Building a Sustainability Program Starts with Building Sustainable Relationships

Published on May 17, 2017 in Areas of Expertise
Eric Richter
Eric Richter
Senior Vice President, Property Management

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As one of the nation’s largest owners and operators of grocery-anchored shopping centers, Phillips Edison has always had a long-standing commitment to sustainability initiatives, based on a mission that is two-fold: be good stewards of the environment and do so in a way that makes business sense and adds value to our centers.
 
Our property management and construction teams are at the forefront of executing this mission at our centers. Over the past several years we have achieved success with upgrading our lighting packages with LED fixtures, replacing our HVAC units with more energy efficient models and installing white reflective TPO roofing systems at our centers.
 
We’ve recently been focused on establishing a solar energy program at our centers to take advantage of our biggest piece of unused real estate – our roofs. We currently own and operate five centers with solar panels, and have been trying to expand this initiative across our portfolio. Admittedly this has been one of our biggest challenges. Part of the challenge is finding the right solution that works for us and most importantly for our tenants. In the past two years, we met with and interviewed over twenty potential providers, and just couldn’t find the right solution.
 
We decided to shift our focus to finding the right partner and building a sustainable relationship with that partner – a relationship that can last because it’s a win for all three parties – Phillips Edison, our tenants and the solar energy developer. We took a meeting with Blue Sky Utility at RECon 2016, and immediately knew we were on to something. Over the course of the past year we worked together to form a strong partnership. Blue Sky Utility invested the time in getting to know us and our centers. Together we developed the following solar energy program for our California properties:
  • Blue Sky upgrades the roofing system at the center to a white reflective 60 mil TPO roof with a 25 year warranty at no cost to Phillips Edison or our tenants
  • Blue Sky installs and maintains the solar panels, and manages the energy generated
  • Phillips Edison buys energy to power common areas from Blue Sky at a 6-8% discount
  • Blue Sky sells power to our small shop tenants at a 6-8% discount
Phillips Edison scores a major win in the relationship with the new roof installation backed by a 25 year warranty. Roof replacement can cost up to $500,000, which eats up capital budgets very quickly. Fixing roof leaks is also one of our biggest expense line items, and these white TPO roofs are much less maintenance and save us time and money on repairs. Blue Sky will take care of any issues with the roofing systems. These CAM savings get passed on to our tenants or assist to offset the rising costs of other center expenses. We also buy common area power at a discount and pass that savings along to our tenants as well.
 
Our tenants enjoy these CAM savings and benefit from being able to buy their power from Blue Sky at a discount. The new reflective roofs also offset heating and air-conditioning costs for tenants.
 
Blue Sky Utility benefits from selling the power generated from the solar panels on our roofs.
 
As a result of our relationship with Blue Sky, we have plans to implement this solar program at nine centers in California this year, with plans to expand to all 23 of our California properties in the next two-three years. We’ve learned the foundation for our sustainability program starts with sustainable relationships. We’ve worked together as partners to build a long-term relationship built on trust, goodwill, and a commitment to successful outcomes for each party. Phillips Edison, our tenants, our energy provider Blue Sky, and ultimately the environment all benefit as a result. 
 
Eric Richter
Eric Richter
Senior Vice President, Property Management