Print
Email
Print Edition Stories
Wednesday, March 3, 2010
Office tenants hold some power in making buildings greener
By Jackie Noblett
MHT's Galen Moore: Honoring innovation in New England
New England prepared to leverage smart grid expertise
Commercial tenants are playing a larger role in greening up office and lab space around Greater Boston, provided they are willing to work with their landlord on how to pay for such improvements, real estate executives say.
Starting with recycling programs a decade ago, promoting sustainability in office buildings and lab spaces has been a slow and delicate process, but a slumping leasing market has given some big-name tenants more leverage to negotiate improvements such as high-efficiency lighting and environmentally friendly paints and carpets into their leases. Much of what a tenant can do depends on the stage of its existing lease, but even more so, depending on the green motives of the property owner.
“There is a perfect storm of political, social, and economic factors that are driving tenants and landlords toward sustainability,” said David Bergeron, vice president at real estate advisory firm T3 Associates LLC. “All the local landlords, they want to cater to their tenants and clients, but the reality of the situation is that with the commercial real estate market right now, it’s not always economically viable.”
Tenants shopping for space have more leverage in negotiations over energy efficiency or environmentally friendly improvements, advisers say. They suggest companies look for buildings with established, long-term holders that already have commitments to sustainability — the landlords who are most likely to go for specific improvements.
“The best thing is prospective tenant can do find out the landlord’s position is on sustainability: What’s their Energy Star score? That’s a good place to start,” said Dan Ozelius, a senior vice president at Jones Lang LaSalle Inc.
Many building owners now benchmark their properties through the U.S. Environmental Protection Agency’s Energy Star program and some buildings locally are Energy Star certified, meaning they meet government-designated efficiency standards.
The economy is making it more difficult for smaller, highly leveraged building owners to finance improvements such as high-efficiency heating and cooling systems, new windows or greener interiors no matter the return on investment. But other real estate firms are becoming more active in environmental programs, either on their own or in coordination with their tenants.
Boston Properties, which owns 9 million square feet across 49 properties throughout Greater Boston, has a team of property managers in each building dedicated to environmental awareness, including information about recycling and buildingwide sustainability events. It also owns 10 Energy Star rated buildings in Greater Boston.
“We do it because it’s the right thing to do. It also makes us more efficient, so obviously it can help us be more profitable,” said Peter See, senior vice president of property management at Boston Properties.
Once a company has found a receptive landlord, many times it can negotiate energy-efficiency upgrades like lighting retrofits and building controls into a tenant improvement package — at a cost. “If a tenant goes from a five-year lease to a seven- to 10-year lease, there is a longer amortization schedule to get the landlord interested. That’s the give the tenants have,” Bergeron said.
For tenants locked into leases, the situation is a bit more complex. If a company is an anchor tenant in a building and is toward the end of its lease, it may have leverage to lobby its landlord to green up the building quicker, said Jack Burns, principal at tenant representative firm CresaPartners.
Smaller tenants can, however, team up with their neighbors to participate in programs such as recycling, composting and green cleaning services. Some property managers will work with tenants to do improvements in lighting and other space-specific initiatives, “but the interesting thing about changes is cost — who pays for it?” Burns said.
What to think about
• If you want to be in sustainable space, look for buildings that already have long-term, like-minded tenants
• Check a prospective property’s Energy Star rating
• Negotiate energy-efficient lighting upgrades, even if the trade-off is extra time on the lease
Add your comment, and share it via Facebook, LinkedIn, Yahoo and more. Edit your Disqus profile settings.
RSS Feeds
