While certain shopping centre owners and occupiers may have forward energy contracts that will cushion them from any immediate increases, they are only delaying the inevitable and it is more than likely that the costs will increase even further.

It is not only energy supply costs that are rising. There are also major potential taxation implications related to energy consumption in the near future. As one of the major commercial users of energy (along with industry and transportation) the property industry will need to be innovative not only in future building design and operation, but also with energy procurement.

Recent headlines have concentrated on sharply rising direct energy supply costs, but factors such as the EU Directive on Energy Performance of Buildings (which will essentially give shopping centres and other buildings an energy rating in the same way as we find on domestic appliances such as refrigerators) could be used in the future taxation of property. The latter, combined with the imminent Climate Change Levy, will have an increasing impact on energy-related costs.

The construction and refurbishment/alteration of shopping centres will also be impacted by the forthcoming amendments to Part L of the Building Regulations (which cover energy conservation and which are anticipated to come into force in April 2006) thus adding compliance costs to the construction budget.

Retail property owners, retailers and asset managers will need to act sooner rather than later and may find it useful, where possible, to act in concert. At DTZ we have tackled this issue both on a usage as well as procurement front. On the procurement front we use Buying Force - a specialist procurement company which enabled us to aggregate our expenditure along with a number of other clients including Prudential.

Buying Force has secured benefit from a £75 million bulk energy purchase. This has not only achieved the best fixed price in the current market through bulk purchase, but it also a 100% green energy supply, enabling compliance with clients' Corporate Social Responsibility policies and eliminating the additional costs of a Climate Change Levy. We are also providing energy log-books and pre-certification advice together with energy consumption benchmark services to assist owners and tenants reduce overall consumption levels.

BCSC's Asset and Centre Management Committee will be discussing energy cost issues at its next meeting on 13 March. I am sure that energy supply and future costs will be major items of discussion between ourselves and, indeed, many others for some time to come.

Peter Preddy, DTZ &, chair, Asset and Centre Management Committee. BCSC

It's not all bad

With the Bank of England's announcement on 9th February that interest rates are on hold again, perhaps the gloom-mongers will curb their depressing retail forecasts.

While the industry generally acknowledges that the retail environment is challenging at the moment, those retailers who provide the public with what they want and run their businesses efficiently will continue to manage a difficult market. There are bound to be quiet periods reported by shopping centres around the country as consumers take a breather from Christmas and the January sales, but this lull is not a harbinger of doom.

Demand for good premises in the right locations remains strong and investment in retail is buoyant. This is confirmed by a number of our clients and highlighted only today in a conversation with Stephen Jaffe who owns and manages 10 centres.

The outlook for 2006 is a great deal more optimistic than would have us believe.

Barry Hammond, managing director, Hammond Phillips

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