Transcript Slide 1

Integrating Sustainability Strategies: Green
Building Solutions
Green Tenant Leases
March 10, 2010
Louise C. Adamson LEED®-AP ID&C
Partner
San Francisco
[email protected]
© 2010 Louise C. Adamson
Corporate Perspectives on Sustainability
 A 2008 global survey of over 400 building occupiers prepared
by Jones Lang LaSalle and CoreNet shows that 90% of
corporate occupiers surveyed consider sustainability a nearterm critical business issue
 Most major corporations have now developed public
sustainability policy statements
 Opportunities: lower rents; landlord concessions
 Sustainability has become part of the corporate vernacular
and remains a high priority
 2009 CoreNet study shows 42% of real estate execs prepared to pay a
premium (up to 5%) to lease green space; 53% willing to pay premium
to retrofit owned property
Global Trends in Sustainable Real Estate: An Occupier’s Perspective. Jones Lang LaSalle/CoreNet, Feb 2008;
BOMA Kingsley Quarterly, 2007; 2009 State of the Corporate Real Estate Industry Report. CoreNet Global, Mar 2009
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When will sustainability become a critical business
issue?
More than
5 years 5%
Never 1%
Within 5
years 4%
Within 3
years 11%
Already
critical 44%
Within 1-2
years
35%
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How important are each of the following to your
organization?
Environmental
friendly practices
77%
75%
Energy utilization
Corporate social
responsibility
70%
Sustainability
revenue
Water utilization
Carbon emissions
63%
62%
52%
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Implementation
 For many corporations, sustainability is an area far
removed from primary business
 Many corporations implementing a variety of
environmental initiatives – energy saving, waste
management, alternative transportation – in an effort to
meet announced corporate sustainability goals
 Green leases provide corporations that are tenants with
a valuable opportunity to implement sustainability goals
and to communicate that achievement to the market
through LEED certification
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What does “green” mean?
Green building is . . .
. . . a collection of land use,
building design,
construction, operations,
and maintenance
strategies that are
designed to reduce
energy consumption,
promote occupant health,
and protect the
environment
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What is the LEED® Green Building Rating System™?
LEED is an acronym for “Leadership in Energy And
Environmental Design”. The LEED Green Building Rating
System is promulgated by the US Green Building Council
LEED has become the established
industry benchmark for the certification
of sustainable building projects
LEED is designed to guide
the development of
high performance sustainable
building projects;
“points” are accrued for
The mission of LEED is to encourage
implementation of efficiency
the global adoption of sustainable
and design measures;
green building and development
certification awarded based
practices
on number of points earned
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Environmental impacts of buildings
 U.S. Building Impacts
U.S. Dept. Energy 2008
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Green Buildings
 USE 24% to 50% less energy
 EMIT 33% to 39% less carbon dioxide into the
atmosphere
 USE 40% less water
 SEND 70% less solid waste to landfills and
incinerators
U.S. Green Building Council
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USGBC Rating System Portfolio
LEED
Rating System
Portfolio
LEED for New
Construction &
Major Renovations
LEED for
Existing Buildings
Operations & Mgmt
LEED for
Interior Design &
Construction
LEED for
Core & Shell
LEED for
Schools
LEED for
Homes
LEED for
Healthcare
LEED for
Retail: New
Construction
'USGBC' and related logo is a trademark owned by the U.S. Green Building Council
LEED for
Neighborhood
Development
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LEED ID&C certification is awarded at the following
levels:
 CERTIFIED
40-49 points
 SILVER
50-59 points
 GOLD
60-79 points
 PLATINUM
80 points and above
 7 “must-have” prerequisites. Balance of credits
selected on “pick and choose” basis across various
categories
'USGBC' and related logo is a trademark owned by the U.S. Green Building Council
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LEED for Interior Design and Construction
 Certification for the tenant build-out is covered by LEED
for Green Interior Design and Construction LEED-ID&C
(formerly LEED-CI) which is premises-based NOT
building-based
 Recognizes that tenant will typically have limited ability
to control or leverage landlord behavior and requires the
implementation of sustainable practices within the
premises ONLY
 LEED-ID&C is all about the art of the do-able!
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LEED-ID&C
LEED-ID&C addresses performance in the following
categories:
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

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

Sustainable Sites
Water Efficiency
Energy & Atmosphere
Materials & Resources
Indoor Environmental Quality
Innovation in Design
Regional Priority
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Why pursue LEED-ID&C certification or locate in a
LEED-certified building?
Opportunity and incentive to
implement environmentally
sustainable practices
Improved bottom line;
increased occupant
well-being and productivity;
reduced absenteeism; qualify
for growing array of
state/local initiatives
Valuable opportunity to
communicate commitment
to responsible environmental
stewardship to the marketplace,
employees, community and
shareholders
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Client Case Study
 Assignment was to “green” standard multi-tenant lease form
for Fortune 100 company with 22 million sq. ft portfolio (56%
owned, 44% leased)
 No “green” tenant leases existed
 Not simply a matter of plugging in a few green provisions into
the lease form (“green washing”)
 Requires identification and communication of sustainability
goals from very start of building selection and lease
negotiation processes
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Client Case Study (continued)
 Input received from all members of the client transaction team
 Developed a unique green lease program that integrates
sustainability in a holistic way starting with site selection and
continuing through RFP, LOI and lease
 Differentiator: Lease tracks LEED-ID&C requirements so that
lease itself facilitates certification of the premises on a standalone basis (regardless of typically uncertified status of building)
 Client has adopted new green lease forms and pursuit of LEED
certification is now default assumption for new leases
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Elements of
Green Leasing Program
1.
2.
3.
4.
5.
6.
Development of sustainability goals
Communication of goals to team
Site selection guidelines (informed by LEED reqs)
Request for Proposal (include LEED questionnaire)
Letter of Intent (include a Sustainability Standards exhibit)
Lease (incorporate green lease terms that track LEED-ID&C
requirements
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Green Leasing Program
Traditional
Site Selection
RFP
LOI
Lease
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Green Leasing Program
Traditional
“Green Washing”
Site Selection
Site Selection
RFP
RFP
LOI
LOI
Lease
Lease
With Plug-in
Green Terms
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Green Leasing Program
Traditional
Green Lease
Establish
sustainability goals
Communicate goals
to team
Site Selection
Site Selection
with LEED parameters
RFP
RFP with
LEED questionnaire
LOI
Letter of Intent
Core green business terms
Lease
Green Lease
Incorporates green policy
tracks LEED-ID&C
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Establish sustainability goals
 Sustainability objectives identified; green policy
statement developed
 Typically includes energy and water use, waste
minimization, materials recycling, alternative
transportation
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Communication of Sustainability Goals
to Team
Communication of sustainability objectives to ALL
parties participating in the leasing process is key –
includes brokers, landlords, architects, contractors
and attorneys, many of whom may have a limited
understanding of green building practices
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Site Selection Checklist
 Site selection checklist – sustainability criteria
 LEED encourages selection of premises located within
buildings that
 implement sustainability best practices (e.g. LEED certified
building or building that incorporates sustainable features)
 are located in areas of maximum density in established urban
communities with access to public transport
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RFP Includes LEED Questionnaire
 “Green” RFP sets out core sustainability requirements AND
solicits green information by including a separate LEED
questionnaire
 Responses to LEED questionnaire allow tenant to compare
the green characteristics of buildings and assess potential for
certification in a given market
 Don’t want to “spook” potential landlords but important to
realistically assess sustainability potential of particular
building, including potential for LEED or other sustainability
certification, early in process
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Letter of Intent
 Sustainability Standards Checklist included as an
exhibit to LOI
 Provides a comprehensive summary of LEED and
other sustainability standards which can be tailored to
each transaction
 Not all standards included in checklist will be
applicable to every transaction
 Negotiated sustainability standards are incorporated
into LOI exhibit which is then attached to Lease
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Letter of Intent (continued)
 If seeking LEED certification, Sustainability
Standards should include LEED prerequisites
together with additional optional points needed to
achieve desired level of certification
 Sustainability Standards Checklist annotated to
show which are the “must have” LEED prerequisites
and which provide optional credits
 Other certification standards (EnergyStar, etc.)
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Green Lease Program Elements
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Sustainable Sites checklist
RFP (include sustainability questionnaire)
LOI (include Sustainability Standards checklist)
Lease (include Sustainability Standards exhibit)
Guide to Green Lease Forms – summary of forms and
how they work; explanation of specific green provisions
 Training/workshop
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Structure to be Flexible and Adaptable
 Green lease may not be feasible for every
transaction
 Highlight green provisions
“OPTIONAL (Sustainability Initiative”)
 Structure forms to work on a stand-alone basis in
both “green” and “non-green” modes
 Green provisions and exhibits can be used as a
drafting guide when using landlord forms
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Green Lease is Low Hanging Fruit
 Opportunity to implement sustainability goals
 Facilitates LEED certification for premises (tenant
build-out) by tracking and incorporating LEED-ID&C
credits
 Certification for the premises can be obtained
regardless of the typically uncertified status of
the building
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 Certification is highly achievable because based on
implementation of measures within premises only
 Certification is inexpensive
 basic/silver level certification highly achievable at little
or no cost
 significant cost savings and other personnel
performance and well-being benefits over lease term
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Take Aways
Green leases provide innovative, highly achievable,
and valuable opportunity to:
 implement sustainable practices
 meet sustainability goals
 communicate achievement to the market through
LEED certification
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Take Aways
Effective green lease program should be:
 holistic and comprehensive – documents incorporate green
concepts throughout the lease negotiation process
 flexible – can be used in green and non-green mode
 adaptable – can be used as drafting guide to revise and
supplement existing forms when landlord forms must be used
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Green Lease Resources
 Green Office Guide: Integrating LEED into Your Leasing
Process – US Green Building Council (USGBC), 2009
(tenant oriented)
 Comprehensive manual designed to assist tenants green the
leasing process
 Addresses site selection, negotiations, lease language, buildout, ongoing operations
 Lease Guide: Guide to Writing a Commercial Real Estate
Lease – Building Owners and Managers Assoc. Int. (BOMA),
2008 (landlord oriented)
 Form of commercial lease agreement that includes green
provisions
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Louise C. Adamson
LEED®-AP ID&C
Partner
San Francisco
[email protected]
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