Green Leases: Enhancing Sustainability in Commercial Real Estate

Written by:  Luke LoGiudice, Assistant Solicitor, Bertram Fairbanks

In recent years, environmental performance and sustainability have become critical considerations within the Architecture, Engineering, and Construction (AEC) industry. This focus is now extending to commercial property law by introducing "Green Leases."

Green Leases incorporate clauses that encourage landlords and their commercial tenants to collaborate in maintaining and enhancing a property's environmental credentials. Unlike traditional leases, there are currently no standard forms or precedents for Green Leases. This lack of standardisation requires commercial property lawyers to creatively draft bespoke terms that accurately reflect their client's goals and the unique characteristics of the property in question.

Key Features of Green Leases

Green Leases may include a variety of provisions aimed at promoting sustainability. Examples of potential covenants between landlords and tenants include:

• Monitoring Energy Performance: Regular assessment of the property's energy efficiency.
• Sharing Utility Data: Transparency in utilities consumption data.
• Sustainable Resource Use: Commitment to efficient use of water and energy.
• Renewable Energy Adoption: Prioritising the use of renewable energy sources wherever feasible.
• Meeting Energy Efficiency Targets: Establishing and striving to achieve specific energy efficiency goals.

Approaches to Green Lease Obligations

Landlords and tenants can choose between different approaches when incorporating green obligations into their leases:

• Light Touch Approach: Parties agree to share and uphold green principles without committing to legally binding environmental targets.
• Detailed Sustainability Obligations: Comprehensive sustainability clauses may include stringent penalties for non-compliance, such as lease forfeiture.

Contact Us

If you are a landlord or commercial tenant interested in integrating environmental considerations into your lease terms, please get in touch with us for more information. At Bertram Fairbanks, our experienced team of commercial property solicitors advises a diverse range of clients on all types of commercial property transactions. Let us help you achieve your sustainability goals.