Why LEED?

Should retailers invest in LEED certification — or an alternative environmental rating system like Green Globes — in order to burnish their green credentials?

In an era rampant with claims of environmental purity, few designations have the clout and cachet of LEED certification by the Washington-based non-profit U.S. Green Building Council (USGBC).

Launched in March 2000, LEED (Leadership in Energy & Environmental Design) remains a hard-to-get credential certifying that a building has met rigorous green standards for location, water efficiency, energy modeling, materials and indoor environmental quality. There is not one LEED certification, but several, varying by type of building (new or existing, school or retail store, for example) and level of compliance (certified, silver, gold or platinum). Moreover, LEED has gone through numerous iterations since its beginning, the latest being LEED for 2009, and is in the process of being updated to LEED for 2012.

Worldwide, more than 10,000 buildings across the architectural spectrum, from schools and supermarkets to the Empire State Building, have received a LEED designation. That number will continue to grow as localities increasingly require new buildings to be LEED certified. At present, 134 supermarkets have been LEED certified or registered with the program, according to the USGBC. Stop & Shop/Giant [4], Quincy, Mass., has joined the USGBC's “volume certification” program, which will certify multiple LEED stores based on a prototype store passing muster; Fresh & Easy is a pilot member of this program.

LEED draws on disparate existing standards to come up with an overarching protocol. “LEED looks at how to green a building comprehensively,” said Marc Mondor, principal, LEED faculty, evolveEA, Pittsburgh, during a presentation in September at the Food Marketing Institute's Energy & Store Development Conference in Atlanta. “Prior to LEED, you had Energy Star, but not a rating system that looked at energy, water, materials and indoor environmental quality.”

By offering a points-based framework for making green improvements, LEED provides a pathway for retailers and other commercial builders to reach environment goals. And retailers that have gotten LEED certification for one or more stores have not only garnered favorable publicity for contributing to the environmental well-being of their communities, but have also been able to reduce their operational costs.

For example, PCC Natural Markets, Seattle, a nine-store organic cooperative, saves on both energy and water costs at its two LEED stores [5]. Beyond that, “the value of features that enhance the work environment for our employees and the shopping experience for our customers is immeasurable,” said Diana Crane, PCC's director of sustainability. And the recognition PCC has received for its LEED stores “has created added value to what many of our shoppers feel they receive for choosing to shop at any of our stores.”

Yet many retailers who have adopted green strategies and technologies have avoided LEED because of the additional costs involved in securing the certification. Complicating the picture is the emergence of a second certification option, Green Globes [6], which shares many standards with LEED but offers a more flexible and less expensive certification process.

FMI's “Food Industry Speaks 2011” study sheds some light on retailers' approach to LEED. About 19% of surveyed retailers have at least one store carrying the LEED certification; another 9.9% plan on building a LEED-certified store in the foreseeable future. On the other hand, 54.4% of retailers reported that they are pursuing green building initiatives without seeking LEED certification.

Cost is the main barrier cited by retailers in the FMI study, with almost half (47.7%) not wanting to pay the administrative and filing fees associated with LEED certification. A slightly lower percentage, 45.5%, didn't see any benefits of official certification, while others (36.4%) cited time considerations.

One executive from a Southeast food retailer, who asked not to be identified, said his chain looked into getting LEED certification and has even adopted some of its guidelines. But in the end costs stood in the way. “To get LEED certification, everything costs more money,” he said, adding, “We don't see the value in it. What does having it give you back, other than saying you've got a LEED Certified store?”

In particular, the executive cited the higher costs of building materials and equipment for LEED projects. Without pursuing LEED certification, the chain is nonetheless adopting systems that would earn it LEED points, such as self-dimming lights, glass doors in dairy and beverage cases, LED lights in freezer doors, among other measures.

Retailers who have pursued LEED report varying costs for the certification. The USGBC charges $3,150 for registration and certification of a building with less than 50,000 square feet, according to Nick Shaffer, USGBC's manager of LEED. This does not include meeting the commissioning requirement, which can run $10,000 or more, he added, or energy modeling. In addition, the premium for a LEED building's green add-ons ranges from 0% to 1%, he said.

Retailers sometimes incur significant cost increases for LEED by hiring contractors or consultants who don't understand the LEED process and need to be vetted carefully, said Shaffer. “The more you understand what LEED is asking for and the small changes you need to make, the less costly it will be.”

Whatever the costs, a number of food retailers, including regional chains like Giant Eagle [7] and Price Chopper Supermarkets [8], have made LEED a fundamental part of their building programs. Their experiences speak to the benefits, as well as the costs, of seeking LEED certification.

Raising the Floor

Over the past eight years, Pittsburgh-based Giant Eagle has gotten LEED certification for five supermarkets (and a few convenience stores) as a way to gradually improve the environmental footprint of the entire chain. “We've kept raising the floor of sustainability practices in construction,” said Brad Morris, engineering manager for Giant Eagle, who spoke with Mondor at the FMI Energy & Store Development Conference.

In each of the LEED stores, the chain has employed LEED as a “benchmark or yardstick” for testing new green practices, said Morris. “We test things; some work, some don't. The ones that work we'll roll out to our other supermarkets,” as well as remodels and new non-LEED construction. The chain generally looks for a two-to-three year ROI on green investments.

Giant Eagle's LEED stores have achieved varying levels, including certified, silver and gold. Morris observed that gold and platinum level stores can involve site constraints - such as brownfield redevelopment - that are costly and not easy to apply at other stores. For the most part, the chain has focused on improvements that don't incur “a lot of cost” but are impactful “because we're rolling that feature throughout the organization,” he said.

Giant Eagle opened its first LEED Certified store — the first LEED supermarket in the U.S. — in Brunswick, Ohio, in 2003. The store was certified in the New Construction (NC) category, the primary category in which food retailers have sought LEED certification. Another is Commercial Interiors (CI), which Giant Eagle used for a store attached to mixed-use housing. (It can also be used for remodels.) Since November of 2010, both NC and CI certifications can be obtained under the umbrella of LEED for Retail. “Whenever we start a project, we look at the rating system that makes the most sense,” said Mondor of evolveEA, who has consulted with Giant Eagle on its LEED buildings.

Still another designation, LEED for Existing Buildings, pertains to ongoing operations and maintenance; apart from Stop & Shop, retailers tend not to pursue LEED certification in this category. “It's not as sexy as LEED for new construction,” said Mondor.

At the Brunswick store, Giant Eagle tested everything from skylights, energy modeling and commissioning to education, water sub-metering and pulping. Skylights “were new to us, a large stepping stone,” said Morris. On the other hand, the pulping test — extracting fluid from produce — “failed miserably.”

At its LEED Silver CI store in the Shadyside area of Pittsburgh, opened in 2007, the chain continued testing skylights, looking at different sizes and types, and added a green roof installation, recycled and regional materials and low VOC (volatile organic compound) applications. “We focused on what worked well from a lighting perspective,” including the installation of continuous-dimming lighting fixtures that adjusted lighting intensity by degrees in response to the light coming into the store, he said. With the Shadyside store, skylights became standard for new stores (LEED or not) as did TPO (thermoplastic olefin) roofing and enhanced store commissioning.

In 2008, Giant Eagle opened its first LEED Gold (NC) store in Columbus, Ohio, where it continued to adjust the lighting technology. The chain decided to replace continuous dimming with a less expensive “step-dimming” system that reacts to outside light coming into the store by shutting off a percentage (say 25%) of the light power at once.

Though there was some concern that Columbus shoppers would notice the lighting shift, “we were able to reduce about $100,000 from our lighting control costs” with the step-dimming system, said Morris. “We were still able to save energy and deliver the right light in the store.” In addition, the chain introduced vertical glazing - glass allowing light into the shopping environment — on certain walls, which was found to improve shoppers' comfort level, and decided to build an exposed ceiling that showed lights, ductwork and the like.

In 2009, Giant Eagle built stores in the Pine Township and Robinson sections of Pittsburgh, the former achieving silver status as a pilot in the LEED for Retail category, the latter gold for New Construction. In these stores, the chain focused on material standards such as low-VOC paint and low VOC caulk adhesive. “In 2003 it was hard to find low-VOC caulk adhesive but by 2009 you could buy it off the shelf,” Morris said, adding that “any future Giant Eagle remodels included these components.” Other standard environmental features include measurement and verification of utility usage, low-flow toilets/urinals and faucets, and water-efficient landscaping.

Giant Eagle's latest LEED (NC) project is a new store in the Broadview Heights section of Cleveland scheduled to open in June 2012. A new system here will be a 135-kilowatt photovoltaic (solar) array on the roof. Solar energy was considered in 2003, but didn't become affordable for the chain until this year. “With the market maturity and federal incentives, we were able to get the payback down to where it made sense for us,” said Morris.

While LEED has enabled Giant Eagle to expand its repertoire of green features, Morris is not persuaded that the general population of consumers recognizes the designation. “Certain areas are more prone to accept it and understand it, but even then they wouldn't choose to shop at a LEED store over a non-LEED store,” he said. “I like to believe that a customer goes into a store more because the daylighting is a better environment than because it's a LEED store.”

As for cost, beyond the administrative side of LEED, Morris said it was hard for him to quantify the premium paid for a LEED store. Now that features like skylights are standard, “they are not included in the premium,” he said.

LEEDs for All

While Giant Eagle judiciously targets specific new stores for LEED certification, Price Chopper, Schenectady, N.Y., with about 130 stores, decided two years ago to LEED-certify all of its new supermarkets.

This year, the chain's first three LEED certifications came through for stores in Warwick, N.Y. (gold), Madison, N.Y. (silver) and Colonie, N.Y. (silver), all of them pilot stores for the LEED for Retail (NC) classification. In addition, a store in Middletown, Conn., is under review for LEED NC, as is Price Chopper's corporate headquarters building opened in 2010. Seven other stores under construction or built have been registered with the USGBC for LEED NC certification, some under LEED for Retail.

In selecting a LEED classification, Price Chopper looks at “what is most beneficial from a site development and store format perspective,” said Joseph Berman, environmental certification specialist for the Golub Corp., Price Chopper's corporate name. For its new Saratoga Springs, N.Y., store, the chain chose LEED for New Construction because the store is being certified as part of an apartment building.

On the other hand, going forward, Price Chopper regards LEED for Retail as “the most viable and applicable [designation] for what we're doing,” Berman noted.

In terms of LEED level, Price Chopper will ordinarily seek LEED Certified, unless a particular site is conducive to gaining silver certification, he said. For example, a site's proximity to public transportation or denser population centers would qualify it for a silver certification.

Price Chopper's LEED process is now focused strictly on new store construction (or possibly major renovations), not remodels or existing store improvements. “We want to make certain we have a completely nailed-down approach in our construction platform before we broaden what we do into our existing buildings,” Berman said.

Among the measures Price Chopper is adopting for its LEED stores are: energy-management controls on ovens and refrigeration; T5 high-output fluorescent lights housed in auto-dimming ballasts; domed skylighting that covers 3% of the roof surface; high-efficiency HVAC configurations; ECM motors, LED lighting, anti-sweat heater controls, thermal film and energy-efficient fans in closed dairy and refrigerated cases; secondary-loop carbon dioxide/glycol refrigeration systems (in larger stores); R-30 roof insulation; and low-flow plumbing fixtures. The chain is also purchasing 3.44% of its energy needs in the form of renewable wind power credits, making it one of the Environmental Protection Agency's top 20 U.S. retail purchasers of green power.

In addition, a minimum of 20% (by cost) of the materials used in new construction must be sourced from within a 500-mile radius of the project site; at least 20% must also contain recycled materials. Low-VOC materials are used for carpeting, paint, sealants and wood-composite materials.

Why has Price Chopper embraced LEED? “LEED is the most broadly recognized, widely respected, most comprehensive sustainable building strategy that addresses all elements of the building process,” said Berman. Price Chopper, he added, finds value in using LEED standards — in the form of best practices — to reduce its environmental impact. “This is a benchmark for what we should be doing — and why. It changes the lens through which we perceive building processes.”

Through the LEED program, Price Chopper has seen “significant reductions in energy consumption” — its new stores are between 27% and 33% more energy efficient than comparable new retail stores, said Berman. The chain has also experienced a “significantly reduced material resources impact,” including a 20% to 30% reduction in potable water usage.

William Sweet, Price Chopper's vice president of construction and engineering, views LEED as a “differentiation factor” for the chain, not unlike its introduction of a range of organic products in 2007. “We've made a broad-brush commitment [to sustainability] that a lot of our competitors have not done,” he said.

Price Chopper promotes this differentiation through educational tours, in-store kiosks that report on energy usage, and LEED plaques, and plans to add information on LEED to its website and an upcoming document on social responsibility.

Sweet said that the LEED application and certification process, including commissioning and energy modeling, runs between $70,000 and $100,000. (Price Chopper receives a discount on the LEED process by virtue of being a member of the USGBC.) Berman added that the chain's internal resources, including design, engineering and construction functions, help it avoid the added costs of outsourcing those tasks to third parties. Price Chopper's LEED program also qualifies for incentives from utilities and groups like the New York State Energy, Research and Development Authority (NYSERDA).

The extra building costs for a LEED project, which would have boosted the total by 15% five years ago, now represent a premium of 2% to 3% for Price Chopper, reducing the ROI to about three years, Sweet said. Many of the green LEED features have become standard best practices that “we would [invest in] anyway.”