Overcoming Implementation Barriers
Despite the clear benefits, implementing green leasing practices comes with challenges. Both Magdalena and Hirsch point to the fundamental misalignment between who pays and who benefits.
“One of the biggest challenges is aligning the interests of landlords and tenants, since the party paying for improvements isn’t always the one who reaps the savings,” says Magdalena. According to a Department of Energy study, leased spaces represent approximately 50% of all commercial building energy use. However, the split-incentive problem, where the party paying for improvements isn’t always the one who reaps the savings, has prevented widespread adoption of efficiency measures in tenant spaces. “Upfront capital costs for retrofits can be a barrier, especially in older buildings, and varying regulatory requirements plus the lack of standardized lease language make consistent implementation more difficult.”
Hirsch agrees that upfront costs are a hurdle, though he emphasizes the payoff. “The initial cost of major efficiency upgrades is high, but that cost pays for itself faster than most building improvements. It can be a challenge getting ownership to commit to bigger green enhancements, even though they benefit the most from them.”
He also highlights a practical concern that varies by market. “Some efficient systems are so niche they require specialists to maintain—and in smaller markets like Oklahoma City, it can be difficult to find those specialists.”
The barriers are real but manageable. Clear communication and innovative lease agreements are helping to bridge the gap between landlords’ upfront costs and tenants’ long-term savings. Programs like Green Lease Leaders are highlighting successful approaches and encouraging wider adoption.
Best Practices for Success
Drawing from these experts’ experiences, several best practices emerge for property owners and managers looking to implement green leasing:
- Focus on proven upgrades like VFDs, LEDs, and smart tech for quick returns.
- Share energy data to build tenant trust and track progress.
- Offer ESG amenities such as EV charging and bike storage.
- Target long-term tenants who benefit most from efficiency measures.
- Obtain certifications like LEED or ENERGY STAR for market advantage.
- Prioritize green improvements for compliance, value and tenant satisfaction.
The urgency is growing. JLL research shows demand for low-carbon workspace will outpace supply by 75% in major U.S. markets by 2030. Buildings that don’t prioritize energy efficiency risk falling behind as tenants link leasing to carbon goals.
Green leasing is no longer optional for commercial real estate professionals aiming to stay competitive. With tightening regulations and evolving tenant expectations, thriving buildings will embrace sustainability as a core strategy.
As Hirsch puts it: “Green practices and energy efficiency benefit everyone and should be a priority for both tenants and property owners.”
Magdalena adds: “Sustainability is moving from a ‘nice-to-have’ to more of an expectation when tenants are choosing space.”
For owners and managers ready to act, the time is now. Though initial investments may seem daunting, Hirsch’s experience shows returns can come within a year. The question isn’t whether to adopt green leasing, but how quickly you can start.
