Hi Geoff,

When negotiating a green lease, the key for both parties is to develop a transparent, win-win agreement that holds both parties accountable for sustainable improvements, operations and energy usage.

In particular, installation of sub-meters can be hugely beneficial for both tenants and landlords, as the energy usage and costs per tenant can be easily quantified and billed accordingly. Techniques like this can serve as a tool to promote collaboration between landlords and tenants on future projects or improvements, however there are certain pitfalls and risks that must be avoided. The capital costs of installing sub-meters must be negotiated and picked up by the landlord or tenant and agreements must be made to measure performance and energy monitoring once installed.

When negotiating a green lease, landlords and tenants should consider the following:

1) Take the time to understand what the lease is asking, and be confident that you can achieve your obligations.

2) Agree on reasonable and specific lease clauses, particularly around targets, timelines, penalties, exceptions, green power, and dispute management.

3) Understand how you will measure performance. Does the building have sufficient metering and monitoring in place? Does someone monitor performance throughout the year? Do they have the right skills, experience and support?

4) Understand how the landlord and tenant(s) impact on each other’s performance. Have a clear process for measuring and managing this.

5) Meet regularly to discuss performance honestly. Where performance falls short of targets, work collaboratively to rectify the situation.

6) Energy usage and building performance should be fine tuned throughout the year, to keep the leased space and building operating at the highest efficiency possible.

Once tenants move in and occupy their space, assessments should be completed by the office manager to stay ‘green’ and measure their level of sustainability on an on-going basis. Jones Lang Lasalle’s “Green Tenant Assessment” examines areas like employee commuting practices, recycling participation, lighting and temperature controls; then distills the responses into scores in all areas of tenant sustainability, including an overall score.

The tool establishes a baseline of performance, using industry-recognized practices, and allows the tenant to measure its progress toward improvement. One of the most important aspects is that the tenant has something meaningful to communicate to its employees about their progress in getting greener.

Thanks,

Chris

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