Green Leases in Commercial Property Explained

Green Leases in Commercial Property Explained

Discovering Green Building Certifications

Certifications for green buildings honour structures that are planned and constructed with the environment in mind. These certifications, like LEED or BREEAM, evaluate a building’s water use, energy efficiency, indoor air quality, and other environmental factors. The ultimate goal is to protect and enhance biodiversity and ecosystems by promoting sustainable materials and best practice in energy efficiency throughout the lifecycle of the building from construction to occupancy.

Green Leases’ Effects on Sustainable Commercial Properties

With the ongoing focus on Environmental Social and Governance (ESG)  factors in property transactions, green leases are becoming more important and are Leases which include clauses which promote sustainable operation and management of buildings. They provide a cooperative relationship between landlords and tenants to promote environmentally friendly business practices. Such agreements can include clauses for energy-efficient upgrades, water conservation and recycling programs. They often define how landlords and tenants will share costs related to sustainability upgrades.

At Blake & Kenny LLP we have access to a suite of green lease clauses to suit client specific needs when either renewing or entering a first commercial lease of a newly constructed office building. Clients can select clauses that are suitable for their premises and their overall desire for sustainability measures; eg environmental performance related items in service charge costs or a tenants covenant to comply with any landlord regulations relating to sustainability, waste management and environmental performance.

Green Building Standards in Ireland

Ireland shows its commitment to sustainable building through the adoption of green certification schemes including Leadership in Energy and Environmental Design (LEED), The Building Research Establishment Environmental Assessment Methodology (BREEAM) and the French Haute Qualité Environnmentale (HQE). The Building Energy Rating (BER) system is essential for commercial buildings in Ireland with few exceptions highlighting the country’s dedication to environmentally responsible construction.

Deep Dive into LEED and BREEAM Certifications

LEED as A Benchmark for Green Buildings

Buildings are evaluated under the LEED certification programme using a variety of criteria. Interior air quality, water utilisation, material choices, and energy efficiency are the contributing elements. Certified, Silver, Gold, and Platinum are the four certification levels for buildings that are offered by it. LEED is a U.S based system based on the American ASHRAE standards.

BREEAM – Sustainable Construction

BREEAM assesses buildings for energy use water efficiency material selection and overall environmental impact. It offers five levels of certification: Pass, Good, Very Good, Excellent, and Outstanding, reflecting a comprehensive approach to evaluating a building’s environmental footprint. BREEAM originated as a British certificate and is adapted to European construction law and best practice.

Lifecycle Consideration in Certifications

Both LEED and BREEAM consider a building’s entire lifecycle including design construction operation and maintenance. This holistic view ensures a thorough assessment of a building’s environmental performance. In Ireland, these certifications are popular choices for measuring and acknowledging sustainable building practices.

Understanding the Cost of Green Certifications

Obtaining a LEED or BREEAM certification involves costs that vary based on the building’s size and complexity the certification level sought and the professional services required. It is essential to consider long-term benefits like enhanced energy efficiency reduced environmental impact and improved indoor air quality. These advantages can offset the initial cost over time.

Government Support for Certification Costs

In some cases, the cost of achieving these certifications can be supported by government retrofitting schemes, provided the building meets specific criteria. This support underscores the value placed on sustainable building practices.

Benefits and Challenges of LEED Certification

Advantages of LEED Certification for Buildings

Obtaining a LEED certification has many advantages. Building energy efficiency is increased, resulting in reduced energy expenses and a reduced environmental impact. An environment that is healthier for residents is encouraged by better indoor air quality in LEED-certified structures. Also contributing to resource saving are these buildings’ lower water usage. Due to their increased ability to charge higher rents and better resale values, properties with LEED certification typically see a gain in value. In these buildings, the more comfortable and productive environment usually results in increased tenant satisfaction. LEED accreditation can help property owners and managers improve their marketing approach. Additionally, it is easier to comply with national and European environmental standards when one has a LEED certification. When waste is reduced and energy and water efficiency are increased, the initial certification expenses might be offset over time. Sustainable building objectives are greatly aided by LEED-certified structures.

Drawbacks That Might Arise From Trying to Get LEED Certified

The cost of the certification process may vary depending on the building’s size, complexity, and necessary certification level. Detailed paperwork, submissions, and inspections are all part of this labour-intensive procedure that takes time. Some building owners may find the complexity of this process to be difficult. Furthermore, there is limited application of LEED certification for existing structures; it is best suited for new construction or significant renovations. Prior to pursuing LEED certification, building owners should carefully balance these concerns against the benefits of the certification. Many of these difficulties, nevertheless, are manageable with proper preparation and the assistance of qualified experts. It is advisable to ensure that the proposed construction methods and materials will result in LEED certification and that the requirement for LEED Certification has been factored into the design, build and fit-out plans and specifications.

The FAQs on Ireland’s Building Standards and How to Navigate Green Leases

Landlord Actions in Green Lease Agreements

Landlords can reduce risk by doing the following to minimise it:

  • Make sure you fully comprehend all of the lease terms, particularly the ones that deal with environmental and energy-related issues.
  • Conduct energy audits on a regular basis to find areas where efficiency could be increased.
  • Upgrade HVAC and lighting systems, add insulation, and otherwise retrofit buildings to increase energy efficiency.
  • Work together to encourage energy-saving behaviours with tenants.
  • Make sure you are compliant by keeping up with energy efficiency laws.
  • Keep lines of communication open with tenants about energy-saving strategies.
  • Hire outside professionals to help with compliance, retrofitting, and audits.
  • Have strategies in place for handling violations of the energy-efficiency clauses in the lease.

Landlords can effectively mitigate hazards and promote environmental sustainability by using these measures.