How Green Is Your Lease?

Green leases are becoming more and more popular. Simply put, a “green” lease is a lease of space in a green building. Green buildings impact leases in three primary ways.

First, green buildings impact the construction and design of the space. A normal lease requires the landlord to construct the core and shell and the tenant to build or pay for improvements to the space. A green lease requires that the landlord and tenant work together in an integrated design process. In addition, the tenant may require the landlord to represent and warrant that the building achieves some level of LEED certification.

Second, green buildings impact a lease’s economic provisions. Constructing a green building might be more expensive than a normal building. However, the operating costs are usually less. The lease should address how those costs and benefits should be allocated.

Third, green buildings impact a lease’s provisions relating to operations and maintenance. Green building systems have detailed operating and maintenance requirements. A landlord may prepare an operations manual for the building and require the tenant to comply with it. Conversely, a tenant may want to impose an obligation on the landlord to operate and maintain the building in accordance with certain green standards. Both parties may agree to use environmental friendly cleaning materials. The landlord may condition approval of tenant alterations on compliance with certain green building rating criteria. These requirements should be reflected in the lease.

As green buildings become more prevalent, green leases will too. We encourage landlords and tenants to consult with an experienced attorney when entering into such a lease so that their expectations are accurately reflected in the final document.