First Capital Realty

From the inside out  First Capital Realty is CanadaÔÇÖs leading owner, developer and operator of supermarket and drugstore-anchored neighborhood and community shopping centers, located predominantly in growing urban areas. Keith Regan talks to the chief operating officer of FCR Management Services, the property management arm, about the companyÔÇÖs quest to become a better neighbor by building a culture of sustainability.  At its 2006 annual general meeting, First Capital Realty made a formal commitment to become a greener, more sustainable company, in particular with its development activities. It pledged to become the first company of its type in Canada to build all its new neighborhood-based shopping centers to the LEED standard for green design and energy efficiency.  It was a bold move given that no shopping centers have been built to LEED standards in Canada. Moreover, at the time the pledge was made, design on the companyÔÇÖs new Morningside Crossing project in Toronto was already well under way. A public community meeting attended by 600 people had already been held to determine what kind of project local residents sought, and soon thereafter demolition and reconstruction were poised to begin. Building LEED into the Morningside project, which involved redeveloping a three-story mall without interrupting service to existing tenants, posed significant challenges. Before long, the designs were updated with a white reflective roof and a system for collecting rainwater to irrigate the grass and plants on the site. Highly efficient water and energy fixtures were installed, and 95 percent of the waste from the demolished structure was reused or recycled to the extent possible. The project is now just one of many in the First Capital portfolio of some 20 million square feet of space across Canada. Already, seven centers have received LEED certification, and another 35 are in the development or certification process. In 2008 alone, First CapitalÔÇöwhich trades publicly on the Toronto Stock Exchange under the symbol FCRÔÇöhas invested $180 million in sustainable construction and renovation projects, according to FCR Management Services head Peter Papagiannis. ÔÇ£Building and operating to recognized environmental standards is only part of our sustainability strategy. We view ourselves as being a neighbor in our communities, a key part of the fabric of those communities,ÔÇØ Papagiannis says. ÔÇ£And we want to be a good citizen in that neighborhood. It was important to us that we start with this mindset.ÔÇØ Sustainability has become a key core value at First Capital, and the companyÔÇÖs recent integration of its property operating business has laid the foundation for it to become ingrained in everything it does, he adds. As part of that effort, the 130-person company instantly grew to more than 300. That integration enabled shifts in thinking and alignment in delivery that have supported the drive toward increasing sustainability. ÔÇ£We view it as table stakes from now on,ÔÇØ Papagiannis says. Sustainability flows naturally from First Capital Realty, president and CEO Dori J. SegalÔÇÖs philosophy that the company takes a long-term view of its business including development projects. ÔÇ£We take a 100-year approach. WeÔÇÖre in it for the long haul, and when you start from that point of view, it changes how you look at the entire business of real estate.ÔÇØ The company sees sustainability as a continuous improvement process, with new opportunities always presenting themselves. In 2008, First Capital formed a Sustainability Council from across its business functions to help identify ways to better use resources and to more closely integrate concepts of sustainability into everyday business practices. That council helped shape the companyÔÇÖs sustainability vision statement, which reads: ÔÇ£Enhance the long-term value of First Capital Realty by minimizing our impact on the natural environment and positively affecting our people and the communities in which we live and work.ÔÇØ Looking ahead, First Capital is exploring international standards for operational metrics to help it extend the sustainability from the development stage over the life of a project, Papagiannis says. ÔÇ£Our primary focus in 2010 will be on implementing operating standards that are right for our centers, something that our tenants can take part in that also support their own efforts toward sustainability.ÔÇØ The company continues to explore options for energy solutions for its centers and most recently is examining installing a geothermal system, which is typically not found in retail shopping centers. This proactive approach can be seen in its development activity as it is also looking to achieve the next LEED certification level of Silver in some of its upcoming developments. While there are still additional upfront costs associated with the green efforts, they are not as stark as they were just a few years ago, a trend Papagiannis expects will continue as more architects, builders and trades become more accustomed to green building techniques. First Capital believes that LEED and other sustainable practices will eventually become standard operating practices for all businesses. ÔÇ£We are fortunate in that we can draw on leaders within the industry to assist us in achieving our sustainability objectives, including our design, architectural trades and tenant partners. YouÔÇÖre already seeing that shift where itÔÇÖs more noticeable if a company isnÔÇÖt progressing on this front. And itÔÇÖs generational as well. The coming workforce and our future employees are more and more aware of what a business is doing from a community and an environmental perspective, as theyÔÇÖve grown up with that mindset. ÔÇ£We have a number of very progressive tenant partners leading the charge, and weÔÇÖre working to get more tenants into the mindset that building and operating in a way that is different from the norm is a benefit to them,ÔÇØ Papagiannis continues, ÔÇ£not only because of the benefits to the environment and the lower long-term operating costs, but because it enables our centers to become a potential source for them to achieve their own sustainability targets and goals.ÔÇØ One such tenant is TD Bank Financial Group. ÔÇ£We are the sixth-largest bank in North America, with locations from Halifax to Vancouver and Maine to Florida, and we have a responsibility to manage our business in a way that protects and enhances the environment,ÔÇØ says John De Benedictis, senior manager, facilities management at TD. ÔÇ£Our operations in Canada, the US and international locationsÔÇöour entire footprintÔÇöare now carbon neutral, making TD one of only a few banks in the world to reach this goal. One of the ways weÔÇÖre continuing to reduce our carbon footprint is through our ability to employ sustainable design and building practices while using energy resources wisely. By jointly participating with First Capital in the redevelopment of the Morningside site and constructing a TD branch to meet a LEED standard, weÔÇÖre able to leverage common requirements such as site preparation, erosion control and waste management while also mutually aligning our environmental goals and objectives.ÔÇØ Papagiannis cites a shopping center where First Capital put an aggressive recycling program in place as part of its waste diversion and recycling strategy that was quickly embraced by the tenants of the center. ÔÇ£We want to make it clear that as partners, together we can contribute to the communityÔÇöthe local community where we operate, but also the broader definition as well. Real estate is still all about location, location, location. But weÔÇÖre trying to show that you can have not only the right location but also the right development at that location.ÔÇØ