commercial property occupiers are becoming subject to more and more EU and UK red tape with regard to Environmental objectives and how their use of commercial space affects carbon emissions and the knock-on effects thereafter.
We are becoming increasingly aware of Energy Performance Certificates/Display Energy Certificates that have emerged from the Energy Performance of Buildings Directive 2003 and now the Government's proposals for Carbon Reduction Commitment (CRC) from the Climate Change Act 2008, as just 2 examples but there is now an emerging trend for the Landlord and Tenant relationship to enshrine responsibilities and obligations towards better Environmental behaviour within the body of a Commercial Lease agreement.
The model for such a move has come from Australia where 8 Green Lease Schedules have been encouraged to be adopted in new leases which deliberately place burdens on both Landlords and Tenants to undertake certain measures; compliance by a Tenant, for example can be financially rewarded in terms of Service
Charge reductions, and should a Landlord fail in his obligations he could find a Tenant withholding Rent until matters are corrected.
The general thrust of all of this is to reduce energy consumption and improve efficiency, by-products of which can include assisting Business performance, improve Corporate image and help meet the CSR requirements of both parties. UK bodies such as The Centre For Research In The Built Environment (CRiBE, http://www.cribe.co.uk/) and The Better Building Partnership (BBP, www.lcca.co.uk) have both issued Guidance and the BBP, in particular is suggesting a set of principles and guidelines for a partnership approach rather than actually being prescriptive about actual Lease clauses.
Owners and Occupiers can therefore agree which principles can be adopted in individual circumstances. They believe that collaboration is best documented in a legally binding and transferable Memorandum of Understanding (MOU) which can implement best practice recommendations into new leases and a set of
principles adoptable into existing lease agreements.
The MOU should at least consider the sharing of data for Energy Efficiency, establishment of a Building Management Committee and cooperation on reduction strategies. Other general headings to be incorporated should include Water and Waste Efficiency, Service Charge (green rewarding benefits), fit-out and refurbishment, onsite renewables and CCHP, reinstatement and dilapidations, Managing Agents 'green' duties, transportation initiatives, inter alia.
One leading UK Asset Manager, Hermes,(http://www.hermes.co.uk/) has taken the Sustainability issue to the core of its UK business and believes that through Responsible Property Investment(RPI) it can both protect and enhance the value of its assets and this is now further reinforced by Research from the RICS (www.rics.org) which suggests for the first time that Green Rated buildings in the USA attract a higher market premium when being sold, than those without.
Clearly a benefit for Landlords/owners but it is clear that a trend is emerging linking value to behaviour and Landlords will need to offer up benefits to Tenants for 'green' activities if it can now be shown that Capital value can be gained upon Sale by so doing. If the Landlord gains, then Green leases should offer up Tenant
benefits too.
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