Green Leasing and Ongoing Energy Efficiency

By Eric Mueller

As organizations and companies increasingly decide to “go green” and adopt aggressive corporate sustainability goals, and as energy disclosure becomes a more common request in building sales and tenant leases, the desire to occupy and rent energy-efficient real estate and buildings is becoming a more common component in meeting broader sustainability goals. Additionally, developers and landlords are seeing the economic benefits of energy efficient buildings with higher rates of tenant retention, higher rent values, and higher property values. To deliver energy cost savings for tenants while also providing an incentive for the developer or landlord to pursue energy conservation measures, a green lease can be implemented. A green lease provides a structure for sharing costs and savings between landlords and tenants in a mutually beneficial way that drives energy efficiency investment. Green leasing can be pursued on new construction projects as well as existing buildings that seek to pursue energy efficiency upgrades. Although typically green leasing refers to a whole host of approaches to reduce environmental and human health impacts through lease language, here we will discuss the approaches specific to maintaining energy efficiency.

A successful green lease requires the following components:

  1. Energy Disclosure: Landlords and tenants cannot manage what is not measured, so there must be a basic level of submetering between tenants and common areas. The energy use data needs to be shared with or visible to tenants on an ongoing (ideally real-time) basis.
  2. Cost Recovery: Leases should have language that allows the costs and benefits for energy efficiency and renewable energy upgrades to flow back to the appropriate party or parties.
  3. Recommissioning: Even a new building requires periodic tune-ups to ensure that it is operating as intended. Including re-commissioning as an annual or bi-annual requirement in a green lease as an operating expense will help drive long-term energy performance.

Ambient Energy helps our clients achieve each of these key green leasing components, whether a developer/ landlord is looking to attract sustainability-minded tenants in a cost-effective manner or a tenant is looking to drive a developer or landlord to provide energy efficiency improvements.

For a new construction project pursuing green leasing, during the pre-design phase, Ambient Energy works with our clients to establish energy efficiency and/or renewable energy goals. Throughout the design phase, our Building Performance and Commissioning Engineers conduct design reviews and verify that energy metering strategies are installed to measure and verify energy performance.

The green lease is structured to pass through the amortized incremental first cost of an energy efficiency measure to the tenant and offset this cost with aggressive energy cost savings. While decisions are being made about energy conservation measures, Ambient Energy completes third-party energy analysis that quantifies the energy savings the tenant should expect to see. After the building is occupied for a given period of time, Ambient Energy provides recommissioning services that range from a brief inspection of overall performance to complete retesting and verification of systems.

Overall, energy efficiency focused green leasing is a strong tool for all stakeholders involved in a building to achieve a set of mutually beneficial goals, provided that a systematic approach is taken. Ambient Energy helps facilitate and drive the success of each client’s unique green leasing approach through our wide array of services and expertise.