Being green is a priority for us at Lester and Lester and is good for all of us. A green lease is not just the smart thing to do; it is the right thing. Per the U.S. Environmental Protection Agency, buildings account for 30 percent of all greenhouse gas emissions in the United States; thus, scientists overwhelmingly call for us to reverse human contributors to global warming. Increasing workplace sustainability is an opportunity to do something good for both business and society.
We’ve been strong in the green atmosphere for some time now. We’re green leaders in the CRE profession and have helped clients throughout the past several years become better environmental citizens. We can draft “green” leasing terms for our clients and have assisted one of our largest area school districts install an alternative fuel program, saving the district monies, helping our own environment and saving our community tax dollars in the long term.
To maximize your results, we suggest you engage a trusted advisor with expertise in both leased commercial real estate and implementing cost-saving sustainability across a large organization, such as our advisors at Lester and Lester.
Benefits to Green Leases
Green leasing is a real estate opportunity that benefits everyone: tenants, landlords, and of course, our environment. Quite simply, a green lease is an arrangement that offers substantial benefits – both quantitative and qualitative – to tenants and building owners. The green lease improves environmental performance of the leased space by securing a few critical commitments on the part of both the landlord and tenant. It aligns financial incentives so both parties can benefit from adopting green measures. It also improves environmental data reporting transparency to enable tenants and landlords to measure success against agreed-upon goals.
Green leases do not need to be complicated. We simply need to structure terms and agreements already in place, such as building operating hours and temperature settings, in a way that provides sustainable cost savings without negatively impacting the building’s performance and occupant comfort. However, a careful process must be used in implementing the green-lease strategy to assure maximum effectiveness, sustainable success and savings.
Here are some good reasons to pursue a green lease.
Even though the obvious green choices are cost savings and helping the environment, our first reason is to enhance your corporate/brand image. Being perceived as an environmental leader in today’s marketplace is important. Several stakeholders, from your customers and investors to governmental officials and the media, care what a company is doing for – or to – the environment. A green lease is a way to differentiate your organization as one making a positive commitment not only to the environment but to the viability of your company as well. Every effort a business can make toward environmental gains will place it nearer to qualifying for possible grants, awards and other sustainability assistance. Helping your building’s commercial efforts in becoming LEED and gaining other green certifications will help all parties involved.
Next reason that comes to mind is the environmental aspect: reducing utility consumption, decreasing waste and saving your company money. A sound sustainability strategy will reduce your requirements, and therefore costs, for electricity, HVAC and water. Some green measures generate immediate savings, but most should more than recoup their investment over time. Run the same calculations on your property portfolio, and the reduction in utility costs alone is probably enough to justify a green lease. Measures outlined in the green lease document will assist tenants in reducing their waste going to landfills – along with waste-handling costs. These provisions encourage reducing consumption, recycling and even composting.
The green lease can improve working relationships with your landlord. Lease negotiations can include many tenant “requests” that put building owners on the defensive and places a strain on relationships. Successful green leases are designed to financially benefit the tenant and landlord so that both parties have an incentive to enter into sustainable agreements. Dialogues about mutually beneficial green-lease provisions can strengthen your overall relationship with your landlord and increase your desirability to building ownership as a preferred tenant.
Many companies have corporate sustainability objectives, such as a set cumulative goal for carbon footprint reduction or other type of environmental gains across the entire organization. Successful green leases greatly assist such objectives because they not only generate, but enable, tenants to measure and report quantitative sustainability improvements. They contribute hard metrics that can be maximized in calculations of a corporation’s overall environmental improvements.
Let’s circle back to your company’s image. Becoming green, especially touting a green lease, will improve civic relations in your area. Many cities are strong advocates of green leasing, especially here in Texas. Adopting your own green lease demonstrates your commitment to a sustainable practice and creates opportunities to strengthen relationships with local lawmakers, other local businesses and community leaders. Demonstrating vision and leadership within your industry will set you apart and help distinguish an organization as an industry thought leader that reaches above and beyond. It’ll also increase your influence as a stakeholder in governmental and business communities.
Green leases have a “soft” benefit as well: they can improve employee productivity, recruitment and retention. These soft benefits can translate to hard dollar savings and cost avoidance. According to a recent CoStar study, workers were almost 5 percent more productive, with almost 3 percent fewer sick days, in environmentally friendly buildings. As an example, if your company has 10,000 employees with an average $50K annual salary, then the reduction in time off the job could be worth $39M in work annually.
A sustainable work environment fostered by a green lease also helps companies attract and retain valuable employees. Young professionals especially, care about the environment, practice at least some green behavior at home and want to see it practiced by their employer. If all other factors in the hiring process are equal, then a demonstrated corporate sustainability commitment through a green lease could put your company ahead of competitors for attracting the best and brightest employees.
Be a leader in going green. Team up with other tenants or other facilities in your organization to form a sustainability committee. Corporate headquarters and landlords are often more willing to participate in such projects when multiple tenants request them with a single voice. You can include simple projects like bringing locally grown food to the building to complex ones such as updating common areas with green improvements, making your space more eco friendly.
Articles coming in our “Go Green!” series:
- Items to include/discuss in a green lease
- LEED buildings
- Green certifications
- How to get started on your green journey
- Incorporating green actions into a balanced life