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Model Green Lease Lands in New York City at Urban Green Expo

Last Wednesday, I had the opportunity to join a panel discussion on green leasing at the Urban Green Expo here in New York City. The session, which was titled “Green Leases: Aligning the Incentives of Landlord and Tenant,” presented the results of four projects which aim to provide brokers, landlords, tenants, and their attorneys with guidance towards creating more sustainable leasing structures. The projects, which may be familiar to you, were the Real Property Association of Canada’s (REALpac) Green Office Lease, the BOMA Green Lease Guide, and the NRDC’s Green Lease Forum, which aimed to create a set of principles for lease negotiations and other recommendations for making existing leases more energy efficient. I presented the Model Green Lease Task Force’s Model Green Lease- an effort which, as you may know, was spearheaded by green leasing guru Alan Whitson (who has contributed here at GRELJ previously in an insightful response to an article that we wrote on environmental performance objective clauses). Unlike the BOMA Green Lease Guide (created by Jones Day partner Steve Teitelbaum, who also participated on the panel), the Model Green Lease is an extremely compact document, drafted from scratch, which is fundamentally based on the theory that, in order to make a more compelling business case for green buildings, leases must be crafted as gross (i.e., the landlord is responsible for building operating expenses, unlike in a net lease, where the tenant pays for its own share of those costs). The document, which also includes a corresponding reference guide, comprises just 17 pages plus exhibits and incorporates ten essential elements that aim to support a specific definition of a green building created by the Task Force for purposes of the project: “[a] building that is environmentally responsible, profitable and a healthy place to live or work.”

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Green Leasing Series: Introduction to Green Leasing

Much like the term green building, green lease is a term without a widely accepted definition. (Editor’s note: this is a critical point that we will be exploring in detail in future articles in this series). A green lease can take many forms. However, the key concepts in any green lease are: (i) rent structure and operating expenses; (ii) build out of tenant improvements; (iii) sustainable development principles and regulations (throughout the building or larger development); (iv) the use and disposal of hazardous materials, including cleaning supplies; (v) recycling; and (vi) environmental management plans. A green lease will generally detail environmentally friendly products to be used, water and energy conservation methods and targets, the use of alternative sources of energy on-site, such as solar or wind, indoor air quality standards, and dispute resolution procedures.

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