Green Leases and Green Building


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This was presented to Sterling Education Group's "Landlord / Tenant Law" program in New Orleans, LA, in February 2010. The topic focused on the growth of green building in Louisiana and across the country, an overview of green building principals, and the concept of green leases.

Published in: Real Estate

Green Leases and Green Building

  1. 1. Green Building, LEED & Green Leases
  2. 2. “ Green Growth is phenomenal across the globe. Harvey M. Bernstein, McGraw-Hill Construction
  3. 3. “ Green building is the bright spot in an otherwise tough economy. McGraw-Hill Construction
  4. 4. 2005 - 2008 Green Building Construction Grows 5x ($10b to $49b) 2009 - 2013 Could Triple, reaching $140b Green Outlook 2009: McGraw-Hill Trends Driving Change Report
  5. 5. $25 Billion for Green Building Allocated Within 2009 American Recovery Act
  6. 6. Louisiana’s Green Energy Plan •Retrofit State Buildings: $25,723,807 •Cash Incentives for Residential/ Commercial Energy Efficient Upgrades: $15,170,450 •State Rebates for Purchasing Energy Star Appliances: $2,638,339 •Incentives for Converting to Efficient Transportation Vehicles: $9,893,772 •Grants for Projects with Renewable Energy Components: $9,893,772
  7. 7. Why?
  8. 8. 13.6% Operating Costs and 10.9% Building Values
  9. 9. What is Green Building? also known as green construction or sustainable building, is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building's life- cycle: from siting to design, construction, operation, maintenance, renovation, and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort.
  10. 10. During Design
  11. 11. Green Design • Site Selection • Parking and Alternative Transportation Design • Maximizing Open Spaces • Daylite & • Stormwater Design (Quantity and Quality) • Heat Island Effect & Green Roofs
  12. 12. During Construction
  13. 13. Green Construction • Purchase Materials Locally or Regionally to Reduce Transportation • Recycle Materials / Building Reuse / Certified Wood • Construction Waste Management • Low-Emitting Materials
  14. 14. During Use
  15. 15. Green Operations • Controllability of Light & Thermal Comfort Systems • Energy Performance • Commissioning and Monitoring of Building Energy Systems • Innovate Wastewater Technologies • Water Use Reduction
  16. 16. ➡ Yes, Building Green Costs May Be Slightly More ➡ Operating Costs and Energy Consumption Can Be Significantly Less ➡ Productivity and Health is Better ➡ Building More Valuable
  17. 17. Paying To Go Green
  18. 18. Reduce Operating Costs 36% Reduced Energy Use USGBC, Capital E Analysis $50-65 20-Year Net Benefit Per Sq Foot USGBC, Capital E Analysis
  19. 19. Increasing Productivity
  20. 20. Green Leases
  21. 21. What is a Green Lease?
  22. 22. Net Operating Income
  23. 23. Decrease Operating Costs or Increase Rental Rates
  24. 24. 13.6% Operating Costs and 10.9% Building Values
  25. 25. ➡ Yes, Building Green Costs May Be Slightly More ➡ Operating Costs and Energy Consumption Can Be Significantly Less ➡ Productivity and Health is Better ➡ Building More Valuable
  26. 26. “ Tenants in green buildings experience increased productivity and fewer sick days....[and] green buildings have lower vacancy rates and higher rents than non-green counterparts. Study by: University of San Diego and CB Richard Ellis Group. Reported in Business Week.
  27. 27. 3.5% Vacancy Rate and 13% Rental Rates
  28. 28. Net Lease Tenant responsible for operating cost. Green leases provide incentive to tenant to use less energy. Landlord benefits from higher base rent, low vacancy & overall building value.
  29. 29. Gross Lease Landlord responsible for operating cost. Landlord benefits from energy cost savings, able to reduce rents in competitive market, improve occupancy & increase profits.
  30. 30. Lease Elements “ [t]he remedies included in a lease for breaching environmental objectives will reveal how critical these obligations are to the parties. If the objectives are aspirational, the lease will include something less than an absolute obligation to comply, such as reasonable efforts. On the other hand, if the objectives are critical, the lease will include an absolute obligation to comply. - USGBC Green Lease Guide
  31. 31. Problems - Guarantee of Certification - Contracting for Certification - Energy Efficiency Difficult to Control - Insurance Challenges (B.C. Green Roof Insurance)
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