What Goes into a Green Lease? – IFMA Luncheon, April 15

skylineIf you were to peer into a crystal ball to try to predict the future of commercial leased space in the Metro Atlanta area, what would you see? Sustainable leasing efforts will present all kinds of opportunities and challenges in the months ahead. Are you prepared to make the necessary informed decisions with regard to your company’s real estate portfolio? Building tenants, and what goes on in tenant space, are critical to the ongoing management and continual improvement of any building and it is the FM’s responsibility to know how to:

  1. Maintain a green building through operations and management practices.
  2. Educate brokers and prospective tenants about what it means to occupy a high performance green building.
  3. Communicate the responsibilities of all parties in the ongoing efforts to keep the building green.

Enforceable Tenant Responsibilities

Terms of the lease present incentives to tenants to reduce consumption of energy, water and materials, produce less waste, recycle as much as possible, and choose energy efficient and environmentally friendly products, furnishings and office equipment. The lease should includes enforceable language, where appropriate, to ensure that the tenant complies with the building’s green practices.

Pass Through Capital Costs

What kinds of alternatives to the typical triple net lease are there, where the landlord pays for capital improvements but the tenants, who pay the utility bills, reap the benefits of energy savings. The language included in a lease gives owners the right as standard procedure to pass through to tenants any capital costs that result in lower total operating costs. New green language ensures that maintaining, managing, reporting, commissioning and re-commissioning the building to conform to a green certification or rating program and is included in the pass through costs to the tenants.

Green Certification Annotation

A Green lease should be designed to be flexible to meet the needs of the specific building’s green building practices, and therefore is rating-system neutral. It does contain additional annotation provided by experts from the organizations involved in the three rating systems predominant in the United States at this time: the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR® program; the Green Building Initiative’s (GBI) Green Globes™ system; and the U.S. Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED) Green Building Rating System™. For those participating in any of these three programs how can you benefit from being in a tenant situation? Do you know?

These very questions will be the focus of the April 15th, 2009 Monthly Atlanta Chapter meeting where we will ‘Get Real About Real Estate’ with a Member Panel Discussion on the current conditions of the Atlanta market. To join in on what should prove to be a lively discussion, register here.