could be leveraged to replicate successful
initiatives currently in place throughout the country, such as those offered by
state energy offices and public utilities.

Inevitably, funding for green building retrofits will come through many
sources and programs, but the directive is clear. In addition to creating
economic activity and providing our economy a much needed jumpstart, these
monies must contribute to a new green economy. It’s also critically important
that such funds be directed to retrofitting and upgrading existing buildings
owned by private companies, allowing the short- and long-term savings generated
by these improvements to strengthen bottom lines and ultimately be reinvested
in additional upgrades and environmental measures.

If you have any comments or ideas, you can reach Marc at

mheisterkamp@usgbc.org

.

We’ve been hearing so much lately about the economy and its potential damaging affect on the commercial real estate market. A variety of recently released reports point to green building as a key solution to many of the challenges our country faces today, from a faltering economy, unemployment, to rising energy prices and America’s dependence on foreign oil.

How so? For starters, green building can contribute to a vibrant industry that could drive economic recovery. McGraw-Hill Construction’s Green Outlook 2009 report “Trends Driving Change” shows that by 2013, the overall green building market (both residential and non-residential) is likely to more than double to $96-140 billion. And studies have shown that the LEED green building certification program has the potential to contribute billions to the economy. A Greener World media study reported that LEED certified projects are directly tied to more than $10 billion of green materials, which could easily reach more than $100 billion by 2020. The U.S. Green Building Council’s nationally recognized LEED program provides third-party review and certification of buildings’ design, construction and performance in five key areas of environmental and health concern, including energy efficiency, water efficiency, materials and resources use, sustainable site development and indoor air quality.

And economic hardship isn’t keeping commercial real estate executives from building green. A recent Turner Construction Company’s report “Green Building Barometer” found that 75% of those professionals – including developers, rental building owners, brokers, architects and engineers – would not let the credit crunch discourage them from building green. In fact, 83% said they would be “extremely” or “very” likely to seek LEED certification for buildings they are planning to build within the next three years.
And while jobs continue to be cut and unemployment continues to rise, reaching 2.6 million in 2008, green building is able to generate new green jobs for Americans. The Center for American Progress and the Political Economy Research Institute at the University of Massachusetts Amherst found in a September 2008 study that a national green economic recovery program investing $100 billion over 10 years in six infrastructure areas would create 2 million new jobs!

Green buildings have the potential to help employers as well, as green buildings help companies cut costs, build sound financial situations and manage operating expenses. Rising energy costs are causing building owners and managers to tighten their belts, and the buildings they use day in and day out cost them millions in unnecessary operational costs. Respondents to Turner’s “Green Building Barometer” said their green buildings have resulted in lower energy costs, with 68% reporting lower overall operating costs. By investing in green technology in both new and existing buildings, building owners and managers are able to reap long-term operational and maintenance savings, all the while bettering the environment.

The Center for American Progress’ study shows how green investments on a wide scale can ignite the economy of the nation as a whole. A $100 billion green infrastructure investment over 10 years, with a focus on green building retrofits and investment in alternative energy sources, could be paid for with proceeds from carbon permit auctions under a greenhouse gas cap-and-trade program. That’s roughly the same amount of investment as the tax rebate checks sent as part of the April 2008 economic stimulus plan but would create 300,000 more jobs.
In short, green building offers a source of solutions and an opportunity for commercial real estate firms to tackle the challenges facing today’s society.

If you have any comments or ideas, you can reach Marc at mheisterkamp@usgbc.org.

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