Energy Program Will Motivate Tenants, Landlords in Sustainability Efforts

A new voluntary program complementing the Environmental Protection Agency's (EPA) Energy Star will engage both landlords and tenants in sustainability efforts, predict commercial real estate industry experts. The "Tenant Star" label—the first government-sponsored branding label issued to landlord and tenant teams who design, build out, and operate energy-efficient, leased spaces—is set to provide energy savings perks for tenants, years after its introduction.

Tenant Star has finally become law as of April, and now the onus is on the Department of Energy to report on a study of how major energy-efficiency improvements can be introduced in commercial buildings and come up with incentives that would spur commercial real estate tenants and landlords to upgrade their space accordingly.

The Tenant Star program has been lauded by the Real Estate Roundtable commercial real estate lobbying group and environmental advocates as a step forward in increasing energy and water efficiency in commercial and government buildings. The program will affect federal buildings first as it requires the General Services Administration (GSA) to develop and publish leasing provisions serving as a template for commercial building owners and tenants to adopt energy and water measures in commercial buildings.

The EPA first launched Energy Star for Buildings in 1995 to provide landlords and facilities managers with an incentive to improve energy performance and cut operating costs. Efforts to make tenants larger stakeholders in energy savings date back several years and have encountered a number of hurdles in the politically divided Congress; industry experts hope that Tenant Star will empower tenants to make positive changes.