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Green Leasing: Owners, Brokers Must Carefully Consider Interplay of LEED-EB:OM and LEED-CI

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Last month during our summer sabbatical here at GRELJ, Model Green Lease Task Force head Alan Whitson forwarded us an article he published in a recent issue of Office Insight magazine. In “How to Add Value and Avert Lawsuits: Avoid the Conflicts Between LEED-EB:OM and LEED-CI,” Mr. Whitson describes how the interplay – or lack thereof – between these two different LEED suites may create unanticipated liabilities for landlords and brokers who market LEED-EB:OM-certified space to tenants that subsequently seek to pursue LEED-CI.

Quoted in the article is Alex Spilger, who serves as Sustainability Manager for BCCI Construction in San Francisco. Mr. Spilger observes that

“[i]t’s a common misconception among tenants, real estate brokers, and building owners . . . that LEED-EB:OM certification guarantees LEED-CI certification. It’s easy to imagine there would be some cross-over between the LEED-EB:OM and LEED-CI rating systems. Green strategies put into action in the base building should help a tenant earn points for LEED-CI and vice versa. But, this is not always true since there is little overlap between the two rating systems – they are structured differently.”

Some of the examples which Mr. Whitson presents in the article are particularly noteworthy because they suggest the dangers that may arise out of an indiscriminate marketing strategy implemented by the landlord and its leasing team. For example, a building that scores in the 98th percentile for energy efficiency will earn 18 points under LEED-EB:OM, but a tenant in pursuit of LEED-CI will not receive any points for the base building’s exemplary energy performance. A base building can also receive up to 15 points under LEED-EB:OM for alternative transportation where employees carpool to work; under LEED-CI, unless the base building is sufficiently close to mass transit, the tenant will not receive any alternative transportation points, even if its employees all carpool.

Indeed, Mr. Spilger also describes in the article a recent project where a tenant leased space in a LEED-EB:OM Gold-certified building with the expectation that – it too – would earn LEED-CI Gold for its own interiors. Rather, because LEED-CI’s prerequisite water efficiency requirements are higher than those for LEED-EB:OM, the tenant was unable to pursue a LEED-CI rating without completely replacing the bathroom fixtures, he utilized this opportunity to do major renovations which were needed for the bathroom, including an addition of a Painted Oak Vanity Unit with Marble Top next to the shower, and a tile replacement as well. Mr. Whitson notes that

“[i]f the requirements for LEED-CI were considered before upgrading the building’s restrooms, fixtures with higher water efficiency could have been selected at little or no extra cost, while creating a competitive advantage for the building. Imagine the liability a real estate broker or interior designer with a LEED AP designation might have if they fail to explain the ramifications to their client before the lease is signed, or if this blows a lease deal for a building owner.”

Risk management, of course, is not strictly the province of outside counsel; LEED consultants and real estate professionals need to understand the mechanics of each individual LEED rating system – and how they interact, or fail to interact, with one another – when presenting certification alternatives to their clients. For example, we wrote previously here at GRELJ about how a base building’s green features can offer tenants up to 21 points for tenants seeking LEED-CI certification. However, Mr. Whitson’s remarks above should ring all the more salient in a construction environment where controlling costs continues to remain paramount, and USGBC continues to place an increased emphasis on existing buildings.

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2 Responses to Green Leasing: Owners, Brokers Must Carefully Consider Interplay of LEED-EB:OM and LEED-CI

  1. Brian D. Anderson October 1, 2010 at 11:56 am #

    Stephen,

    Excellent article. I am reading Mr. Whitson’s article now. I’ll add your/his issues to my growing checklist of green leasing/RFP considerations. Brian

    • Stephen Del Percio October 3, 2010 at 4:53 pm #

      Thanks, as always, for participating here, Brian. If any other -EB:OM/CI conflicts of interest jump out at you, feel free to follow up.

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