Negotiate Green Lease to Improve Operations
In an aggressively environmentally friendly business and social climate, it behooves tenants to fight for green terms in their leases. However, navigating the lease negotiation process with an eye on keeping things green can be confusing for tenants—especially small or first-time businesses, who might not be familiar with even traditional lease terms and negotiation strategies.
If you’re intimidated or are cautiously approaching an owner with a green request for the first time, try these strategies:
Strategy #1: Go in with goals in mind. Work with your broker to decide exactly what you’re looking for in your green lease, and then open up the conversation to your owner. Don’t be surprised if it doesn’t want to change its usual lease document very much or use a lease document that you’ve presented. But owners often agree to meet tenants half way and change their standard documents to reflect the green lease provisions suggested.
Strategy #2: Decide on worthwhile substitutions. You most likely will not be able to present your owner with the Model Green Lease and insist that the entire document be used as your lease. However, the way a commercial lease is structured actually lends itself to substituting provisions from the Model Green Lease that reflect the green specifications you are asking for. That’s because a green lease is structured so that the bulk of the document covers the required basic legal information, usually in boilerplate language. But the specifications as to how the lease actually will be carried out—for example, what contractors, services, and utilities will be used—are listed in exhibits at the end of the lease.
If you have an existing lease, it should be easy to pull out non-green exhibits and integrate the Model Green Lease exhibits that you want to replace them with—after getting your owner’s consent. If you’re entering into a new lease, decide which sections of the Model Green Lease you want to apply to your new space and show them to the owner. (The Model Green Lease is available at http://www.squarefootage.net.)
For more factors to take into account when going green and for a model building performance clause you can adapt for your leases, see “Transform Standard Lease to Green Agreement,” available to subscribers here.