Greening Our Lease

USGBC Colorado launched a Commercial Real Estate Initiative last fall, intending to integrate the various players in that sector with the goal of greening the entire system.  This initiative is pulling together architects, general contractors, developers, tenant representatives, property managers, academics, and a few brokers to jump start this effort.

It is in this initiative that some wonderful attorneys have started to get involved with our Chapter.  There are some fascinating legal issues that start to come up around green building contracts, building performance, emerging technologies and products, and green leases.

It is one thing to begin to understand the issues and complexities from a theoretical perspective. It's quite another thing to put things into place on the ground.

Our new landlord is excited to have us, they love what we do and are about. But they have no experience with doing green building, and are a little tentative about making binding contractual agreements that might have a financial or legal impact on them down the road.  So a major part of our relationship moving forward is going to be about developing relationships and doing some owner education.  Which is exciting - it's all part of our mission.

When we started negotiating our lease, I brought in Paul Means from Davis Graham & Stubbs, a local attorney who has volunteered with the Chapter and who has a particular interest in green leases, to help with the process. 

Some of the critical elements were set in place before the lease negotiations started.  Specifically, we agreed to take the space as is, without tenant improvements, for two reasons. First, it helped us negotiate a significantly lower lease rate. Second, it allowed us to ensure that any of the TI is done as sustainably as possible - and already a number of sustainable product manufacturers have committed to donating products & services to the Chapter.

In addition, while most of the building operating expenses are building-wide and passed through to tenants, the electricity in our office is sub-metered, allowing us to measure the impact of our energy efficiency improvements, and directly benefit financially from those investments.

The basic goals going in to the negotiation were:

1. Set a collaborative and mutually respectful tone to both the lease negotiation and our working relationship with the owners and the owners representative
2. Ensure that nothing in the lease would prohibit us from seeking LEED for Commercial Interiors Certification - for example, we wanted to be sure to have access to the building systems so that we could do fundamental commissioning (LEED CI E and A Prereq 1)
3. Establish a basic and soft commitment from the owner to not inhibit our efforts to green our office, and to (at no cost to them) be open to greening the building over time
4. Establish transparency in the overall building operations - for example, being able to access historical and future utility & water bills for the building

While the overall tone of the negotiations (still ongoing as of this post) is really positive, the actual process of greening our lease in a significant way can be summed up in a comment written by Paul earlier this week: "Now you see why I call green leasing still more aspiration than practice right now."

We had attempted to include a green building section to one of the addenda to the lease. As of this writing they have all been stricken from the lease by the owners, out of fear that they'd be committing themselves to unknown and potentially significant cost.

That is where we are at this point in time. Ultimately it looks like we have the foundation for a great  collaborative relationship, the interest of the owners in our efforts, and possibly a few of the key things that we were looking for.  In the new publication released by USGBC, "Green Office Guide: Integrating LEED into your Leasing Process", they wrote something which is incredibly appropriate and reflects our current green lease reality: 

"Especially when dealing with a landlord who is not very experienced with LEED and the greening of tenant space and building operations, tenants (especially small, nonanchor tenants) must be careful not to scare off potential landlords by requiring all the green lease clauses in this guide. Using a collaborative approach to lease negotiations requires give and take, and it is nearly impossible to incorporate every green lease clause in any transaction."

Stay tuned for the final outcome of our lease negotiations.

Green Lease Resources:
Green Office Guide: Integrating LEED into your Leasing Process (USGBC)
 The Real Property Association of Canada
BOMA Green Lease Guide
Energy Efficiency Lease Guidance