GREEN LEASING PRACTICES FOR OCCUPIERS

November 20, 2013

DOJ LEASE PROCUREMENT SCENARIOS

Project # 3DC0398

Presented to: Presented to:

October 31, 2013

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GREEN LEASING PRACTICES FOR OCCUPIERS Overview

Greening of Commercial Real Estate has been largely a landlord trend with new construction projects targeting LEED Certifications and existing buildings undergoing retrofits to achieve LEED EB status or similar BOMA designations.

Trend toward “green” leasing by occupiers began in the mid 2000’s, gaining real momentum by 2007.

Tenants have benefited due to more sustainable and efficient building operations and lower operating costs.

Landlords have now developed “green” leases.

Tenant’s participation in sustainable leasing practices has been limited to the selection of a more sustainable building (along with the associated operating procedures relating to cleaning, recycling, etc.) and the implementation of LEED interiors.

Recession caused corporations to rethink strategies due to significant cutbacks in budgets and corporate downsizings Approach to green leasing typically consistent with corporate values.

CBRE | METROPOLITAN WASHINGTON COUNCIL OF GOVERNMENTS| GREEN LEASING PRACTICES FOR OCCUPIERS

GREEN LEASING PRACTICES FOR OCCUPIERS Corporate Strategies

Client Large Telecom Large Tech Large Telecom Large Bank Multinational Industrial Conglomerate Current Situation

 Sustainability is a top priority. Program started in 2011. Since 2013 program requirements enforced in Tier I properties. Lease language is based upon BOMA guidelines.  Focus is on selection of buildings that carry industry designations. No specific lease schedules imposed on third party landlords   Program initially developed in 2007 focused on cost savings and PR benefits of green buildings.

Premium cost of LEED buildings led to little payback.  Strong interest in sustainable practices but business units are driven by P&L impact of decisions which favors lease renewal.  Client is continually ranked as one of the “greenest” companies in America. Client driven program to incorporate green initiatives into the leasing process starting with the RFP.

Green Leasing Program

 Three Tier approach to Green Leasing Program includes:  Site selection- LEED/Energy Star rankings  Sustainable lease terms based upon BOMA green guidelines.

 PJM has incorporated sustainable construction practices and materials   Operations includes reporting and monitoring of energy and waste management LL’s must cooperate with waste and recycling tracking,  diversion rates Energy reporting and audits audits on larger sites – 3rd party vendors retained for   Program focus on the selection of Green Buildings Sustainable practices in the design and construction of interiors           Have built a program around existing leases and landlords Install utility meters where possible Maximize sustainability at minimum cost Business deal still comes first To be a success, program must have a senior level sponsor New site selection compares industry designations (LEED/Energy Star) Green practices are incorporated in interior design and construction RFP provisions relating to sustainable practices Green questionnaire Lease exhibit pertaining to Green Lease Guidelines CBRE | METROPOLITAN WASHINGTON COUNCIL OF GOVERNMENTS| GREEN LEASING PRACTICES FOR OCCUPIERS

GREEN LEASING PRACTICES FOR OCCUPIERS Corporate Strategies

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Motivations & Benefits

Operational cost savings Corporate commitment to the environment Public Relations value Improved indoor environment Increased workforce productivity

Key Components

          Operating Costs Building certifications (LEED, Energy Star, BOMA) Water & electricity usage Maintenance & monitoring Waste management & recycling Tenant fit-ups (including construction waste) Alternative transportation (bicycles, EV’s) Landscaping Cleaning Must include the ability to monitor and control utilities and building operation

Best Practices Tools

     Selection of buildings based upon certifications (matrix or scorecard) Selection of buildings based upon public transit/alternative transit Education and communication are key components within organization – employees must understand and embrace the benefits Requires commitment and a corporate sponsor. Selection of green buildings not always the low cost alternative.

Can be implemented around an existing lease portfolio.

     Development of a green leasing policy stating corporate goals and objectives with respect to green leasing Green leasing RFP Building Due Diligence Scorecard – when comparing alternative locations Develop tenancy profiles – minimum building requirements based upon user group, tenant size, location, term. Profiles in the form of a matrix (single tenant/multi- tenant, small/medium/large) Green lease clauses/provisions/remedies/audit

Going Forward:

The next wave of workplace enhancements is focused on the employee. The Delos Wellness program (part of CBRE Workplace360) considers not only sustainable leasing practices, but also building features and enhancements that improve the employee experience (water, air, light, sound ergonomics, structure).

CBRE | METROPOLITAN WASHINGTON COUNCIL OF GOVERNMENTS| GREEN LEASING PRACTICES FOR OCCUPIERS

GREEN LEASING PRACTICES FOR OCCUPIERS Federal Requirements in Lease

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Energy Star 75

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EPA.Gov

Resource Conservation and Recovery Act (RCRA) Environmentally preferable producers Certified forest products 

Recycling & Conservation Waste Management

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Water Conservation

Plumbing fixtures Landscaping  •

Lighting

F8, T-5 or LED fixtures  • • •

LEED Base Building

LEED NC Silver LEED CI LEED EB 

Other:

Paints, Carpeting, Cleaning Products, Paper Products CBRE | METROPOLITAN WASHINGTON COUNCIL OF GOVERNMENTS| GREEN LEASING PRACTICES FOR OCCUPIERS