Nabers Annual Report 2022/23

Spotlight on Shopping Centres

Almost half of Australia’s shopping centre footprint was rated by NABERS last financial year. But as the retail sector drives energy efficiency at speed and scale, there’s plenty of work ahead.

NABERS began rating the energy and water consumption of shopping centres in 2010. That first cohort of shopping centres posted an average 0.9-star rating. Last year, a record 238 shopping centres obtained NABERS ratings, and the average 4.5-star Energy rating achieved proves the NABERS mantra, “measurement leads to better management”.

Figure 1: Average NABERS Energy for Shopping Centres: star ratings excluding GreenPower

Average NABERS Energy for Shopping Centres: star ratings excluding GreenPower

The average energy intensity of NABERS-rated shopping centres – in other words, the amount of energy consumed per unit of floor area – has fallen dramatically over time. This means shopping centres rated by NABERS are using less energy, year-on-year, to manage their functionality and comfort.

The graph in Figure 2 is instructive. It shows three cohorts of shopping centres that joined NABERS at five-year intervals. As these shopping centre owners began to measure – and then better manage – their energy efficiency, their NABERS star ratings Increased.

The original cohort from 2010 had an advantage over shopping centres that joined NABERS five years later, with better performing assets and lower energy bills.

The same trend can also be seen when comparing the 2015 cohort with shopping centres joining NABERS in 2020. What does this data suggest? We know that most shopping centres are improving their energy efficiency – but those joining the NABERS program are moving forward faster.

Figure 2: Average NABERS star rating for 3 cohorts of shopping centres

Average NABERS star rating for 3 cohorts of shopping centres

Insight and empowered investment

The GPT Group has been a “longtime supporter” of NABERS, according to the company’s Head of Sustainability and Energy, Steve Ford. GPT’s team began benchmarking the energy performance of its shopping centres in 2011.

“NABERS considers the idiosyncrasies between shopping centres, not just the energy use per square metre,” Steve says.

“As an external person looking in – whether that’s an investor or a tenant – you get a good understanding of performance of an individual asset against others in a portfolio, or of a single asset over time.”

NABERS delivers a “foundation of data” that is easy to understand. But one of NABERS’ “structural advantages” is its army of NABERS Assessors, Steve adds. “It’s not just about measuring and managing. It’s about having skilled people to help you.”

“The very basis of NABERS is a known set of rules that everyone understands. In reporting, it is easy to include numbers that look good and exclude the ones that look bad – but you can’t do that with NABERS.”

Steve Ford, Head of Sustainability and Energy, The GPT Group

How do NABERS ratings work?

NABERS is a common language that allows us to compare shopping centres of all shapes and sizes.

The NABERS assessment process considers the factors that are unique to shopping centres to ensure a fair, like-for-like comparison. This includes everything from the floor space to postcode to car parking spaces to trading days.

The benchmarks adjust depending on the shopping centre’s characteristics. This means the energy consumption to achieve a coveted 6-star NABERS Energy rating will vary, depending on those unique characteristics.

Take a hypothetical example of two shopping centres of the same size and scale, and with the same hours of operation and trading days (Figure 3). The only difference is location.

The shopping centre in Darwin is inherently a larger consumer of energy because of the air-conditioning required to maintain occupant comfort. The benchmark adjusts for this. Even though the energy intensity values of the two centres are different, they both achieve 6-star NABERS Energy ratings.

Figure 3: Comparison of hypothetical NABERS-rated buildings

Comparison of hypothetical NABERS-rated buildings

Figure 4: Comparison of shopping centres infographic

Comparison of shopping centres infographic

Star-studded shopping centres

Cbus Property has ownership in more than 285,000 sqm of shopping centre floor space as part of the Australian Core Retail Trust (ACRT), rated under the NABERS Sustainable Portfolios Index.

In 2023, Cbus Property was awarded a 5.5-star NABERS rating for its portfolio, ranking second in Australia.

“Elevating our NABERS Energy ratings has been a progressive achievement,” says Cbus Property’s Sustainability Manager, Marc Gillespie. “Measuring and monitoring our NABERS ratings closely give us a better understanding of how our buildings operate over time.”

All shopping centres have undergone substantial changes over the Covid-19 period, Marc notes. Changes to foot traffic influenced energy and water consumption.

“NABERS gives us extra insight to help optimise our operations, at an asset, and at a portfolio level. Using a standard benchmark like NABERS allows us to share knowledge between buildings on what works and what doesn’t.”

Rating more retail in 2024

In FY23, NABERS rated more shopping centres than ever before. The achievements of Australia’s leading retail asset owners over the last decade are worthy of awards and applause.

But the challenge of driving down energy consumption and emissions is as supersized as our shopping centre footprint, which the Shopping Centre Council of Australia says amounts to 26.5 million square metres.

The NABERS team is developing a tool to rate the spaces that aren’t currently assessed by NABERS, like large supermarket tenancies, department stores and big box retailers. This tool is set for launch in mid-2024.

Many retailers are eagerly awaiting the new NABERS rating tool. One of those is menswear label M.J Bale. Athena Savvas, M.J Bale’s Sustainability and Projects Manager, welcomes the launch of a “valuable tool to propel retail businesses in their efforts to better understand and reduce their environmental impact”, especially as NABERS has been “proven to reduce energy consumption of other industries”.

Electric dreams

Shopping centres participating in NABERS have achieved huge reductions in energy use in just a few years. But a more nuanced picture emerges when we look at the decline in electricity and gas usage separately.

The graph in Figure 5 shows the evolution of 71 shopping centres that were certified by NABERS in FY15, and then once again in FY23. During this 8-year period, those shopping centres reduced their electricity consumption (in MJ/m2) by a whopping 37%, a world-leading rate of energy improvement. In contrast, gas usage in these buildings declined by 18%, a respectable decline but only half as fast as the progress seen with electricity usage.

Figure 6 complements the analysis, showing that although shopping centres have become more energy-efficient, the percentage of NABERS rated shopping centres using on site fossil fuels is still high.

This example shows the great challenge ahead for Australian retail, as well as the broader building sector. We need to continue to use our electricity more efficiently, but we need an even bigger leap towards electrifying our buildings. So, while we can and should be proud of our progress to date, there is much work ahead on the road to a net zero retail sector.

Figure 5: Percentage change of electricity and gas intensity of 71 shopping centres since FY15

Percentage change of electricity and gas intensity of 71 shopping centres since FY15

Figure 6: Percentage of shopping centres that use fossil fuel energy

Percentage of shopping centres that use fossil fuel energy

The new Renewable Energy Indicator is displayed on NABERS certificates, showing the proportion of a building’s energy derived from renewables.

GPT’s Steve Ford says the Indicator will drive the next level of investment in energy efficiency. “A simple outcome of stars, and now renewable energy percentages, can be what attracts green finance or gets buy-in for energy efficiency projects. The uplift in a NABERS rating can be the extra incentive that gets capital investment over the line.”

Cbus Property’s Marc Gillespie says the addition of the Indicator on NABERS certificates has been “eye opening”. Cbus Property is working towards electrification across its portfolio, but this takes long-term planning. Understanding the proportion of energy that comes from gas “helps to drive the electrification conversation today”.

Steve emphasises the crucial insight his team has gained from its long collaboration with NABERS.

“Our biggest lesson from working with NABERS has been to pay greater attention to the changing profile of our assets. Shopping centres aren’t stagnant. They are in perpetual change. NABERS helps us understand and respond to those changes.”