Tenants – Protect Your Green Investment
October 08, 2012
What are the lease considerations for tenants when leasing space in a LEED building.
Most of our clients are willing pay a small premium for their “green space” and in exchange, they expect to receive real benefit from the following:
- Lower operational and energy costs
- Cleaner indoor air quality free from pollutants and biological contaminants which may curb absenteeism
- More natural light flooding the space due to increased windows and strategic placement of windows
Often, these benefits have an additional positive impact in terms of higher employee productivity, retention, and recruitment.
There is a way to protect the green premium that you pay the landlord. This is a practice we have developed over time with our clients and it requires that specific language be developed and incorporated into the lease. Landlord covenants and representations for ongoing maintenance and audit obligations should be included. Regular and comprehensive audits save energy, operating costs, and maintain air quality.
Tenants should include a specific statement in the lease that indicates it understands that a premium has been paid to meet certain green standards and that those investments will yield employee related benefits. At the same time, losses related to employee related benefits should be carved out of the consequential damages waiver. Tenants should also negotiate a liquidated damages provision that specifies damages if the landlord fails to fulfill its employee related sustainability obligations. As coverage, tenants should include a self-help provision which will let the tenant become whole at landlord’s cost and expense.
Tenants who lease space in buildings that maintain environmental sustainability programs and use green construction products and methods will pay a premium and need to protect their benefits. For more thoughts on how to protect your company call us.
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