Seeing Green – The Future of Leases

Climate-conscious landlords and tenants across Europe are “greening” their relationships by adopting a collaborative approach to minimise the environmental impact and improve the sustainability and commercial attractiveness of their buildings.

The key objective of green leases is to promote a sustainable approach to the operation of buildings. They encourage a cooperative approach between landlords and tenants, with the aim of improving energy efficiency, reducing waste and water consumption, and improving the environmental impact of buildings.

Green construction methods can be integrated into buildings at any stage, from design and construction to renovation. Implementing a green-lease strategy is not overwhelming, and the benefits of committing to ‘green and clean’ are not only for the landlord and tenant but, of course, the environment.

What is a green building?

In short, a green building is one that is occupant and environmentally friendly as it reduces its environmental impact and enhances the health and well-being of its users. It does this by optimising the efficient use of energy and other resources and adopting the use of renewable energy and eco-friendly materials to minimise carbon footprint and emissions as well as improving the indoor environment.

What is a green lease?

Green leases are designed to align landlord and tenant interests around energy efficiency, water conservation, and other environmentally friendly measures in the construction, operation, and usage of commercial spaces.

What goes into a green lease?

There is no one-size fits all lease but common green themes include energy efficiency measures, pass-through clauses for capital improvements, data sharing, waste reduction and green certifications.

Going ‘green’ can do more than reduce a building’s carbon footprint. Many tenants will see reduced operating costs by occupying an energy-efficient building and may attract the best talent when it comes to recruitment as well as appeal to the environmentally conscious consumer. Also, studies show a link between buildings with better sustainability credentials and increased well-being and productivity of employees.

It is anticipated that the use of green leases will become more widespread, driven by ESG requirements which are increasingly one of the key criteria for investors within commercial real estate. In turn, buildings with green lease provisions are beneficial both from an environmental and commercial perspective for both landlords and tenants.

By helping combat the climate crisis, seeing green might also help lessen the threat posed to future generations.

Should you require any assistance in this area please contact Cathy McFadden in our Property Team, or your usual Whitney Moore contact.