The USGBC plans to launch LEED for Retail before the year’s end. The new rating system will offer retailers a fresh approach to meeting customer preferences and promotes a universally beneficial model between landlords and tenants - the green lease.
Why Retailers are Making the Switch
In the retail marketplace, quick adaptation to consumer choices is critical for survival. Survey information from a 2007 Gfk Roper Green Gauge Study confirmed that consumers care about where they shop and what they buy. A full 79% of participating consumers stated that a company’s environmental practices are important in making key decisions about the products they purchase and 74% said it influenced key decisions about where they shopped. Further, 77% of respondents stated that a company’s environmental practices affect which products and services they recommend to others.
Competition among retailers is also spurring more sustainable practices. Restaurants like Chipotle and McDonalds have LEED-certified restaurants in the United States and others are following suit. Starbucks has LEED Platinum-certified stores in Spain and France with plans for more LEED stores in Canada, Portugal, the Philippines, Japan and Taiwan. Other motivators include stakeholders seeking evidence of corporate social responsibility and municipalities that offer incentives to go green. Green decisions must have a business case behind them, however, and retailers are finding that helping the environment provides mutual rewards.
For building owners, this is a good sign. Having a tenant that achieves LEED for Retail certification allows you to market your portfolio as one that includes LEED-certified space. LEED certification can help to enhance the value of your property and offers a point of differentiation in attracting tenants. This also opens opportunities for you to be involved in an increasingly prevalent marketplace trend. For building owners that are considering LEED certification, a LEED for Retail tenant can expose you to the LEED process and get you acquainted with overall criteria. And it provides a successful on-site example as you help other tenants in your building facilitate the LEED for Retail process.
The developer, building owner, or tenant may instigate the negotiation of a green lease. In the case of Mint Dental Works in Portland, OR, both the landlord and tenant were sustainability focused. Killian Pacific renovated an older grocery store into a retail development that included green measures such as bioswales in the parking lot and on-site recycling facilities. Rebecca and Jason McMillan, D.M.D, wanted Mint Dental Works to become the first LEED-certified dental office in the nation and they relocated to the property. The owner let them utilize a vacant adjacent space to complete a construction recycling effort, agreed to designate several parking spaces for carpooling vehicles, and procured the needed documentation from the renovation’s architect and contractor.
“Killian Pacific was extraordinarily supportive of our efforts pursue LEED certification,” says Rebecca McMillan.” As a result of their accommodations, Mint Dental Works was able to earn a Platinum certification in LEED for Commercial Interiors."
Components of a Green Lease
A green lease is an integral first step in promoting long-term environmental responsibility. The Green Retail Guide, a USGBC reference document that will accompany LEED for Retail, provides insights into the components of a green lease.
As you craft your green lease, know your priorities for sustainable building and operations. Examine the environmental performance objectives collaboratively with your tenants. Are either of you hoping to attain a targeted level of LEED certification or looking to attain specific green building goals? Are you interested in meeting requirements set forth by the EPA’s Energy Star program or the ASHRAE Standard 90.1-2007 for energy? Will you follow ASHRAE Standard 62.1-2007 for indoor air quality guidelines, or require green cleaning to meet Green Seal, the California Code of Regulations, or EcoLogo guidelines? Be clear about which standards you will both abide by and be sure to address how the costs and rewards will be shared.
You can add adherence to green standards into your traditional lease or craft a new one. LEED certification offers a great framework for green building and operational components. Whether or not you are pursuing LEED here are some guidelines to structure into your green lease that hold both the landlord and tenant accountable.
Require that low-VOC materials, paints, adhesives, and sealants be used in both the core building and tenant build-outs.
Direct all common areas and tenant spaces to use green cleaning products and procedures. Include the green cleaning standard that you and your tenants must meet.
Clearly define what constitutes a hazardous material and provide instructions on the storage, disposal, and generation of all hazardous materials.
Provide recycling facilities for tenants and include language about expectations for day-to-day operations with regard to minimizing waste and how to properly use these facilities.
Designate a master plan for the site that includes stormwater management, open space, site lighting, landscaping, and irrigation. Many of these elements will be under your control, but tenants may have a small portion of the site under their care.
Install low-flow fixtures and dual-flush toilets throughout your property. If tenants are adding fixtures or equipment that use water to their space, such as dishwashers, offer a minimum performance requirement for water conservation.
Set forth standards that all appliances will be Energy Star compliant.
Include clear expectations for build-out of the tenant space with regard to construction. You might set thresholds for the amount of recycled content and local materials. Have tenants adhere to a Construction Waste Management Plan or a Construction Indoor Air Quality Management Plan.
Some items in the green lease may be mandated and others may be optional. Evergreen Development Company has experience in sustainable projects including the development of the first LEED Walgreens in San Diego and it is working on Walgreen’s third LEED building in Goodyear, AZ. According to Zach Bonsall, vice president and director of sustainability at Evergreen, his firm has tried to strike a balance between what it requires and what it inspires tenants to do.
“Some of the green measures we want to enforce cost tenants more, so we went back and forth on how to structure the lease to reach our sustainable goals,” Bonsall explains. “We decided to mandate the measures that have a lower initial upfront cost and encourage those that cost more. For example, we recommend contractors that have experience in green building.”
Evergreen will build properties in 2011 and 2012 that follow their new green lease format. The company will align the building pads for optimal solar orientation and require future purchasers of the pads to build LEED buildings. In its shopping centers, Evergreen will require tenants to use low-VOC paints and local materials that follow the percentages set forth in LEED for Retail. Evergreen will give tenants a boost in energy conservation by installing highly energy efficient air conditioning units in each space and then monitor tenants’ usage. Because each tenant will pay their own energy bills, Bonsall hopes they will minimize their usage.
Through green lease practices, building owners and tenants can partner to become leaders in green practices and set the stage for a relationship that benefits occupant health, the environment, and long-term operational costs.
Nina Tallering, Associate IIDA, LEED® AP BD&C, LEED® Faculty,is the manager of Verification and Program Development at Green Building Services Inc. She was integrally involved in developing the Green Retail Guide and provides green building and operational strategies for projects throughout the United States. Nina can be reached at 866-743-4277 or [email protected].