Yes, You Can Achieve Greater Sustainability in Leased Space

June 6, 2011

Many top companies have developed a sustainability strategy to enhance enterprise value, reduce operating expenses, limit risk, and align with stakeholder expectations.

Corporate real estate portfolios, which typically consist mostly of leased space, are often keystones in these strategies, as real estate leaders seek to improve operational efficiencies, reduce environmental impacts, and create work environments conducive to productivity and retaining/recruiting top talent.

While the move to more sustainable leased space is gathering momentum, many challenges remain. Recent research by the Sustainability Roundtable, Inc. (SR Inc.), entitled “How Leaders are Moving to More Sustainable Leased Space,” cited the following barriers to implementation: 

  • Perceived cost premium for more sustainable space
  • Limited tenant leverage in smaller leases
  • Lack of relevant KPIs, benchmarks and metrics
  • Few reliable sources of information about best practices
  • Lack of a single solution and the need for incremental innovation
  • High hurdle rates based on ROI expectations

The research includes information on best practices on ‘green leases,’ and features case studies from Gensler, Brandywine Realty Trust, Equity Office, Akamai Technologies, Autodesk, and the General Services Administration.

Discussing the research findings, Michael Gresty, SR Inc.’s Executive Vice President of Research and Consulting, notes that, “leading companies have found ways to design, build and even certify more sustainable leased space at little or no cost premium. The most experienced among them, such as Adobe, are consistently pursuing LEED-CI Platinum level certification, because they have proven that the benefits exceed those of basic certification. However, the barriers to adoption identified in our research are real, and can only be overcome by persistent efforts and greater collaboration between corporate tenants and landlords, and further efforts to negotiate win-win solutions in green leases.” 

The key takeaways of the research presentation include:

Leased Space is an Opportunity not an Obstacle – Tenants and landlords can find common ground based on sustainability to reduce costs, risks, and, together, create enterprise value.

Adapt to Mainstreaming of Sustainability – Corporate Tenants, Investors, Advisors, and Owners, recognize that sustainability has become a mainstream concern, that there is no cost premium, and they can innovate within their organizations to adapt.

Overcome Market Barriers – Tenants and landlords still face institutional and cultural barriers to more sustainable leased space; leaders have adopted proven strategies to overcome them, including ‘green’ leases.

Develop an Integrated Strategy – Companies that adopt a cross-disciplinary strategy using Integrated Project Delivery methodology rather than trying to ‘green’ conventional design and management methodologies can maximize sustainable value.

If you would like to receive a copy of the presentation, email Larry Simpson at larrysimpson@sustainround.com.

(The author is Larry Simpson, Executive Vice President, Sustainability Roundtable, Inc.  who can be reached at larrysimpson@sustainround.com. Additional posts can be found in SR Inc.’s Forum found at http://www.sustainround.com/forum/ )