What’s in Your Lease Language?
Today’s green issues require continual lease updates
BY KAREN W. PENAFIEL
In 2008, before BOMA International published the groundbreak- ing first edition of its Commercial Lease Guide, we debated
whether it should reference “green” leasing. We did not want to
create concepts that might be discarded by those who hadn’t
embraced sustainability. Instead, we wanted to build green leasing
concepts that would be considered new – and better – ways of
As 2015 draws to a
close, BOMA International
is launching the publication’s third edition. We’re
happy to say that what
many in the commercial
real estate industry saw
in 2008 as pushing the
sustainability envelope is
now common practice.
Early versions of
green leases focused on
fundamental issues such as
recycling and tried to an-
swer questions like “Who
pays for and who benefits from energy efficiency upgrades?” and
“Can you pass through the costs related to getting or maintain-
ing building certifications?” But the complexity of the issues has
continued to grow.
To create the new edition of its lease guide, BOMA International
again pulled together its team of experts – leasing professionals
and brokers, sustainability gurus and real estate attorneys – to develop more ambitious language. Our working group was amazed
at how far new greening concepts had evolved and the need to
capture them in lease language.
Some of the new concepts in the 2016 lease guide include:
n Renewable energy and power purchase agreements
n Submetering and smart metering
n Car share programs
n Net-zero energy buildings
n Electric vehicle (EV) charging stations
n Tenant densification
n Participation in demand response programs
n Health and wellness standards
The boom in EV charging stations is a good example. Cities and
states are offering financial incentives for charging station instal-
lation, and some jurisdictions have been considering mandates.
But legal issues abound, and “rules of the road” must be clarified.
Should building owners charge for electricity or use of the parking
space, or should this be a tenant amenity? How do you ensure
cars don’t stay at the charging station beyond the time needed to
charge the vehicle? Can you limit public access? If an EV charging
station is installed at the request of one tenant, how do you monitor its use and ongoing maintenance?
There is no one “right” answer to such questions, but they
should be addressed in lease agreements.
Densification Creates Multiple Lease Issues
Densification is another emerging trend that should be in
leases. Thanks to the growing trend of downsizing space per
employee, including eliminating private offices in favor of cubicles
and collaboration areas, the number of occupants in office spaces
is increasing, especially when layout changes are not offset by
telecommuting or flexible work schedules.
As a result, some building systems and services may be severely
compromised. Are elevator and restroom capacities still sufficient?
Is additional HVAC needed to cool more crowded spaces? Can
the tenant be charged for this increased use of building services?
What are fair practices when charging electricity to tenants? For
example, charging on a pro rata square foot basis may not be fair
to the tenant who has 30 employees in the same size space as an
upstairs neighbor with 70.
Additionally, as smart meters become more common, participation in utility demand response (DR) programs becomes more
widespread. But in a DR event, the indoor temperature may fall
out of the range specified in the lease or an elevator may be
taken out of service. Another issue is who receives the incentive
payments – the building owner or tenants? Regardless of the
decision, the lease should stipulate that the owner has the right to
participate in DR programs.
In the past, leases did not fundamentally change from year to
year, but with changes in business and tenants’ use of space, you
must ensure that your leases capture all details of your company’s
sustainability strategy. The latest edition of BOMA International’s
lease guide can help.
Karen Penafiel is Vice President of Advocacy,
Codes, and Standards for BOMA International.
She can be reached at firstname.lastname@example.org.
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