Karen Penafiel

When I attend industry meetings focused on sustainable building, I frequently hear that building owners are the barrier to market transformation.

But it’s often the tenants—because they aren't willing to pay for “green” renovations—that present the barrier. Lack of communication between the building owner/manager and building tenants can impede the process of implementing green operating and management practices.

The Building Owners and Managers Association (BOMA) International has spent much of the past several years identifying the barriers to a more rapid adoption of energy-efficient technologies and sustainability in the multi-tenant office environment, and working hard to find solutions to overcome them.

Two of the most commonly cited barriers to implementing green and energy-efficient building practices are the split incentives resulting from a typical triple-net lease (where the landlord pays for capital improvements but the tenants, who pay the utility bills, reap the benefits of energy savings) and a lack of tenant demand (fueled by a lack of tenant education).

A team of experts—BOMA members with experience in executing leases and a proven track record of leading the green building movement within the real estate industry—worked to green BOMA's standard lease document, “The Guide to Writing a Commercial Real Estate Lease.” The group walked through a standard lease agreement, clause by clause, looking for opportunities to change language that has been long-accepted common practice.

In doing so, BOMA feels we have created a document that is legally enforceable and is a tool to help building owners/managers maintain green buildings through operations and management practices. More importantly, it serves as a tool for communicating with brokers and prospective tenants about what it means to be a tenant in a high-performance green building, including the responsibilities of all parties in the ongoing efforts to keep it green.

Many have demonstrated it is relatively easy to build a new building built to meet national green building standards such as LEED and Energy Star. However, a building won't perform as it was designed to if it’s not managed using best practices, which BOMA's
green lease seeks to address.

Element’s of BOMA’s green lease
BOMA's green lease is designed to be flexible to meet the needs ofindividual buildings and therefore is rating-system neutral. The list below includes some of the elements that should be taken into consideration by both landlord and tenant during the lease negotiation process.

Who pays? Since the basic purpose of any lease is to outline the obligations of each party, any green lease must first and foremost include consideration of who is going to pay for any future investments in energy-efficient or sustainable technologies. The BOMA green lease begins with a typical triple-net lease (where tenants pay a pro rata share of operating costs, including energy costs) that includes language that allows the building owner to pass through energy efficiency improvements as operating costs as long as the improvements result in lower costs for the tenants.

Operations. A green lease should include language on green building operations. To what standard is the building being operated—a specific level of LEED certification, Green Globes or another green building rating system? The tenant should understand what the rating means and agree to make every attempt practical to comply with the building's design goals.

Recycling. The lease should include language outlining the building's waste management and recycling practices and the tenant’s responsibilities for sorting waste—as well as the landlord's right to refuse to collect any waste that has not been properly sorted (or charge the tenant for the janitorial time spent sorting the waste).

Maintenance, repairs & improvements. Any maintenance and repairs the tenant undertakes must be done in accordance to the building's green building practices. For alterations, tenants have the obligation to ensure the contractors they hire understand and comply with the building's green building practices. Leases generally include a “Contractor Rules and Regulations” as an exhibit to the lease, and this must be updated to coincide with the individual building's green building practices.

Janitorial services. Does your building use green cleaning? If the building's green cleaning includes day cleaning practices, the days/hours of this service need to be included. End-of-lease term. At the end of the lease term, tenants should be encouraged to recycle or reuse any refurbishable equipment, furnishings or materials.

Karen Penafiel is the vice president of advocacy at BOMA International. She can be reached at kpenafiel @ boma.org. Founded in 1907, BOMA includes more than 90 local associations and affiliated organizations worldwide. Learn more at www.boma.org.