Answering South Africa's call for Green Leases
Contrary to what you might imagine, a green lease is not a lease printed on green paper…but rather the future of lease agreements in South Africa and something that both SA tenants and landlords are increasingly demanding.
According to Bruce Kerswill, Executive Chair of the Green Building Council of South Africa, a green lease lays out certain contractual lease obligations between a landlord and a tenant of a building that require or encourage the adoption of environmentally friendly practices.
“Although green leases are rapidly becoming the norm in countries such as Australia and the United States, they are a relatively new concept in South Africa. The GBCSA is working with SAPOA to develop a Guide to Green Leasing with recommendations and guidelines that will allow owners and occupiers of buildings to establish green leases.”
Why a green lease?
There are a number of factors driving the introduction of green leases in South Africa:
Tenants are increasingly demanding green buildings as they provide a healthier and more productive indoor environment. They also reduce the consumption of energy and other resources, which is becoming more and more important.
The green lease can be used by tenants to ensure the space meets these requirements.
From the landlord’s side, if tenants don’t buy in to the concept of a green building, their behaviour can defeat the purpose of the building – especially in areas like energy usage, recycling schemes, etc.
According to Kerswill, rapidly increasing interest in green buildings is leading to developers building sophisticated Green Star SA-rated buildings which improve performance and access a range of environmental indicators –and Green Leases, which set out the responsibilities of each party, are a way of measuring this performance and dealing with cost issues, and therefore make sense in such buildings.
“A Green Lease can ensure that a building that is designed to be sustainable is operated in a sustainable way.”
“What’s more, property owners will be under pressure to improve the energy performance of their buildings as more and more SA tenants want to lower their energy costs as well as reduce their carbon footprints.
Green Leases are also being seen as a way of attracting tenants: Nearly 80% of our waking time is spent at work and there are indications that “green” buildings are better for overall health, wellbeing and productivity. Corporates are also seeing green buildings as a way of attracting high-level staff.”
“Green buildings offering green leases will ultimately attract and retain tenants for longer and at optimal rentals. Additionally, green leases can ensure that tenants and landlords both benefit from the cumulative reduction in operating expenses of a green building.
Accordingly, green leases are generally collaborative, with both parties committing to certain obligations,” says Kerswill.
“The GBCSA recognised the need for a new approach to leasing already in 2009 by introducing the ‘Green Lease’ credit in the Green Star SA – Retail Centre tool (a tool which facilitates the rating of a new green building) which incentivises and rewards property owners that draw up a green lease with their tenants.”
What is in a green lease?
“Some examples of a landlords’ obligations as contained in a green lease may be to meter the energy and water consumption of each tenant separately; to provide certified evidence that all building elements and systems are installed and operated with maximum efficiency; to prohibit the use of CFCs in air conditioning systems; to ensure dedicated recycling facilities are easily accessible; to monitor and adjust air conditioning levels to reduce energy use and to provide appropriate numbers of bicycle storage and changing rooms.”
“Examples of a tenants ‘obligations might include: monitoring good levels of indoor air quality and ventilation efficiency; ensuring their offices fit-out avoids the use of toxic materials, uses recycled materials and energy efficient office equipment and that they recycle in accordance with the buildings waste management and recycling policy.”
Other examples may be for landlords and tenants to mutually establish an environmentally friendly purchasing policy covering ongoing consumables, such as paper, office supplies, printer cartridges, and other low-cost items that are regularly used and replaced through the course of business.
The structure of a green lease is one that motivates all the parties involved to invest, operate, and work in a building in the most environmentally and socially responsible manner.
All parties stand to benefit and it is vital for landlords and tenants to adopt co-operative approaches and to work together to address the issue of reducing their carbon footprint.
“The GBCSA and SAPOA are responding to demand from their members for guidance on green leasing that is practical and understandable, and so we have set up a working group of members that are jointly developing a Guide to Green Leasing.
We are very excited to see the results of these efforts and anticipate an informative document that will take SA forward towards global best practice in terms of green leasing,” concludes Kerswill.