Monday, 1 December 2014

Green Spotlight on Tenant Efficiency

Written by Amanda Steele
Head of Sustainability for CBRE Pacific

Green leases are a hot topic in the Asia Pacific region at present.  In the simplest form, a green lease is a lease between a landlord and tenant of a commercial building which provides obligations for both parties to minimise adverse environmental impact in areas such as energy, water and waste.

Industry research has shown that tenants activity can impact the energy efficiency of a building by 40-60%. This means the spotlight is now on tenant efficiency. On this theme, Sparke Helmore, an Australian law firm, has worked with the Better Buildings Partnership’s Tenant Working Group based in Sydney to develop a guideline for best practice leasing. This includes a review of green lease clauses currently in use in Sydney’s Central Business District (CBD). Surprisingly over 30% of office leases in the CBD contain green lease clauses. This is a higher rate than many expected.

The main myth with green lease clauses that is being expelled is the cost impact on tenants. The majority of such clauses have little or no financial implications and instead encourage greater collaboration, and sharing of information between occupiers and owners.

CBRE has been working with Stockland, an Australian property development company, to assist them with the analysis of the tenant and landlord relationship in terms of environmental benefits. Stockland’s Triniti office park is a highly efficient building with little room for eking out more savings in the base building. By working with the tenants on site and providing NABERS* tenancy ratings, CBRE has identified ways for the entire building to improve its overall efficiency. A positive knock-on effect has been the social interaction between tenants. By meeting quarterly to discuss sustainability issues all tenants have stated that they have better relationships with each other in the building.

As a result, many large Australian property companies are now reviewing their leases to include green clauses. Most are “light green” with no financial impact but the intent is that they will move to a deeper green, whereby landlords ask tenants to share their environmental aspirations. Although many are still considering how to implement and monitor green leases, what is certain is that this issue will remain on the agenda for some time to come.


For more information on this topic please refer to:

Sydney BBP
Green clauses 
Landlord & tenant guide to happiness

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