Retail - No Sale for LEED?

Retail is a huge industry. In 2014, commercial, non-office, non-hospitality construction in the United States amounted to $57 billion, second only to educational construction. There are about 1.16 million retail establishments in the US, including freestanding retail stores, shops in malls, food sales (grocery) and food service (restaurants).

Yet, LEED retail registrations and certifications amount to only a tiny fraction of stores. With fewer than 1,500 LEED-certified new construction retail projects during the past six years, LEED certifications represented less than 0.3 percent of stores (that is, one out of every 333 retail buildings or establishments).

A few chains such as Kohl’s, Starbucks (only 500 out of 12,000 company-owned stores), PNC Bank (about 100 branches) and Stop & Shop grocery stores represent “power users” of LEED, but overall penetration of the retail space is insignificant.

USGBC’s recent “LEED in Motion: Retail” report presents a few success stories:

  • Starbucks currently has 500 certified stores in 18 countries.
  • Kohl’s is committed to achieving LEED certification for all new stores. The company has certified 434 buildings, or 38 percent of its stores. Of their total certifications, 286 are for existing buildings.
  • Verizon Wireless has 200 certifications, all LEED Silver or higher, about 10 percent of their 2,300 locations.

The growth of retail projects in the United States is shown in Figure 1. Through year-end 2015, fewer than 3,500 US retail projects were certified, and there is only slow growth in this segment, fewer than 700 certifications a year. The basic conclusion: given the small percentage of this sector that is engaged with using it for certification, with very few exceptions LEED is irrelevant to the needs and interests of the retail sector.

Figure 1. Growth of LEED US Retail Projects, 2010–2015

LEED for Retail growth in the US since 2010 is quite slow.

LEED for Retail growth in the US since 2010 is quite slow.

Through 2014, LEED had awarded 3,474 retail certifications globally (81 percent in the US), distributed as follows: 

·      New Construction = 49 percent (1,688 projects)

·      Existing Buildings = 14 percent (473 projects)

·      Commercial Interiors = 37 percent (1,313 projects).

Considering that Starbucks alone operates 21,000 stores worldwide (12,000 in the US), this total represents a very small percentage of retail stores. LEED developed its “volume certification program” specifically for retail, so a company could certify a typical store prototype, for example, in terms of materials use, energy use, water use, etc., and then just evaluate site characteristics to secure a rating. The volume program has existed in various forms since at least 2007; however, only a handful of retail chains use it.

Figure 2 shows retail project numbers (stores and tenant build-outs) choosing to use LEED during the past six years. Here again, the bottom line is stark: LEED is not used to any significant extent by the retail market.

The reason is plain: there is not much connection between consumer and retailer when it comes to LEED certification. Trying to make LEED a brand recognized by consumers (and also by store employees) is beyond USGBC’s resources. Because of this, companies don’t see an incremental gain in sales from spending money to certify a store. There may be other reasons, but sales growth is the most powerful motivator for retailers and LEED certification doesn’t provide it.

Figure 2. US LEED Retail Projects, 2010–2015

Annual registrations for LEED retail projects peaked in 2010-2011 and is down one-third since then.

Annual registrations for LEED retail projects peaked in 2010-2011 and is down one-third since then.

Conclusion

LEED will never have much impact on greening the retail world, because the certifications have little or no meaning for consumers and because LEED is too costly and cumbersome for most retail purposes. The verdict from the marketplace: NO SALE!