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A sound sustainability strategy will almost always 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. Jones Lang LaSalle’s clients have identified short-term utility spend savings of 3 percent to 13 percent from easy-to-implement sustainable measures built into their leases. To translate that into dollars, let’s use a theoretical example of a 1-million-sq.-ft. leased portfolio with average energy cost of $3 per sq. ft.; an average $3 million annual energy spend. The portfolio would potentially reduce its energy costs by $90,000 to $390,000 a year. Run the same calculations on your portfolio, and the reduction in utility costs alone is probably enough incentive to pursue a green lease.
Frequently lease negotiations are marked by a flood of tenant “asks” that put landlords on the defensive and can escalate to a contentious tug of war. Successful green leases are designed to financially benefit tenant and landlord, so that both parties have an incentive to enter into sustainable agreements. Such 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 set cumulative or percentage goals for carbon footprint reduction or other green 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 sustainable improvements. They contribute “hard” metrics that can be maximized in calculations of a corporation’s overall environmental progress.
To realize how important it is to be perceived as environmentally friendly in today’s marketplace, look at large companies’ Web sites or product packaging. Increasingly, a wide range of stakeholders, including customers, investors, employees, media and governmental officials, care what a company is doing for—or to—the environment. A green lease is a creative way to differentiate your organization as having made a positive commitment not only to the environment, but to the viability of your company. It also yields quantifiable sustainability gains that can be featured in carbon disclosure project responses, sustainability reports, and other disclosure mechanisms.
Green leasing can help distinguish an organization as an industry thought leader that reaches above and beyond the sustainable behavior that many firms practice to at least some extent these days. It can also increase your influence as a stakeholder in potential government regulations affecting your business. Public sector officials often confer with those whom they deem to be industry leaders before enacting new rules. Being regarded as an industry visionary increases your chance of gaining a seat at the decision-making table.
Many large cities are already strong advocates of green leasing. New York Mayor Michael Bloomberg has assembled a Green Lease Task Force, and San Francisco’s Business Council on Climate Change has developed a Green Tenant Toolkit for local occupiers and landlords. Adopting your own green leases demonstrates your commitment to a sustainable practice many urban administrations either actively support already, or soon will as they begin to understand the benefits to their community’s environment. Green leasing creates opportunities to strengthen relationships with local lawmakers by providing an example they can use to promote the strategy to other local business tenants and their landlords.
Having a green lease can help a property instill and encourage sustainable conditions and practices that can earn valuable credits toward LEED for Commercial Interiors (CI) certification. It can also help facilitate the path toward obtaining Green Globes and other formal measurement recognitions for sustainability.
Employee gains from green leases are sometimes considered a “soft” benefit, but they can translate to hard dollar savings and cost avoidance for an organization. According to a CoStar study, workers were almost 5 percent more productive, with almost 3 percent fewer sick days, in environmentally-friendly buildings. Using another theoretical example, if your company has 10,000 employees with an average $50,000 annual salary, the reduced time off the job is worth $39 million in work annually. A sustainable work environment fostered by a green lease also helps corporations attract and retain valuable employees. Studies show that most young professionals—a key to the growth and ongoing success of most companies—care about the environment, practice at least some green behavior at home, and want to see it practiced by their employer. If all other employment factors such as responsibilities, salary and benefits are roughly equal, the corporate sustainability commitment demonstrated by a green lease could put you a step ahead of competitors for attracting the best and brightest employees.
Tenants can potentially reduce waste going to landfill—along with waste handling costs—through measures facilitated by green lease provisions that encourage reducing consumption, recycling, and even composting if applicable. Collecting data on waste can also improve reporting practices and results. Best practice is to achieve waste diversion rates of up to 80 percent or more. In some cases, recycled materials can be sold for additional offsets to occupancy costs.
A green lease is not just the smart thing to do, it is the right thing. Scientists overwhelmingly call for efforts to reverse man-made contributors to global warming, and according to the U.S. Environmental Protection Agency, buildings account for 30 percent of all greenhouse gas emissions in the U.S. Increasing workplace sustainability is an opportunity to do something that is good for both business and society.
