by aleida, on November 22nd, 2009
The Green Lease: A Two-Way Street was the third session I attended. Moderated by Ashok Gupta from the Natural Resources Defense Council (NRDC), the speakers were: Mark Bennett, climate change practice leader with Miller Canfield, a law firm; Steven Teitelbaum with Jones Day, also a law firm; and Sally Wilson, global director of environmental strategy with CB Richard Ellis, one of the largest commercial real estate firms in the world.
This was a straight panel discussion where the speakers focused on commercial leases, and tackled the difficult subject of how to negotiate them. Since these leases can be long-term agreements, sometimes lasting more than twenty years, getting all parties on board a green building strategy can really make a difference. First, it was all around recognized that green leases are rarely a partnership between the landlord and the tenant. In fact, it rather seemed that the landlords usually stand to benefit more than the tenant. As an example, one of the speakers said that when there are carbon credits for green buildings, the landlord will keep them and not share the benefit. But if there are carbon taxes, the landlord will make the tenant pay.
So if a green lease is not a partnership, how can a fair one be set up? How does the conversation between them take place? The panel members never actually walked the audience through a green lease, so it wasn’t exactly clear how they are set up. However, they recommended that anyone interested purchase one of two guides they introduced, one being a USGBC product. Here are, in no particular order, some of the recommendations that came to light during the discussion:
- tenants should have the right to sub-meter, track, and manage their own energy usage
- tenants should not accept leases that state that the tenant shall obey the landlord’s environmental management clause, because that just means that the landlord can change his mind about anything in the clause at any time, with or without consulting with the tenant
- tenants should look into having green cleaning written into leases, and even explore cleaning practices that not only use better products but also help save energy, such as having the cleaning crew do its job during the day so as to avoid lighting at night
- tenants should have a say in the water flow in bathrooms
- tenants should speak with landlords about on-site water reclamation
- tenants should address with landlords how to handle space alterations — can the tenants make changes to the space? and do they have to be green?
Notice how all the advice was for the tenants. While I actually wish they had, at least very quickly, reviewed a sample lease, I suppose there are so many variations that a single version is not going to apply to every situation.
Did you also attend this session? If so, what did you think? And did you happen to catch any advice for landlords that perhaps I neglected to jot down?
As always, an excellent recap Mr. O’Donnell.
May I add:
Per the panel, in the past the focus has been on rental rates instead of operating rate. The focus now needs to be on operating rates and transparency is required from both sides. With transparency comes accountability. For green lease purposes this means both sides must agree to share data, specifically utility consumption.
For tenants considering new space, they should ask to see the LEED scorecard. How did the building get its certification?
They recommended 3 guides:
USGBC Green Office Guide – Teitelbaum & Wilson both have a credit on this guide and it is just a guide
BOMA Green Lease Guide – written by Teitelbaum and containing green lease language one can copy
RealPac.ca – the Canadian version of the green lease offered by the Real Property Assoc. of Canada, available free (I think) from their website
Apologies to Ms. Montejo. Excellent reporting on green leases.
Kim M.
Hello Kim,
Thank you so much for your comments and valuable addition to this topic. I had not at all caught the name of the third guide so it’s great that you included it along with the other two.
I’d suggest that you read the the article Green Lease in the July 2006 issue of Environmental Design + Construction. Another article is Rent Structure Hinders Energy Efficiency published in the June 2005 BOMA Magazine. Both articles are availble on wwww.squarefootage.net
As the Chair of the Model Green Task Force, and Lead Presenter of the half-day session – Model Green Lease – presented at Greenbuild on Tuesday, I’d suggest you explore the Model Green Lease. It addresses many of the issue raised in the above post.
We’ll be presenting this workshop in 10+ cities across the nation in 2010 – right now we’re working out the final schedule.
Hi Alan,
Thank you for the article recommendations – I will definitely check them out. And I’ll keep an eye on the 2010 schedule. We have never had to advise any of our clients on their lease terms, but it might be good to have more detailed knowledge on the topic for any possible future reference.
Hello,
Interesting, did you plan to continue this article?
[url=http://www.purimblog.net/]Garretot[/url]
Does anyone know if there is an audio file I can download for this discussion?
Hi Evan,
I’m sure there’s an audio, and possibly a video, file for this educational session. Greenbuild usually offers their sessions for sale, but they may not allow you to purchase individual sessions. You may have to buy the who conference. I’ve done that for past expos and the material is pretty good.