Commercial Green Leasing in the Era of Climate Change: Practical Solutions for Balancing Risks, Burdens, and Incentives

• Date: 01 May 2010

5-2010 NEWS & ANALYSIS 40 ELR 10487

A R T I C L E S

Commercial

Green Leasing in

the Era of Climate

Change: Practical

Solutions for

Balancing Risks,

Burdens, and

Incentives

by Stephen R. Miller

Stephen R. Miller is an associate at Reuben &

Junius LLP, San Francisco, California.



Recent studies make clear that it is not whether a build-

ing is built “green” that matters in terms of both green-

house gas reductions and other environmental benets;

rather the most important factor is how the building is

operated and used in the long term. Long-term leases

negotiated today should address the operation of green

buildings to achieve environmental benets and the

roles of parties in doing so. A review of model leases

available in the United States and throughout the world,

including Australia, Canada, and the United Kingdom,

provides a global view of how real estate markets—both

public and private—are navigating the dilemma of

meeting climate change mandates through leases.

The vast majority of oce building space t hat will

be available in 2020 has already been constructed.1

Despite this limitation, almost every eort to ght

climate change and limit greenhouse gas (GHG) emissions

seeks substantial reductions in energy use and resource con-

sumption from oce buildings over the next decade,2 and

even greater reductions in GHG emissions from that sector

in t he decades t hereafter.3 Attaining these GHG emissions

reductions in the built environment will not only necessitate

increased regulation of new construction, but also a dramatic

rise in the regulation of existing buildings, the operation

of existing buildings, and construction on the interior of

buildings, such as tenant improvements.4 e shape of these

regulations is a lready evident in the creation of voluntary

certication schemes, such as the Leadership in Energy and

Environmental Design (LEED) building and operations rat-

ings systems,5 as well as local ordinances incorporating these

third-party rating systems.6 e coming decade, however,

will likely a lso see increasing regulation of buildings at the

state and federal levels.7 Moreover, any such additional regu-

lations seem likely to serve as a baseline in more competitive

markets, with the market exerting additional pressures to

“green” buildings, especially in Class A oce space.8

Commercial oce space is one of the largest—if not the

largest—source of GHG emissions, energy use, and resource

consumption.9 e overwhelming majority of commercial

1. C. S A, G C’ L O

S: C  O 17, 86 (2009), http://www.sus-

tainca.org/les/GreenLeases_report_050509.pdf. Note that the oce building

sector diers somewhat for projections for the built environment as a whole. It

is estimated that by 2030 one-half of all development in the country will have

been built since 2000. See Trip Pollard, 

Growth and Green Building, 27 V. E. L.J. 125, 130 (2009).

2. C. A R. B., C C P S P: A F-

  C 58 (2008), http://www.arb.ca.gov/cc/scopingplan/docu-

ment/psp.pdf (“For commercial buildings, a 2011 target should be established

such that a quarter of all new buildings reduce energy and water consumption

by at least 25 percent beyond code.”).

3. C. A R. B., supra note 2, at 44 (discussing zero-net-energy buildings).

4. C. A R. B., supra note , at 43-44, 57.

5. See U.S. Green Building Council, LEED Rating Systems, http://www.usgbc.

org/DisplayPage.aspx?CMSPageID=222 (last visited Feb. 25, 2010).

6. See Stephen R. Miller,    -

 , C. R P. J., Spring 2009, at 54;

Edna Sussman, 

, 16 N.Y.U. E. L.J. 1 (2008) (dis-

cussing local ordinances nationally).

7. See C. A R. B., supra note , at 57 (California voluntary green build-

ing standards become mandatory in 2011); see also American Clean Energy

and Security Act of 2009, H.R. 2454, 111th Cong. §§201-219 (2009); P

C.  C C, P C S  H.R. 2454: A-

 C E  S A  2009 (W-M) 21-26

(2009), available at http://www.pewclimate.org/docUploads/Waxman-Mar-

key%20summary_FINAL_7.31.pdf.

8. See Henry H. Chamberlain, President & CEO, Bldg. Owners & Manag-

ers Ass’n (BOMA), Remarks on State of the Industry 3-4 (June 29, 2009),

available at http://www.boma.org/SiteCollectionDocuments/Brain/Docs/

State%20of%20the%20Industry_nal.pdf.

9. U.S. D’  E (DOE), 2008 B E D B 3-1 to

3-36 (2009); C. S A, supra note 1, at 7 (noting that

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