The Green Shopping Center

Shopping centers around the globe are turning green, and not just for branding purposes.The same argument for building or retrofitting sustainable buildings for commercial properties holds for shopping centers. Sustainable buildings typically benefit from lower operating expenses, less potable water consumption, potential tax credits and other incentives, better indoor environmental quality, higher worker productivity and fewer sick days, and public relations benefits from a mandate to embrace corporate responsibility.

A shopping center can employ the same sustainable building design concepts that any other type of building uses. These would include, without limitation:

• Rooftop HVAC units using full outdoor air economizers to reduce the need for cooling when outdoor air is cool.
• Solar and wind power to help meet its energy needs.
• Regenerating heat from the refrigeration racks.
• Radiant floor heating.
• Burning waste-recycled cooking and motor oil to heat water.
• LEDs (light-emitting diodes) instead of incandescent or fluorescent light bulbs.
• Green roofs with drought-resistant vegetation.
• Reusing treated water, captured from rooftops and parking lots, for irrigation purposes.
• Use of reflective roofs.
• Use of low VOCs such as those found in sealants, paints and furniture.
• Minimization of light pollution with exterior wall-mounted fixtures in the parking lots to promote “dark-sky” and minimize upward lighting.
• Addition of a heat exchanger to minimize spring and winter cooling requirements from the chiller and the inclusion of a system of water flowing from the cooling tower back into the chiller, converting it into chilled water.
• Commissioning and re-commissioning of all systems.
• The use of BAS, which turns off equipment during low load and unoccupied times.
• Using indoor photocells connected to the lighting control systems so that the lights turn off when the natural light level exceeds a base level.
• Individual tenant-controlled HVAC units.
• Green cleaning.
• Green pest control.
• Automatic flush urinals, toilets, sinks.
• LED digital screens with shopping center maps to avoid the printing of paper.

Benefits

The benefits of going green abound ' not only in direct economic cash-on-cash terms, but also in indirect ways. Studies have consistently shown that employees in a sustainable building take fewer sick days per year than their counterparts in non-green buildings. Furthermore, employee productivity is a by-product of occupancy in a green building. In a recent Notre Dame study, it was reported that bank employees are more productive in a sustainable premises. “Over the years, there have been lots of studies that show employees are more satisfied and productive when they work in green buildings, but this is the first study to show that banks actually bring in significantly more revenue. Researchers found that bank branches generate more revenue ' $461,300 per employee ' even though they offer the same products and services as others.”

Clearly, shopping center developers now have many carrots, albeit green ones, to entice retail tenants to their malls. But do retailers themselves want to embrace sustainability?

In fact, within the past 10 years, many retailers have gone green. This can be found not only in the corporate mandates of behemoths such as Wal-Mart, Tesco, Kingfisher, Starbucks, Safeway, Nike, Intel, Dow, Whole Foods and Kohl's, but also in their actions. In 2011, the Corporate Renewable Energy Index was developed to show how corporations are investing in renewable energy through Renewable Energy Certificates (RECs), green pricing, carbon offsets, and direct investments in solar, hydro, wind, geothermal and others. But energy savings is only a part of the story.

Whole Foods, for example, recognizes that reducing the use of potable water is also an important component in sustainability programs. In its “Whole Foods Market's Green Mission 2012,” the company boasts its use of low-water landscaping, rainwater harvesting, and automatic water faucets. (See www.wholefoodsmarket.com/pdfs/2012MarchGreenMissionReport.pdf.) Similarly, Nike has green building practices for some of its retail stores. (Id., the Nike Houston store was built to LEED-CI (commercial interiors) certification standards.) In the Houston Niketown store, for example, not only did Nike reduce energy and water consumption, but it touts that “96 percent of construction waste was recycled and low-VOC paint and finishes were used throughout” the store.

Shopping Centers

So, if the retailers are jumping on the sustainability bandwagon, which shopping center owners are doing likewise? Abroad, there are now many mall owners that have already turned green: The Taj Mall (Amman, Jordan), the Ir Yamim Mall (Netanya, Israel), the Mall of Split (Split, Croatia) and the Erzurum Shopping Center (Erzurum, Turkey). In the United States, there are many more: Melaver, Inc. (Abercorn Common, Savannah, GA); Pyramid (Destiny USA, Syracuse, NY); Crescent Real Estate Holdings LLC (The Shops at Houston Center and 4 Houston Center, Houston, TX); Bond Companies (Springbrook Prairie Pavilion, Naperville, IL); Regency Centers (Deer Springs Town Center, North Las Vegas, NV); Jefferson Square (La Quinta, CA); Lower Nazareth Commons (Township, PA); and Taubman Centers, Inc. (City Creek Center in Salt Lake City, UT).

Although not all shopping centers obtain some form of certification (such as from G.B.C.I. (under the U.S.G.B.C.), GBI, Energy Star, Ashrae, BOMA) when turning green, many have some form of green certification ' For example, certified centers in the United States and Canada include: Abbotsford Shopping Centre (Abbotsford, British Columbia), CashCo Pawn and Shopping Center (San Diego, CA), Ft. Polk Shopping Center (Ft. Polk, LA), Langley Shopping Centre (Langley, British Columbia), Pedro Point Shopping Center (Pacifica, CA), Waikiki Shopping Plaza Expansion (Honolulu, HI), The Mall at Millenia (Orlando, FL), Prime Outlets Phase VII (Williamsburg, VA), Tanger Outlet Center at the Arches (Deer Park, NY), Northfield Stapleton (Denver, CO), Tanger Outlet Center Hilton Head I (Bluffton, SC), and Green Circle Shopping Center (Springfield, MO). (See www.usgbc.org/LEED/Project/CertifiedProjectList.aspx and www.usgbc.org/LEED/Project/CertifiedProjectList.aspx.)

Legal Issues

Once a shopping center owner or its tenant decides to have a sustainable property/premises, there are some legal issues that each of them should consider when becoming green. For example, each contract to be executed by the mall owner or tenant planning to obtain sustainability (and perhaps certification as well) will need to reflect the intent of all those signing the agreement and their respective obligations under it. Similarly, myriad parties are involved in the greening process (which includes not only getting to a green status, but also maintaining that status). Each party must strictly adhere to its contractual obligations because the landlord or tenant (or both) has a lot riding on sustainability.

The following case study is offered to better explain what could happen if the contracts turning a property green are not well-drafted.

Case Study

In our hypothetical, ABC Centers LLC (“ABC”) is expanding its shopping center with a second phase (“Phase II”) and will retrofit the existing portion (“Phase I”) so that the entire center (“Center”) will become LEED Gold Certified. The first contract that ABC signs is with its architect (“Architect”), who will design the new Phase II and the Phase I retrofit. The architectural firm guarantees LEED (Leadership in Energy and Environmental Design) Gold Certification of the shopping center (against its attorney's advice) on or before a date that is 18 months after execution of the contract with ABC (all references to timing for the project are based on the original date of execution).

Two issues raise potential red flags. One is the guaranty of completion, which, in and of itself, poses problems. The second issue is the guaranty that the certification will be obtained by a date certain. Since the USGBC (United States Green Building Council) through its certification body GBCI (Green Building Certification Institute) is the certifying body, the process is totally out of the control (at least with respect to timing) of the architect.

ABC next contracts with the one who will perform the retrofit designed by the architect ' namely, the contractor (“Contractor”). Here, although not requiring the contractor to guaranty the certification from GBCI, the contract permits ABC to withhold its final installment of payment for the work until certification is obtained, which could be many months after substantial completion of the job. The Contractor promises substantial completion no later than the 15th month.

ABC next enters into a loan agreement with a lender (“Lender”) to pay for the construction. In order for ABC to pay its debt service, ABC signs a 20-year lease with an anchor tenant for Phase II (“Retail”). The 20-year lease, which also gives the tenant four five-year renewal options, is for 50,000 rentable sq. ft. of space in a LEED Gold Certified shopping center. The lease was to commence in the 24th month. Last, ABC, which uses a property manager (“Property Manager”), modifies its existing contract with Property Manager to include (for an added fee) having Property Manager oversee the construction of Phase II, the retrofit of Phase I and the obtaining of the LEED Gold Certification for both.

The Problem

Although the Contractor substantially completes the entire job by the 15th month, the Center's application for LEED Gold Certification had problems. As of the 18th month, the Center had not yet achieved LEED Gold Certification. ABC was told by a representative from GBCI that a Silver Certification (not Gold) would be issued in or about the 24th month ' but not sooner.

The Domino Effect

Now the fun part begins. The lease between ABC and Retail required ABC to deliver to Retail the premises (which you remember had to be in a LEED Gold Certified center) no later than in the 20th month ' or else Retail had one of the following options: 1) To terminate the lease; or 2) To be given 1/3 credit in monthly rent for the entire term if LEED Gold Certification was not delivered at commencement or, if lost during the term, from the date of the loss of certification through either the date certification was granted or the expiration of the term (including all renewals). If Retail chose this option, Retail had to take occupancy no later than the 21st month; or 3) To take occupancy in the 21st month with a ' monthly rent credit until LEED Gold Certification was delivered and maintained or if a lower certification level was delivered (such as Certified or Silver) on or before the 20th month.

By the way, on top of all of this, the loan agreement between ABC and the Lender required that ABC deliver a LEED Gold Certified Center on or before the 20th month or it was an Event of Default under the loan agreement. The Lender could, in addition to other remedies, withhold its last construction loan payment until Gold Certification was obtained. Furthermore, if LEED Gold Certification was not achieved on or before the 24th month, the Lender could foreclose on the loan.

Well, the fun continues. The 20th month rolls around and there is no LEED Gold Certification. In fact, no certification is evident at all. ABC still owes Contractor its last payment and owes Architect its final payment. And, although the lease provided for Retail to notify ABC no later than the 20th month as to which option Retail would exercise, there has been no word from Retail. Property Manager has contacted Retail repeatedly, but gets no response.

Who Sues Whom?

ABC sues the Architect for failure to deliver a LEED Gold Certified Center by the 18th month. The Architect countersues ABC for failure to pay its fee, and blames the failure of issuance of the LEED Gold Certification on ABC's change orders during construction ' which substituted a green building product with a non-green product. ABC sues the Contractor for substituting a non-green product into the construction job without ABC's consent, which proximately caused the failure of LEED Gold Certification to be issued. The Contractor countersues ABC for failure to pay its fee, and blames the failure of issuance of the LEED Gold Certification on ABC for not responding to the requested change order; also, Contractor sues Architect for not providing guidance on a substitute green product when the original products were unavailable.

ABC next sues Retail for not exercising its option under the lease because ABC needs to know: 1) if it has a tenant at all; or 2) under what economic scheme the tenancy will be structured. Retail countersues ABC because ABC knew, or should have known, that LEED Silver Certification was the most it could obtain for the Center; if only ABC had given Retail notice of this earlier, Retail could have terminated the lease and rented space across the avenue from ABC's shopping center from another, older, LEED Gold Certified mall for the same rent it was to pay ABC.

Circumstances have now changed. Market conditions have improved for the across-the-avenue shopping center owner (which now has no LEED Gold competitor across the avenue), and the rent there is 1' times the rent under ABC's lease with Retail. Retail seeks damages in the amount of the difference for the entire 40 years it might have rented space from ABC.

Next, the Lender has decided to call the failure to obtain LEED Gold Certification a material default under the loan (“Event of Default”) and to foreclose on the loan. ABC defends itself by stating that the foreclosure is premature, because it is not yet the 24th month and no certification has been issued. Although GBCI stated that LEED Silver Certification is the most it would award to ABC, there was a chance it could be LEED Gold instead. ABC also contends that the loan agreement was ambiguous, notwithstanding that the language in the loan agreement permits the Lender to withhold the last construction loan payment “until LEED Gold Certification is obtained.” ABC asserts that the Lender should wait as long as it takes until LEED Gold Certification is issued. Last, ABC sues the Property Manager for negligently supervising the construction job and failing to obtain LEED Gold Certification.

As one can see, the road to sustainability could be laced with many obstacles and liabilities. To better protect themselves in contracting and in getting what they are paying for, shopping center owners and retail tenants should be cognizant of all the legal issues that could arise.

The Long-term Outlook

What is the long-term outlook for getting shopping centers to go green? Clearly, on just an operating expense reduction basis, there are few reasons not to embrace as many sustainable building modifications as possible. If one adds in the intangible benefits of going green ' higher worker productivity, fewer sick days and lower healthcare costs, all of which relate to indoor air quality, green cleaning, green pest control and more ' smart mall operators should do everything they can to get green. Retailers that rent space from them will be demanding it, not only for their own bottom lines, but also with the general public demanding these sustainable initiatives.

In her insightful article, “Five Reasons for Retailers to Go Green,” Karen Lowe sums it up best. “Building a sustainable supply chain, conserving energy, developing smarter packaging, becoming more socially responsible, and developing more
loyal customers” (See www.stores.org/stores-magazine-january-2009/five-reasons-retailers-go-green) are “worth the investment.” Clearly, many large and small retailers agree.

Richard J. Sobelsohn is the Director of Lexis' Practice Advisor's Real Estate Content. Sobelsohn brings more than 14 years of legal experience to LexisNexis' in the area of real estate. He is also an adjunct professor of law at Brooklyn Law School and New York Law School, and is a LEED Accredited Professional. Sobelsohn is a member of the New York, New Jersey, Connecticut and District of Columbia Bars.

Shopping centers around the globe are turning green, and not just for branding purposes.The same argument for building or retrofitting sustainable buildings for commercial properties holds for shopping centers. Sustainable buildings typically benefit from lower operating expenses, less potable water consumption, potential tax credits and other incentives, better indoor environmental quality, higher worker productivity and fewer sick days, and public relations benefits from a mandate to embrace corporate responsibility.

A shopping center can employ the same sustainable building design concepts that any other type of building uses. These would include, without limitation:

• Rooftop HVAC units using full outdoor air economizers to reduce the need for cooling when outdoor air is cool.
• Solar and wind power to help meet its energy needs.
• Regenerating heat from the refrigeration racks.
• Radiant floor heating.
• Burning waste-recycled cooking and motor oil to heat water.
• LEDs (light-emitting diodes) instead of incandescent or fluorescent light bulbs.
• Green roofs with drought-resistant vegetation.
• Reusing treated water, captured from rooftops and parking lots, for irrigation purposes.
• Use of reflective roofs.
• Use of low VOCs such as those found in sealants, paints and furniture.
• Minimization of light pollution with exterior wall-mounted fixtures in the parking lots to promote “dark-sky” and minimize upward lighting.
• Addition of a heat exchanger to minimize spring and winter cooling requirements from the chiller and the inclusion of a system of water flowing from the cooling tower back into the chiller, converting it into chilled water.
• Commissioning and re-commissioning of all systems.
• The use of BAS, which turns off equipment during low load and unoccupied times.
• Using indoor photocells connected to the lighting control systems so that the lights turn off when the natural light level exceeds a base level.
• Individual tenant-controlled HVAC units.
• Green cleaning.
• Green pest control.
• Automatic flush urinals, toilets, sinks.
• LED digital screens with shopping center maps to avoid the printing of paper.

Benefits

The benefits of going green abound ' not only in direct economic cash-on-cash terms, but also in indirect ways. Studies have consistently shown that employees in a sustainable building take fewer sick days per year than their counterparts in non-green buildings. Furthermore, employee productivity is a by-product of occupancy in a green building. In a recent Notre Dame study, it was reported that bank employees are more productive in a sustainable premises. “Over the years, there have been lots of studies that show employees are more satisfied and productive when they work in green buildings, but this is the first study to show that banks actually bring in significantly more revenue. Researchers found that bank branches generate more revenue ' $461,300 per employee ' even though they offer the same products and services as others.”

Clearly, shopping center developers now have many carrots, albeit green ones, to entice retail tenants to their malls. But do retailers themselves want to embrace sustainability?

In fact, within the past 10 years, many retailers have gone green. This can be found not only in the corporate mandates of behemoths such as Wal-Mart, Tesco, Kingfisher, Starbucks, Safeway, Nike, Intel, Dow, Whole Foods and Kohl's, but also in their actions. In 2011, the Corporate Renewable Energy Index was developed to show how corporations are investing in renewable energy through Renewable Energy Certificates (RECs), green pricing, carbon offsets, and direct investments in solar, hydro, wind, geothermal and others. But energy savings is only a part of the story.

Whole Foods, for example, recognizes that reducing the use of potable water is also an important component in sustainability programs. In its “Whole Foods Market's Green Mission 2012,” the company boasts its use of low-water landscaping, rainwater harvesting, and automatic water faucets. (See www.wholefoodsmarket.com/pdfs/2012MarchGreenMissionReport.pdf.) Similarly, Nike has green building practices for some of its retail stores. (Id., the Nike Houston store was built to LEED-CI (commercial interiors) certification standards.) In the Houston Niketown store, for example, not only did Nike reduce energy and water consumption, but it touts that “96 percent of construction waste was recycled and low-VOC paint and finishes were used throughout” the store.

Shopping Centers

So, if the retailers are jumping on the sustainability bandwagon, which shopping center owners are doing likewise? Abroad, there are now many mall owners that have already turned green: The Taj Mall (Amman, Jordan), the Ir Yamim Mall (Netanya, Israel), the Mall of Split (Split, Croatia) and the Erzurum Shopping Center (Erzurum, Turkey). In the United States, there are many more: Melaver, Inc. (Abercorn Common, Savannah, GA); Pyramid (Destiny USA, Syracuse, NY); Crescent Real Estate Holdings LLC (The Shops at Houston Center and 4 Houston Center, Houston, TX); Bond Companies (Springbrook Prairie Pavilion, Naperville, IL); Regency Centers (Deer Springs Town Center, North Las Vegas, NV); Jefferson Square (La Quinta, CA); Lower Nazareth Commons (Township, PA); and Taubman Centers, Inc. (City Creek Center in Salt Lake City, UT).

Although not all shopping centers obtain some form of certification (such as from G.B.C.I. (under the U.S.G.B.C.), GBI, Energy Star, Ashrae, BOMA) when turning green, many have some form of green certification ' For example, certified centers in the United States and Canada include: Abbotsford Shopping Centre (Abbotsford, British Columbia), CashCo Pawn and Shopping Center (San Diego, CA), Ft. Polk Shopping Center (Ft. Polk, LA), Langley Shopping Centre (Langley, British Columbia), Pedro Point Shopping Center (Pacifica, CA), Waikiki Shopping Plaza Expansion (Honolulu, HI), The Mall at Millenia (Orlando, FL), Prime Outlets Phase VII (Williamsburg, VA), Tanger Outlet Center at the Arches (Deer Park, NY), Northfield Stapleton (Denver, CO), Tanger Outlet Center Hilton Head I (Bluffton, SC), and Green Circle Shopping Center (Springfield, MO). (See www.usgbc.org/LEED/Project/CertifiedProjectList.aspx and www.usgbc.org/LEED/Project/CertifiedProjectList.aspx.)

Legal Issues

Once a shopping center owner or its tenant decides to have a sustainable property/premises, there are some legal issues that each of them should consider when becoming green. For example, each contract to be executed by the mall owner or tenant planning to obtain sustainability (and perhaps certification as well) will need to reflect the intent of all those signing the agreement and their respective obligations under it. Similarly, myriad parties are involved in the greening process (which includes not only getting to a green status, but also maintaining that status). Each party must strictly adhere to its contractual obligations because the landlord or tenant (or both) has a lot riding on sustainability.

The following case study is offered to better explain what could happen if the contracts turning a property green are not well-drafted.

Case Study

In our hypothetical, ABC Centers LLC (“ABC”) is expanding its shopping center with a second phase (“Phase II”) and will retrofit the existing portion (“Phase I”) so that the entire center (“Center”) will become LEED Gold Certified. The first contract that ABC signs is with its architect (“Architect”), who will design the new Phase II and the Phase I retrofit. The architectural firm guarantees LEED (Leadership in Energy and Environmental Design) Gold Certification of the shopping center (against its attorney's advice) on or before a date that is 18 months after execution of the contract with ABC (all references to timing for the project are based on the original date of execution).

Two issues raise potential red flags. One is the guaranty of completion, which, in and of itself, poses problems. The second issue is the guaranty that the certification will be obtained by a date certain. Since the USGBC (United States Green Building Council) through its certification body GBCI (Green Building Certification Institute) is the certifying body, the process is totally out of the control (at least with respect to timing) of the architect.

ABC next contracts with the one who will perform the retrofit designed by the architect ' namely, the contractor (“Contractor”). Here, although not requiring the contractor to guaranty the certification from GBCI, the contract permits ABC to withhold its final installment of payment for the work until certification is obtained, which could be many months after substantial completion of the job. The Contractor promises substantial completion no later than the 15th month.

ABC next enters into a loan agreement with a lender (“Lender”) to pay for the construction. In order for ABC to pay its debt service, ABC signs a 20-year lease with an anchor tenant for Phase II (“Retail”). The 20-year lease, which also gives the tenant four five-year renewal options, is for 50,000 rentable sq. ft. of space in a LEED Gold Certified shopping center. The lease was to commence in the 24th month. Last, ABC, which uses a property manager (“Property Manager”), modifies its existing contract with Property Manager to include (for an added fee) having Property Manager oversee the construction of Phase II, the retrofit of Phase I and the obtaining of the LEED Gold Certification for both.

The Problem

Although the Contractor substantially completes the entire job by the 15th month, the Center's application for LEED Gold Certification had problems. As of the 18th month, the Center had not yet achieved LEED Gold Certification. ABC was told by a representative from GBCI that a Silver Certification (not Gold) would be issued in or about the 24th month ' but not sooner.

The Domino Effect

Now the fun part begins. The lease between ABC and Retail required ABC to deliver to Retail the premises (which you remember had to be in a LEED Gold Certified center) no later than in the 20th month ' or else Retail had one of the following options: 1) To terminate the lease; or 2) To be given 1/3 credit in monthly rent for the entire term if LEED Gold Certification was not delivered at commencement or, if lost during the term, from the date of the loss of certification through either the date certification was granted or the expiration of the term (including all renewals). If Retail chose this option, Retail had to take occupancy no later than the 21st month; or 3) To take occupancy in the 21st month with a ' monthly rent credit until LEED Gold Certification was delivered and maintained or if a lower certification level was delivered (such as Certified or Silver) on or before the 20th month.

By the way, on top of all of this, the loan agreement between ABC and the Lender required that ABC deliver a LEED Gold Certified Center on or before the 20th month or it was an Event of Default under the loan agreement. The Lender could, in addition to other remedies, withhold its last construction loan payment until Gold Certification was obtained. Furthermore, if LEED Gold Certification was not achieved on or before the 24th month, the Lender could foreclose on the loan.

Well, the fun continues. The 20th month rolls around and there is no LEED Gold Certification. In fact, no certification is evident at all. ABC still owes Contractor its last payment and owes Architect its final payment. And, although the lease provided for Retail to notify ABC no later than the 20th month as to which option Retail would exercise, there has been no word from Retail. Property Manager has contacted Retail repeatedly, but gets no response.

Who Sues Whom?

ABC sues the Architect for failure to deliver a LEED Gold Certified Center by the 18th month. The Architect countersues ABC for failure to pay its fee, and blames the failure of issuance of the LEED Gold Certification on ABC's change orders during construction ' which substituted a green building product with a non-green product. ABC sues the Contractor for substituting a non-green product into the construction job without ABC's consent, which proximately caused the failure of LEED Gold Certification to be issued. The Contractor countersues ABC for failure to pay its fee, and blames the failure of issuance of the LEED Gold Certification on ABC for not responding to the requested change order; also, Contractor sues Architect for not providing guidance on a substitute green product when the original products were unavailable.

ABC next sues Retail for not exercising its option under the lease because ABC needs to know: 1) if it has a tenant at all; or 2) under what economic scheme the tenancy will be structured. Retail countersues ABC because ABC knew, or should have known, that LEED Silver Certification was the most it could obtain for the Center; if only ABC had given Retail notice of this earlier, Retail could have terminated the lease and rented space across the avenue from ABC's shopping center from another, older, LEED Gold Certified mall for the same rent it was to pay ABC.

Circumstances have now changed. Market conditions have improved for the across-the-avenue shopping center owner (which now has no LEED Gold competitor across the avenue), and the rent there is 1' times the rent under ABC's lease with Retail. Retail seeks damages in the amount of the difference for the entire 40 years it might have rented space from ABC.

Next, the Lender has decided to call the failure to obtain LEED Gold Certification a material default under the loan (“Event of Default”) and to foreclose on the loan. ABC defends itself by stating that the foreclosure is premature, because it is not yet the 24th month and no certification has been issued. Although GBCI stated that LEED Silver Certification is the most it would award to ABC, there was a chance it could be LEED Gold instead. ABC also contends that the loan agreement was ambiguous, notwithstanding that the language in the loan agreement permits the Lender to withhold the last construction loan payment “until LEED Gold Certification is obtained.” ABC asserts that the Lender should wait as long as it takes until LEED Gold Certification is issued. Last, ABC sues the Property Manager for negligently supervising the construction job and failing to obtain LEED Gold Certification.

As one can see, the road to sustainability could be laced with many obstacles and liabilities. To better protect themselves in contracting and in getting what they are paying for, shopping center owners and retail tenants should be cognizant of all the legal issues that could arise.

The Long-term Outlook

What is the long-term outlook for getting shopping centers to go green? Clearly, on just an operating expense reduction basis, there are few reasons not to embrace as many sustainable building modifications as possible. If one adds in the intangible benefits of going green ' higher worker productivity, fewer sick days and lower healthcare costs, all of which relate to indoor air quality, green cleaning, green pest control and more ' smart mall operators should do everything they can to get green. Retailers that rent space from them will be demanding it, not only for their own bottom lines, but also with the general public demanding these sustainable initiatives.

In her insightful article, “Five Reasons for Retailers to Go Green,” Karen Lowe sums it up best. “Building a sustainable supply chain, conserving energy, developing smarter packaging, becoming more socially responsible, and developing more
loyal customers” (See www.stores.org/stores-magazine-january-2009/five-reasons-retailers-go-green) are “worth the investment.” Clearly, many large and small retailers agree.

Richard J. Sobelsohn is the Director of Lexis' Practice Advisor's Real Estate Content. Sobelsohn brings more than 14 years of legal experience to LexisNexis' in the area of real estate. He is also an adjunct professor of law at Brooklyn Law School and New York Law School, and is a LEED Accredited Professional. Sobelsohn is a member of the New York, New Jersey, Connecticut and District of Columbia Bars.