In Conversation with Doug Harman of Ivanhoe Cambridge
Ivanhoe Cambridge is a large Canadian-based property owner, manager and developer. Its international real estate portfolio consists of more than 44 million square feet of retail space and includes around 70 regional and super-regional shopping centres. With this large portfolio, the company must be creative in managing its buildings’ energy and resource use due to the number and variety of its tenants. Doing so successfully has been a team effort, but Doug Harman’s enthusiasm for everything green made him a natural fit to champion the company’s environmental initiatives.
February 23, 2009 By Robert Colman
Energy Management recently sat down with Harman to learn more about how this dynamic company has embraced a culture of energy conservation and environmental stewardship.
Energy Management: You’ve just moved from the position of VP of Property Services. What did that position entail?
Harman: It’s a slate of work that supports the operation of the company — right from the building maintenance programs, to the environmental program, procurement, information reporting, insurance, risk management, realty taxes. We work closely with many other departments in the business — the legal team, development, construction, and operations.
EM: Now you’ve taken on a new position in Montreal as VP for development for the Company’s Canadian Eastern Region.
Harman: Yes, the new job gets directly into the redevelopment of existing properties and development of new projects, which excites me a lot. I have an opportunity to take my knowledge as it relates to the “green” side of our business and have it make an impact at the entry level.
EM: Your team in Property Services has been very active in supporting such activities as well. How would you characterize that role?
Harman: Property Services is a pretty diverse team and is always looking for efficiencies. A big role has been our relationships with the various utilities. There are a lot of grant programs for energy efficiency efforts, and it’s very satisfying to see provinces being very active in this — Quebec, Manitoba and BC, in particular. Quebec and BC have been helping us find the extra cash to make our projects a little bit more cost-effective, so that we can continually look for and implement the best projects possible.
In terms of reducing the carbon footprint of a company, the first step is to reduce your consumption. The Property Services team has been focused on that for 20 years. It used to be that it was almost exclusively cost savings that drove it, whether it was lighting projects or management systems that shut down systems at night, but now it’s two-pronged, considering the green benefits that come with it.
EM: You have also been instrumental in the company’s green power purchasing plan.
Harman: In Property Services, we do the energy procurement. In Alberta starting in 2001, and Ontario in 2002 with deregulation we started purchasing electricity on a forward basis for the properties. And soon after that, in 2004, we were dealing with Enmax in Alberta and had an opportunity to expand into green electricity.
When the market opened in Alberta, prices were high so we locked in for five years and then restructured the deal after three. We were able to realize considerable cost savings because the market had shifted down, and took part of that and injected it into purchasing 25 per cent green power for all the buildings in the province. It’s nice when you can do that without adding to the cost because it’s a challenge for us to keep costs under control.
In Ontario in 2005, we tendered asking for green power. That brought us to Sky Generation, now one of the big suppliers for Bullfrog Power. Sky is not a big wind farm operator but they were one of the pioneers with the vision to champion green power. They introduced us to Bullfrog when they changed their business model, and we’ve been with Bullfrog ever since.
We initially opted to get 30 per cent of our power for common areas in our properties from Bullfrog, but in January of last year made the business case to increase that to 50 per cent.
EM: You also have properties in Europe. Have they moved in this direction as well?
Harman: We’ve purchased green power at our property in Glasgow, Scotland. I asked them if we could explore green power there, which they did, and the premium to go from 100 per cent brown to 100 per cent green power is much less significant than it is in Ontario because electricity is so expensive there. What was satisfying for me was to see the buy-in at the regional level. These are the business people who I respect, who are there to make the business profitable and feel strongly enough to buy 100 per cent green power.
EM: What made you decide to go this route in the first place?
Harman: I guess a lot of it comes from me personally. I head up the environmental program for the company, and am quite involved with my team on a lot of the energy efficiency initiatives. I believe in it. I drive a hybrid, I have Bullfrog at home, I’ve done everything to my house I can do in terms of efficiency to squeeze as much as I can out of it. When I studied engineering at McGill, it was the environmental stream of civil engineering that I pursued. And in 1975, that wasn’t very common. People didn’t really understand what I was talking about.
I find it interesting that five years ago, when I told people I bought a hybrid they’d say, “What’s that, and where do you plug it in?” Now more and more people are really keen to know more about my hybrid because they see the importance of it.
EM: Green building has come a long way in the last few years as well.
Harman: I think LEED (Leadership in Energy and Environmental Design) has done so much in that regard. If that standard had not been developed, it would be tougher to get people to pay attention to it. It gave it a lot of credibility. I find it very interesting that throughout our company people understand that we need to be sustainable. Two or three years ago, not a lot of people understood what it meant to be sustainable. And now it’s like there’s a mission.
We have a pre-certified LEED Platinum office building going up in Vancouver right now — Metrotower III. It will be the first multi-tenant LEED platinum building in Canada. And that’s not because of me — we don’t operate that way. It’s the development people in Vancouver that are totally focused on that. I think it’s a two or three year project. It’s so much fun for me to see what they have put into taking green to that next level. It’s as if it’s not acceptable to them to consider doing anything that’s not LEED certified.
Three of us in the company are now LEED Accredited Professionals (LEED AP). It’s not that hard to become a LEED AP, it’s a bit of work, a bit of reading, but honestly, from the ground up looking at your building or your property, your radar picks up things that you can improve on without needing to call a professional to help you with it. It doesn’t mean we’re going to be the guys doing all the documentation — you rely on professionals for that — but LEED as a process has a thousand different roads you can take to get there. So the points on energy, water, recyclables — there are some that make sense that are easy, there are some that make sense that aren’t as easy, and there are some that are stupid to pursue. At the end of the day, when you get x number of points, when you compare two buildings they will be very different, because circumstances vary.
EM: How about green leases? Is that something you are considering?
Harman: I participate with the sustainability committee at RealPAC, and one of the fellows in our legal team participated in the creation of RealPAC’s green lease. Any document like that needs to be practical, it needs to be something that works, otherwise it becomes something so complicated it gets rejected.
There are certain considerations and things you can measure, and other things you can’t. When you talk about water, for example, in an office building like ours, it’s great to care about the water but to measure each space to find out what they’re using is basically measuring how many times they flush the toilet. The fixtures consume what they consume. The bigger emphasis should be seeing that the right fixtures go in when the place is fitted out. In urinals alone right now we’ve gone from just the standard under the code of 3.8 litres per flush to 0.8 with the low flush models. When you’re doing new construction, that’s the time to think about that.
EM: Do you have a set goal for all of your properties with respect to energy efficiency?
Harman: While that would be nice, these initiatives are done at a local level with consultants who know what they’re looking at, or the people who know what the next logical steps ought to be.
Part of getting a better benchmark for all of our properties will be initiating the Building Owners and Managers Association (BOMA) BOMA BESt program a property at a time. That exercise shows where you are compared to a benchmark. The BOMA BESt program is useful as a way of cultivating improvements rather than setting rules.
We do conferences annually with our operations and construction people. In 2008 we included in this a lot of workshops on water and energy efficiency, LEED, the BOMA program, and recycling. Through these events, our people across the country learn from each other and learn from people who are facilitating the discussions.
We also have a huge opportunity to learn from the properties we have in Germany. What I found fascinating about working with partners to build those properties is they don’t even use LEED, they just build sustainable because it’s the right thing to do. It’s not about impressing people, it’s just the way they build them.
EM: Is it a goal of the company to establish all of its properties as BOMA BESt?
Harman: Put it this way, in our Eastern Region, if there’s any missing it isn’t a long list because 11 properties joined the program right before Christmas 2008 in addition to the other 4 that received their certification prior to that.. I’m very sensitive to the efforts that go into those applications, and we have a lot of busy shopping centres and office buildings. The management teams for those properties worked very hard to obtain BOMA BESt certification and are to be congratulated for this achievement.
We have a few properties in Western Canada Region working on submissions, and in the Central Region they participated directly with BOMA Toronto in the development of a standard that’s more applicable to shopping centres, and that’s just been completed.
What BOMA has going in Canada, I hope it gets adopted internationally. As much as I like LEED for the construction side, there’s a huge departure when you go from what resources are required for BOMA BESt vs LEED.
A few of our properties were road tested in the new BOMA BESt for retail. In a lot of ways, the BOMA certification is about being aware of what you don’t control. For instance, you look at an office building like ours. The managers can divert 80 per cent of waste easily here. In a shopping centre, you could divert 60 per cent at most. Getting that discipline from minimum wage employees in retail is often a challenge. BOMA BESt takes things like that into account.
There’s a large installed base of building product that has to be run better or be retrofitted to be more efficient. We take it a project at a time but it’s always important to have that mindset of continuous improvement.
EM: How are you sharing these developments across your portfolio?
Harman: When it comes to energy, we’re gearing up to get reporting internally to a level that we’re sharing all the things that are happening across the company. Energy projects are something that we will see shared in this manner. Different properties will experiment with certain ideas that we may not want to roll out nationally, just want to try it here, try it there. People will experiment with waterless urinals, will learn from that and report back.
EM: Monitoring and metering must be a big challenge in retail. How does it work?
Harman: This is a considerable challenge. In commercial office buildings, the landlord typically purchases all energy and water required by the occupants and can compare one property to the next. In the retail world, there are two business models. For many properties in our portfolio, we purchase all energy and water for both common areas and demised premises. For many others, we only purchase energy and water for common areas, whereas retailers purchase their own for their stores. As you can see, for the metrics need to be comparable, we have a bit of work to do to extract the right information. This is a work in progress for us right now.
EM: So in such different markets, how do you sell the idea of efficiency to tenants?
Harman: One idea that we have looked into is a green tenant allowance, whether it’s in office or retail. What tends to happen with a lease deal is the tenant will get an amount of money from the landlord to build out the premises, and the thinking is, let’s slice it into pieces and have the standard, normal construction cost, and then have another piece that we split 50-50 that results in them having maybe green certified up to a LEED standard. We’ve got some traction internally on the concept but the tricky part for us is fitting it in the business model. If you consider all the people it touches and how it needs to be disseminated throughout the company, it’s a challenge. But when you start with a handful of sites that are saying, “I want to try that,” it can get some traction.
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