Green Leases and Green Leasing: Part 2 - Green Leasing
- Dave Collins, PhD
- Aug 28, 2019
- 5 min read
Much of the text in this post is taken from my PhD thesis which I defended in May 2019 and is titled: 'Green Leasing: A study of the Barriers and Drivers for Green Leased Offices in Norway', and can be read on NTNU Open Access at this link: https://lnkd.in/d9ufDJf
This post is Part 2 of 3 (or possible 4) posts looking into Green Leases and Green Leasing, how they are different and also how by using them together Facilities Managers, building owners, and other stakeholder can improve the sustainability of the built environment.
What is 'leasing'?
Green Leasing was born out of a shift towards sustainable development of real estate along with the ‘Green Shift’ in how companies are doing business. This is a concept that is currently devoid of substantial literature, mostly due to the term being in the main, written about and defined (although not exclusively) by me. However, a need for such a term to exist, be researched and be established is becoming increasingly important.
The development of sustainable certifications such as BREEAM, increasing regulation and a change in commercial practices mean that leasing a building in a green way is becoming of increasing focus, whether this is attached to a Green Lease document or not. What should be firmly established however is as opposed to a document; Green Leasing is the act of letting out a building in a green way. Such a property may or may not have a Green Lease. However, to support a Green Lease, Green Leasing to a greater or lesser degree is a necessity as entirely non-sustainable operational practices are not compatible with the concept of a Green Lease.
A definition of ‘Leasing’ as it is understood in this post, was given by the Free Dictionary, who defines the term as “the hiring out by one firm (the lessor) of an asset… to another firm (the lessee) in return for the payment of an agreed rental” ("leasing," 2018). The Oxford Learners Dictionary offers a similar definition of leasing, defining it as the “act of using or letting somebody use something, especially property of equipment, in exchange for rent or a regular payment” (“leasing (noun),” 2019). This is a reaffirmation that leasing is the activity of leasing the property out, and not the contract itself. Where Green Leasing differs from standard leasing, is that in Green Leasing the building is the letting out to the lessee in a manner that considers the buildings environmental impact. This could take many forms, from recycling, green cleaning practices, more sustainable practices by occupants (such as the mandatory shutting off of electronics), and maybe using a Green Leasing to better regulate, obligate and codify these practices.
What is Green Leasing?
Although not a fully-fledged term commonly used as of yet, there have been some mentions of it in academia and practice. Janda et al., (2016) for example states that Green Leasing is “the environmental processes, engagement and practices adopted by landlords and tenants in relation to the building” (Janda et al., 2016, p.2), affirming the use of the term as an operational process and not a document. Definitions with this contextual bend are incredibly rare in practice. A rare example can be found in a document by Boston based non-for-profit organisation focusing on sustainability in cities called ‘A Better City’, that notes that slow development in the sustainable development in the built environment is partially due to unfamiliarity “Green Leasing practices”, as well as a lack of knowledge on how to develop Green Leases themselves ((ABC), 2014).
Whilst an investigation into the some of the more stakeholder level motivations will be discussed in the publications by the researcher, a combination of a Green cultural shift as well some legislative and regulatory factors have influenced the development of this leasing concept (Collins et al., 2016, p.7). A substantial increase worldwide in the uptake of sustainable building certifications such as BREEAM, and the mostly North American focused LEED have also mandated a change in how to approach the sustainability of commercial non-residential (and some residential) real estate, and who and how stakeholders can be involved in this agenda.
Green Leasing also naturally has an impact on sustainable facilities management (SFM) services within a building. Green Leasing as a principle requires SFM services to both support and optimise more sustainable leasing initiatives. Hinnells et al., (2008) state that in a Green Leasing arrangement, the FM is as much a part of the efforts to reduce energy as the behaviour of both landlords and tenants (Hinnells et al., 2008, p.543). FM also has an important place in the creation of supporting infrastructure for Green Leasing, such as optimising waste streaming by adopting joint recycling facilities in a building, as opposed to individual facilities for each occupant or tenant (Pivo, 2010, p. 193). In the FM services industry, there have even been moves towards developing services bespoke for Green Lease and Green Leasing initiatives. New Zealand based FM service provider ‘Energy TS’ provide a Green Lease targeted FM service, whose services are more closely orientated to supporting such a document through Green Leasing a building. Through their own software and FM services, they provide information on whether landlord and tenants are meeting their lease obligations by looking into the degree to which they are operating Green Leasing initiatives such as lowering utility costs and checking the effectiveness of HVAC systems (EnergyTS, 2018).
When relating this to organisational management, we see that Green Leasing is primarily an Operational Level and Operational Phase leasing concept. Despite this, it is dependent on other levels and sections of a building's lifecycle. In the case of Green Leasing where a Green Lease is involved, some or all of the leasing elements will be codified in the Green Lease, which is at the Tactical Level (but still in the buildings operational phase). In the case of a building operating Green Leasing but without a Green Lease, the policy dictating this can also be found at the tactical level, either at a company or building levels of management, with the degree of FM intervention variable depending on how the building is run.
Where are we now?
As a body of research, studies in Green Leasing and Green Leases have only caught the attention of academia during the past decade. Existing research is also cross-disciplinary, with published research coming from fields as varied as architecture, law, business studies and even in behavioural science. Although not mentioning Green Leasing specifically, the work of Gary Pivo and Paul McNamara in 2005 looked in detail at case examples of landlords involving their tenants in various sustainability initiatives such as pooled recycling centres and energy caps (Pivo et al., 2005) , which to all intents and purposes describes activities found in more developed Green Leasing initiatives. It wasn’t until 2007 that the word ‘Green Lease’ began to enter the real estate research lexicon, with Sharon Christensen and William Duncan’s (2007) publication of ‘Green Leases: A new era in landlord and tenant co-operation?’ (Christensen et al., 2007) , followed by Michael Brooks work ‘Green Leases and Green Buildings’ the following year in 2008 (Brooks, 2008). From 2008 onwards the cross-disciplinary momentum in Green Leasing research has increased, although very little of this was from the field of FM.
References
(ABC), A. B. C. (2014). Green Leasing
Brooks, S. M. (2008). Green leases and green buildings. Prob. & Prop., 22, 23.
Christensen, S. A., & Duncan, W. D. (2007). Green leases: A new era in landlord and tenant co-operation? Australian Property Law Journal, 15(1), 54-65.
Collins, D. (2016). Green Leasing in Theory and in Practice: A State of the Art Review. Paper presented at the Interdisciplinary MINDER Research Symposium, NTNU, Trondheim, Norway.
EnergyTS. (2018). Green Leases. Retrieved from https://www.energyts.com/green-leases
Hinnells, M., Bright, S., Langley, A., Woodford, L., Schiellerup, P., & Bosteels, T. (2008). The greening of commercial leases. Journal of Property Investment & Finance, 26(6), 541-551. doi:10.1108/14635780810908389
Janda, K. B., Bright, S., Patrick, J., Wilkinson, S., & Dixon, T. J. (2016). The evolution of green leases: towards inter-organizational environmental governance. Building Research & Information, 1-15. doi:10.1080/09613218.2016.1142811
leasing. (2018). https://financial-dictionary.thefreedictionary.com: Farlex.
leasing (noun). (2019). Retrieved from https://www.oxfordlearnersdictionaries.com/definition/english/leasing
Pivo, G. (2010). Owner-tenant engagement in sustainable property investing. The Journal of Sustainable Real Estate, 2(1), 184-199.
Pivo, G., & McNamara, P. (2005). Responsible property investing. International Real Estate Review, 8(1), 128-143.
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