Commercial leases go green


New opportunities to fight climate change in these properties are coming from an unlikely source: the commercial property lease. A new study finds that in 2009, only 15% of all leases signed in Sydney’s central business district contained green clauses; by 2013, this had risen to over 60%.

Traditionally, leases ignore environmental considerations, partly due to conflicting landlord and tenant goals. However, the study shows how leases are evolving to include green clauses that can increase cooperation between tenants and landlords on sharing environmental goals, acting as a 'local law' to increase environmental accountability and opportunities.

Researchers from Oxford, Reading and Sydney Universities examined five case studies in the UK and Australia, where green leases were first introduced in 2006, to understand how green leases are applied in offices and stores. Their paper published in the journal, Building Research and Information, finds that green leases provide a valuable framework for improving levels of cooperation between tenants and landlords which can include sharing energy data, targets for improvement, and in very rare cases, costs for building upgrades.

The study finds that in both countries, green leasing is taken up in offices more than in retail, with green leases proactively driven by landlords rather than tenants. One notable exception is the British multinational retailer, Marks & Spencer (M&S). To date, M&S has implemented green leases and written agreements about environmental improvements with multiple landlords in more than 80 of its stores, with plans for more. The study remarks that the important drivers for the M&S leasing policy were 'strong leadership and concern about climate change'. It also notes that this retailer’s brand and size gives it some sway in the leasing arrangements. With the notable exception of M&S, the study finds green leasing is still unusual in retail markets in both the UK and Australia, possibly due to the highly price-sensitive nature of this sector.

Lead author Dr Kathryn Janda, from the Environmental Change Institute at the University of Oxford, said: 'Green leasing is a promising tool that tenants and landlords can use to develop joint environmental actions, with little or no involvement from government. It can foster greater cooperation in shared premises, and help organisations achieve environmental goals. More research is needed to measure the outcomes of this approach.'

Co-author Dr Sara Wilkinson, from the University of Technology, Sydney, said: 'The evidence shows that landlords and tenants in key Australian markets are valuing the enhanced reputation gains that green leases and greener buildings provide. Ongoing work by the Better Buildings Partnerships encourages the parties to sign up to a greater range and degree of enforceable green lease clauses that deliver greater benefits.'

Continue reading at the University of Oxford.

Building image via Shutterstock.