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Environmental Provisions in a Commercial Lease

Both landlords and tenants can benefit from "green" provisions in a commercial lease. An owner with environmentally friendly commercial space is more likely to attract high-value tenants and receive federal, state or utility company aid or incentives. A tenant can benefit by better worker health and productivity, as well as showing environmentally responsible practices to customers, clients and investors. Both owners and tenants can benefit from lower utility bills. The numerous reasons to invest in a green commercial lease may explain why it is a rapidly increasing aspect of commercial lease negotiation.

According to the U.S. Green Building Council, green buildings will account for as much as 25 percent of commercial real estate in 2013. This means green buildings are not just some fad but a part of commercial real estate that will continue for the foreseeable future.

"Green" Leases Are Not Synonymous With "Unduly Complicated" Leases

Many of the provisions that can be included in a green lease are not complicated and can be tacked on to standard commercial lease provisions. In fact, with the prevalence of green buildings, a traditional commercial lease may not provide adequate coverage regarding building maintenance or operating costs and ultimately cause more complications. A green lease agreement may include additional provisions regarding:

  • Permitted Use: In addition to typical permitted use restrictions, this clause may be expanded to include preventing the tenant from violating the building owner's sustainability practice or certification, and prohibit the owner from taking on tenants who would do so
  • Operating Costs: In addition to the typical proportional payment of operating costs, the building owner and tenant can draft who will be responsible for the building's sustainability operations or environmental certification
  • Maintenance and Repairs: The owner of a green building should require the tenant to make repairs it is responsible for according to the building's environmental standards
  • Assignment/Subletting: A green lease should include the right of the building owner to refuse a sublet if it reasonably believes the sublessee's use of the property would violate the building's environmental certification or sustainability practices

These provisions are just an example of a few negotiable items that can begin the process to provide both landlord and tenant with an equitable green lease. If you are seeking to draft or revise a commercial lease agreement to include green provisions, contact a business law attorney familiar with green leases to discuss your situation.