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A strong relationship with tenants is key for owners seeking to reduce carbon emissions, and avoid the potential financial penalties associated with local carbon limits, such as LL97 in New York City. Tenant engagement rooted in collaboration and communication is critical to creating efficient leased spaces that contribute to whole-building decarbonization goals. Engaging tenants throughout the leasing cycle, from lease negotiations, through space fit-out and the ongoing operations of the leased space, can lead to optimal energy efficiency and carbon reduction outcomes for both tenants and landlords.

Engagement begins with lease negotiations that incorporate green leasing provisions, followed with high performance design guidelines and build-outs. Owners should remain engaged as much as possible during this phase, and can provide tenants with valuable information about incentives and financing for energy efficiency projects. Finally, owners should educate tenants about best practices in energy management throughout the duration of their lease, so tenants can minimize their environmental footprints, reduce energy costs, and create comfortable, healthy spaces for their employees.


Performance-Based Leasing  

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Adding performance-based terms to a conventional lease is a win-win for building owners and tenants alike. It can improve the business deal, make it more responsive to current conditions, contribute to a cleaner environment, and produce cost savings for both parties. Performance-based leasing incorporates collaborative strategies found in green leases to clarify the landlord-tenant relationship with respect to building performance standards, or compliance with local regulatory mandates.  Specifically, it:

  • Sets energy performance targets to meet carbon reduction goals
  • Equitably distributes landlord and tenant responsibilities to meet building performance standards
  • Ensures landlord-tenant transparency and accountability by tracking energy use and implementing building performance goals
  • Offers continuous monitoring via periodic recommissioning studies, and mitigating plans where necessary 
  • Presents remedies should either party fail to meet building performance goals 

Read more about high performance leases here.

Download the Institute For Market Transformation's (IMT) high performance based leasing toolkit including model lease provisions

Owners and tenants who have implemented performance-based leasing should consider obtaining recognition for their efforts through the Green Lease Leaders Program, a national recognition and education program that spotlights landlords, tenants, and partnering real estate practitioners that incorporate green leasing into their deals.

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High Performance Design and Construction Guidelines 

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In many cases, there may be a discrepancy between base building efficiency standards and tenant fit-out spaces. Without tenants prioritizing sustainability, the building will fall short of its efficiency potential. Tenant design guidelines promote energy efficiency within tenant spaces. These guidelines outline the standards that every tenant must follow when designing and constructing the fit-out space. The team shall audit existing guidelines or develop new guidelines to push the potential for energy efficiency within the building. The high-performance guidelines shall include guidance on the following categories:   

  1. Energy Efficiency  
  2. Lighting  
  3. HVAC  
  4. Plug Loads  
  5. Water Efficiency  
  6. Materials and Resources  
  7. Contractor Guidelines  
  8. Commissioning  
  9. General   

Within these guidelines, the building owner requires tenants to meet high performance design standards (i.e. ASHRAE, Energy Star, NYStretch Energy Code), utilize efficient equipment (such as Energy Star, and WaterSense Fixtures), and provide instrumentation for future analysis and optimization (metering and sub-metering).  Download sample design and construction guidelines here.

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Ten Steps to Efficient Tena