Recently the Sustainability Committee of BOMA Greater Los Angeles (GLA) hosted a LunchCast webinar called Green Leases and How to Capture Overstandard Tenant Consumption. The webinar was part of a BOMA/GLA educational Sustainability Series, and was led by Sara Neff, Kilroy’s Senior Vice President of Sustainability.
BOMA/GLA says on their website, “Over the last 20 years, there has been a massive paradigm shift in how the public and commercial real estate view the sustainability of the built environment. Building owners not only seek efficient and healthy buildings, but also understand that their buildings’ operations directly impact the surrounding community.”
The webinar walked through how to implement green leasing best practices, which can help further sustainability efforts at your property. Here are a few of the takeaways that stood out to us.
Submeters are commonly used today to capture utility usage on above standard equipment, but they can be a much more powerful tool for sustainability. By submetering all tenants as a standard, you engage the tenants in their energy consumption. If they’re paying a pro rata share, there’s no incentive for them to undertake energy efficiency initiatives. By making them individually responsible for their utility consumption, they become your partner in increasing energy efficiency at the property.
Running your building’s HVAC after hours, on weekends, or on minor holidays can be a huge energy expense. Look at how you’re managing after hours HVAC requests, as well as what you’re charging for each hour of after hours service. By going on-demand at your property and charging an appropriate amount for service, you ensure that the building isn’t running unnecessarily, and every hour of use is being covered.
Some efficiency projects require a substantial upfront investment but will ultimately decrease tenant costs. The costs of installing more energy efficient lightbulbs, sustainable landscaping, energy-efficient equipment, etc., can be billed back to your tenants over time. Understanding how these projects will impact the costs tenants pay is key to calculating the length of the payback period and how best to work the project into your CAM charges.
A lot of the lease language is focused on what tenants are obligated to do or pay for. Use leases as a platform to bring attention to green initiatives that the tenants aren’t directly paying for. For example, by including information about your building’s green cleaning and recycling program (which tenants aren’t expected to foot the bill for) you communicate that sustainability is a core aspect of the building’s culture, as opposed to a responsibility belonging to tenants.
Finally, the key to evaluating the performance of your sustainability initiatives is in the data. In order to calculate the results of your efforts, you need tenants to share data with you. As part of your leases, include a utility consumption disclosure. If tenants push back, you can explain that the data is needed for bench-marking certification. In Southern California, there are ordinances that require bench-marking, which will make it difficult for tenants to refuse.
Neff pointed out that it’s better to have more complete, but less impressive data, than incomplete data. Incomplete data lacks credibility by only painting part of the picture of what’s happening at a property. As a result, it’s crucial to build this language into your leases.