Link between retail rents and energy consumption uncovered

Rents for high street shops and retail parks are positively correlated with their respective energy consumption, according to research by Redevco.

The study of the property company’s pan-European portfolio of 400 retail properties focused on finding a link between energy consumption and leases rather than energy consumption and the properties themselves – with implications for sustainability management and portfolio construction.

Redevco’s high street assets that had high rents per square metre showed higher energy consumption. Those with a low rent per square metre had a low energy intensity.

For retail parks, Redevco found the opposite: high rent per square metre corresponded with low energy intensity.

Derk Welling, head of corporate responsibility, said the research could enable Redevco to uncover a new benchmark or investment market outperformance indicator that “could also prove to be good for the environment”.

Redevco, which has a €6.5bn portfolio, said it began researching energy consumption and its link with real estate financial performance in 2008 – but found little relationship. It launched a retailer sustainability benchmark last year.

Its latest findings, contained within its Responsible Real Estate Investment Report 2013/2014, could have implications for future investment performance, with sustainability becoming a component of asset management.

Welling said: “I think we’ll see a ‘flip-over’ point where future rising energy unit prices will lead to an intense focus on this element of the sustainability and asset management mix.”