Get the scoop on green leases, and see which companies are using them successfully

by Brianna Crandall — July 9, 2018 — The energy efficiency nonprofit Institute for Market Transformation (IMT) and the US Department of Energy’s (DOE) Better Buildings Alliance recently announced the 2018 Green Lease Leaders at the BOMA International Conference and Expo in San Antonio, Texas, a conference that brings together thousands of commercial real estate professionals every year and covers the latest industry trends, building innovations, and operational best practices.

The Green Lease Leaders program recognizes leading-edge companies and real estate practitioners who break down barriers to high-performance buildings by revolutionizing leases to include energy efficiency and sustainability. This year, Green Lease Leaders represented portfolios totaling 717 million square feet (sq. ft.), bringing the cumulative floor area of all Green Lease Leaders to more than 1.8 billion sq. ft.

To achieve major reductions in building energy usage requires better collaboration between landlords and tenants. With this in mind, Green Lease Leaders, now in its fifth year, continues to elevate industry standards and visibility for real estate leaders who are implementing “green” — also known as high-performance or energy-aligned — leases. Working across a diversity of real estate owners, tenants, brokers, and other stakeholders, green leasing sets terms up-front, and provides a framework for landlords and tenants to ensure building efficiency practices and investments are mutually beneficial and properly executed — helping move past historical road blocks to better building performance and return on investment (ROI) caused by most standard lease structures.

IMT estimates that green leases can help reduce utility bills by up to $0.51 per square foot (11-22 percent) in US office buildings alone, and if all leased office buildings executed green leases, the market could save over $3 billion in annual cost savings. Lease clauses that 2018’s Green Lease Leaders have implemented address a range of important issues such as energy and water efficiency, health and wellness, employee engagement, indoor air quality (IAQ), data center efficiency, and zero net energy buildings.  Restrictions on HVAC (heating, ventilation and air-conditioning) hours, required plug load management, submetering utility data, and periodic retro-commissioning to optimize operations and equipment are just a few of the terms that are currently being fulfilled.

Kathleen Hogan, deputy assistant secretary for Energy Efficiency at DOE, stated:

With leased space representing more than half commercial building energy usage in the US, DOE and IMT are working side-by-side with real estate industry leaders on ways to bring building energy efficiency and affordability in leased spaces forward. This year’s Green Lease Leaders demonstrate that by using mutually beneficial lease language to collaboratively address building performance, landlords and tenants are achieving higher energy savings and improving tenant satisfaction.

Cliff Majersik, executive director for IMT, added:

As building owners, developers, tenant companies, and other real estate decision makers strive to keep up with evolving market pressures, leading-edge companies are using the lease as a powerful instrument to create higher-performing buildings that not only save energy and money but also provide healthier work environments “IMT and DOE’s Green Lease Leaders program has made a significant impact over the past five years by setting the bar for green lease agreements and putting a much-needed spotlight on the growing number of innovative firms that use their lease to achieve ambitious energy, sustainability, and business goals. We are thrilled to recognize this year’s impressive recipients who are pushing the envelope on building performance and energy-aligned leasing.

BOMA International Chair Rob Brierley, BOMA Fellow, managing director of Real Estate Management Services and executive vice president of Colliers Boston, commented:

BOMA International is pleased to have once again hosted this year’s Green Lease Leaders awards ceremony. As a long-time supporter of green leasing in the commercial real estate industry, BOMA offers resources, including its recently updated Green Lease Guide, to help property professionals work together with tenants to achieve sustainable, high-performing properties. The 2018 Green Lease Leaders demonstrate the value of these efforts, and BOMA congratulates them on their achievements.

The 2018 Green Lease Leaders are:

Landlord — Gold Recognition

  • Brixmor Property Group
  • CommonWealth Partners
  • Digital Realty
  • Federal Realty Investment Trust
  • Forest City
  • Ivanhoe Cambridge
  • JBG Smith
  • Kilroy Realty Corporation
  • Kimco Realty
  • Prologis
  • The Tower Companies

Landlord — Silver Recognition

  • AEW
  • Jamestown
  • LaSalle
  • Manulife | John Hancock
  • The Natural Resources Defense Council (NRDC)
  • Triovest
  • Weingarten Realty

Tenant — Gold Recognition

  • TD Bank

Tenant — Silver Recognition

  • NRDC
  • Sprint
  • Ulta Beauty

Team Transaction Recognition

  • Rocky Mountain Institute, with Morgan Creek Ventures, Packard Dierking Attorneys at Law, Holland & Hart, and Coburn

How to receive Green Lease Leaders recognition

To receive Green Lease Leaders recognition, organizations must meet two prerequisites and earn five or more credits for best practices such as utility data tracking and sharing, cost recovery for efficiency-related capital improvements, sustainability training, and energy efficiency fit-out requirements for tenant spaces, among others. A new Innovation in Leasing credit encourages organizations to test out new ideas and share them with the market. The application period to be recognized in 2019 is now open and will close next March. To receive one-on-one guidance for greening your lease and/or support for becoming a Green Lease Leader, contact IMT and DOE staff online.

In addition, the program now recognizes two levels of achievement — Silver and Gold. Silver recognition applauds the establishment of foundational policies and business practices that encourage reduced energy and water consumption in leased spaces. Gold recognition builds on Silver-level achievements and requires execution of leases and energy-efficient tenant fit-outs that are verified with an executed lease and other documentation. Participation in a case study is also required for Gold recognition. Commercial, industrial and retail landlords and tenants, as well as transaction teams (a combination of landlord, tenants or brokers for a single real estate deal) are eligible for recognition. Designees must reapply once every three years to maintain their Green Lease Leader status.

Jessica Loeper, director of Sustainability at CommonWealth Partners, a 2018 Green Lease Leader, pointed out:

Tenants are typically responsible for nearly 70% of the total building energy consumption. Educating tenants is the first step towards addressing tenants’ large percentage of energy use and ensuring a mutually beneficial agreement that address split incentive dilemmas to advance our sustainability programs These sustainability goals we follow influence the properties’ capital and operating budgets and ultimately provide an overall efficient portfolio… Our Executive Team directs the establishment of sustainability goals, leads the efforts of our development and operations teams, and monitors the progress toward achievement of the goals set forward.

For more comments from this year’s Green Lease Leaders, see the IMT announcement online.

Become a Green Lease Leader in 2019

For more information on the Green Lease Leaders program, this year’s recipients, and how to apply to be recognized in 2019, visit the program’s website. To learn more about the benefits of green leasing and landlord-tenant collaboration on sustainability, visit the Green Lease Library and stay tuned for upcoming Green Lease Leader case studies that will be released in August just ahead of the 2018 Better Buildings Summit and Building Energy Exchange.