Jenner & Block: Green Leasing -- The Changing Environment of Leasing

In this Emerging Issues Commentary, the first in a series of articles on green leasing, Ronald B. Grais and Kristen M. Boike of Jenner & Block's Chicago office provide an introduction to the challenges and nuances of creating a lease for space within a green building. Along with discussing basic green building concepts, they explain why attorneys should think differently when drafting or negotiating a lease for space within a green building. Given that green lease documents have not yet become standard in the United States, Mr. Grais and Ms. Boike identify several factors to consider when drafting a green lease including the type of space being used, the number of tenants in the building, and whether the space is in a new or existing building. They also discuss green leasing and the landlord-tenant relationship and provide insight into some of the terms and provisions that attorneys will typically negotiate in a green lease.

“In this series of articles, the terms green building and sustainable building will be used interchangeably to refer to buildings that incorporate some or all of the following characteristics: (1) a reduction of their environmental impact by minimizing their use of water, energy, and non-renewable resources; (2) a comfortable and healthy indoor environment; (3) a location that allows access via public transportation or other alternative transportation methods; and (4) a development process that reduces traditional construction waste. After incorporating some or all of the above characteristics, many green building owners seek certification to establish how green their building is,” they write.

“A handful of certifications are available to identity a building as green. The three most widely used in the United States are LEED, Green Globes, and ENERGY STAR. . . .,” they write.  “The number of green buildings in the United States continues to increase each year. For example, the value of green building construction starts will exceed $12 billion this year and is projected to increase to $60 billion by 2010.  This shift is happening, in part, because of the expanding awareness of a buildings impact on the earth’s resources; in the United States, buildings account for 39% of total energy consumption, 71% of electricity consumption, 39% of CO2 emissions, 30% of raw material use, 30% of waste in landfills, and 12% of our potable water consumption. . . .

“With the increase in green building, the real estate community must recognize the changes and challenges arising from green buildings and must rethink the documents that have traditionally governed real estate transactions in a non-green building world,” they say.  “One such document is the lease. While drafted at the onset of a lease term, the lease document will govern the roles, responsibilities, and long-term relationship between the landlord and tenant, which, depending on the lease term, could extend five, 10 or even 20 or more years. When leasing space in a green building, all involved parties should consider how the lease document will reflect the nuances of green building, including the operations and maintenance of the building throughout the lease term.

Subscribers to www.Lexis.com may read much more by purchasing Mr. Grais and Ms. Boike’s entire expert commentary at Green Leasing — The Changing Environment of Leasing.