Under most net leases, energy costs are paid directly by tenants and building owners aren’t driven to invest in efficient building systems. Conversely, in many gross leases, building owners pay energy expenses and tenants have little incentive to save energy in their leased space. This dynamic is commonly referred to as the “split incentive” barrier to energy efficiency.
The Institute for Market Transformation (IMT) and the US Department of Energy’s Better Buildings Alliance are working to identify and promote strategies to align financial and energy incentives for landlords and tenants. This includes developing resources to encourage ‘green’ or ‘energy-aligned’ leasing, educating brokers on the importance of energy efficiency in commercial real estate, and engaging tenants to undertake efficiency improvements in leased space.
What are Green Leases?
Green leases (also known as aligned leases, high performance leases, or energy efficient leases) align the financial and energy incentives of building owners and tenants so they can work together to save money, conserve resources, and ensure the efficient operation of buildings.
Why Are Green Leases Important?
Green leases combine the productivity, comfort and sustainability features that tenants are looking for in commercial space while supporting landlord priorities of improving the triple bottom line and occupancy rates. In addition to achieving both tenant and landlord objectives, green leases have social, economic and environmental implications for companies operating in today’s global economy. Green leases truly are the future of commercial real estate.
10 Reasons to Sign a Green Office Lease
The JLL Energy and Sustainability Services team recommends that tenants and landlords collaborate to develop a green lease that benefits each party, typically including the following:
1. Reduce utility consumption and save money
2. Improve working relationships
3. Support corporate sustainability initiatives
4. Enhance corporate image/brand
5. Demonstrate vision and thought-leadership
6. Improve civic relations
7. Contribute to LEED and other green certifications
8. Improve employee productivity, recruitment and retention
9. Generate additional savings through waste stream diversions
10. Do the right thing for the environment and its people