How can you use green leasing to reduce your operating costs and increase your asset value?

1 What is green leasing?

Green leasing, also known as energy-aligned or high-performance leasing, is a type of lease agreement that aligns the interests and incentives of landlords and tenants to achieve energy and water savings, reduce greenhouse gas emissions, and enhance indoor environmental quality. Green leasing can include clauses that address issues such as energy efficiency standards, metering and data sharing, cost allocation and recovery, green building certification, and tenant engagement and education.

2 Why should you consider green leasing?

Green leasing can help you reduce your operating costs and increase your asset value in several ways. First, by improving the energy and water efficiency of your buildings, you can lower your utility bills and maintenance expenses, and increase your net operating income. Second, by achieving green building certification, such as LEED or BREEAM, you can enhance your marketability and reputation, and attract and retain high-quality tenants who are willing to pay higher rents and occupancy rates. Third, by engaging and educating your tenants on sustainability practices, you can foster a positive and collaborative relationship, and reduce tenant turnover and disputes.

3 How can you start green leasing?

To start green leasing, you need to assess your current portfolio and identify the opportunities and challenges for improving your environmental performance. You can use tools such as the Green Lease Assessment or the Green Lease Library to benchmark your existing leases and compare them with best practices and examples. You also need to communicate and negotiate with your tenants and other stakeholders, such as property managers, brokers, and lenders, to align your goals and expectations, and to share the benefits and costs of green leasing. You can use resources such as the Green Lease Leaders program or the Institute for Market Transformation to find guidance and support for green leasing.

4 What are some key elements of a green lease?

A green lease can vary depending on many factors, such as the type, size, and location of your property, as well as the needs and preferences of your tenants. Generally speaking, it should include energy efficiency standards based on benchmarks like ENERGY STAR or ASHRAE, metering and data sharing for measuring and verifying energy and water consumption, cost allocation and recovery mechanisms for splitting and recovering costs and savings from energy and water efficiency measures, clauses for pursuing or maintaining a level of green building certification like LEED or BREEAM, and tenant engagement and education activities to involve tenants in sustainability goals.

5 How can you measure and improve your green leasing performance?

To measure and improve your green leasing performance, you need to track and evaluate the impacts of your green leasing strategy on your environmental, social, and financial outcomes. You can use metrics such as energy and water intensity, greenhouse gas emissions, tenant satisfaction, occupancy rate, rent premium, or return on investment. You can also use tools such as the Green Lease Scorecard or the GRESB Real Estate Assessment to benchmark your performance against your peers and industry standards. You can also seek feedback and recognition from your tenants and other stakeholders, such as the Green Lease Leaders awards or the GRESB Green Star rating.

6 What are some tips and best practices for green leasing?

Green leasing is an adaptable approach that can be tailored to different types of properties and tenants. To ensure success, it is important to start early by engaging tenants and other stakeholders to build trust and rapport. Transparency is key; share relevant information with your tenants to demonstrate commitment and accountability. When negotiating green lease clauses, consider the specific needs of your property and tenants, so that everyone benefits. Monitor performance regularly to identify any issues or opportunities, and update your green lease clauses at each cycle to stay up to date with changing market and regulatory conditions.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?