Month: July 2015

A Green Lease Overcomes a Primary Obstacle to Commercial Properties Going Green

PJ Pictureby Paul L. Jones, CPA, LEED Green Associate, Principal, Emerald Skyline Corporation

One key obstacle to overcome for commercial buildings is the incongruous lease structure. Under the most common commercial lease structures (Modified Gross and Net), the costs of a sustainable retrofit are borne by the owner while the cost savings from reduced utility bills and maintenance costs as well as the improved indoor environment inure to the benefit of the tenant.

The solution is to create a lease structure that equitably aligns the costs and benefits of efficiency, sustainability and/or resiliency between building owners and tenants, known as a Green Lease (also known as an aligned lease, a high performance lease or an energy efficient lease). In short, a green lease facilitates cooperation between landlords and tenants to make their buildings and individual spaces energy and water efficient.

Last month, the US Department of Energy acknowledged property owners, tenants and brokers who are leaders in using green leases to save energy and water in commercial buildings. In a July 2nd National Real Estate Investor article entitled “The Greening of Leasing,” Susan Piperato interviewed Jonathan Saltberg and Jaxon Love of Shorenstein Properties which was one of the “Green Lease Leader” honorees.


Figure 1 Source: National Real Estate Investor, 7/2/2015; Institute for Market Transformation

According to Jaxon Love: “We survey our tenants annually on sustainability and track interest and satisfaction with our program. In 2014, 66 percent of our tenants indicated that green building operation is important or very important to their company; 68 percent of tenants indicated that our green building operation is good or excellent.”

Further Ms. Piperato reports that Shorenstein Properties has cut energy use by 16.2% and cut carbon emissions by almost 15% which is in-line with industry expectations of a 10% to 20% savings in energy and water monthly.

According to Meaghan Farrell, energy and sustainability service, Jones Lang LaSalle (JLL), “Green leases combine the productivity, comfort and sustainability features that tenants are looking for in office space while supporting landlord priorities of improving the triple bottom line and occupancy rates. In addition to achieving both tenant and landlord objectives, green leases have social, economic and environmental implications for companies operating in today’s global economy. Green leases truly are the future of commercial real estate.” (10 Reasons to Sign a Green Office Lease, Meaghan Farrell, Environmental Leader, 10/22/2014.

Green leases not only bring congruity to the financial requirements necessary to do a sustainable retrofit of a building but also to encourage owners, tenants and their employees who occupy the building to employ sustainable building operations.

The JLL Energy and Sustainability Services team has identified that collaboration by tenants and landlords in negotiating and executing a Green Lease results in the following ten benefits (Shorenstein Properties notes that the collaboration required to create a green lease is the first benefit of the program):

  1. Reduce the utility (power and water) consumption, reduce maintenance costs and save money
  2. Improve working relationships between landlord and tenant
  3. Support tenant and landlord corporate sustainability initiatives
  4. Enhance corporate image/brand (especially important for retailers, manufacturers and large public companies and financial institutions)
  5. Demonstrate vision and thought-leadership
  6. Improve civic relations – with climate change, municipalities appreciate buildings and companies that help the community become sustainable and resilient
  7. Contribute to LEED and other green certifications which is increasingly important for buildings to maintain and improve their competitive position
  8. Improve employee productivity, recruitment and retention through proven that daylighting and other sustainable strategies
  9. Generate additional savings and benefits through waste stream diversions
  10. Do the right thing for the earth and humanity in order by reducing the building’s carbon footprint

As stated by Adam Siegel, VP – Retail Industry Leaders Association (RILA), “Green leasing is a process to identify lease provisions that can potentially be modified to address both landlords’ and tenants’ sustainability goals. These provisions tend to foster efficiency improvements that can save both parties money.”

As reported by the RILA Retail Green Lease Primer, lease provisions that modify a standard lease agreement to a green lease fall into five primary areas:

  1. Provide for improvements to the base building shell and common areas;
  2. Provide for improvements to the tenants’ interior spaces consistent with the building’s permitted uses;
  3. Encourage efficiency investments by allocating the benefits derived to the party that is making the investment;
  4. Facilitate the sharing of energy and water usage and waste generation data increasing required for compliance with municipal benchmarking regulations or LEED/Energy Star certification guidelines; and
  5. Clarify who has the rights and responsibilities to make sustainable improvements in spaces like the rooftop.

According to the Shorenstein Properties team, the Green Lease provisions that they are working to incorporate into all of their leases include: Energy alignment; tenant sub-metering, energy information sharing, building performance certifications and green building standards.

The aforementioned RILA Retail Green Lease Primer (available here: lists 13 specific areas of focus which are provided with the caveat that “Each company should assess the costs and benefits of each term before including in their contracts:”

  1. Extend/lengthen the lease term which reduces waste associated with tenant replacement and improvements;
  2. Expense reimbursement methodology (.In an article published in the September/October 2010 issue of The Leader, Elizabeth King Fortsneger, a CPA and LEED AP, states: “If the goal is to keep both owners and tenants motivated to support the building’s green initiatives, the modified gross lease, net utilities with sub-metering and possibly an expense stop (full service except the tenant pays utilities) may be a viable alternative.”);
  3. Permitted use that define allowable/restricted uses for the leased premises;
  4. Leased premises tenant build-out specifications;
  5. Capital improvement provisions that allow the landlord to amortize and recover capital costs associated with qualifying sustainable improvements to building and common areas;
  6. Include low-cost efficiency project expenditures in the definition of operating expenses for tenant reimbursement;
  7. Align tax benefits and other monetary incentives for building improvements with the investing party (landlord or tenant);
  8. Submeter each tenant space for electricity, natural gas and water with billing of tenants based on the submeter readings where state codes and utility tariffs allow it (According to Mr. Love, “…submetering…gives the tenant direct responsibility for and control over their energy (and water) cost. The economic incentive to save energy is a powerful motivator.”);
  9. Utility data sharing whereby the tenant provides energy and water consumption data to the landlord monthly while the landlord provides the tenant with periodic reports on the performance of the whole building.   As more cities require benchmarking information from landlords, the ability to gather the necessary information from tenants is a necessary condition for regulatory compliance;
  10. Specify sustainable maintenance policies, procedures and materials for use in tenant spaces;
  11. Specify sustainable maintenance policies, procedures and materials for use in common areas;
  12. Define tenant obligations to participate in recycling programs which facilitates the sustainability objective of reducing waste that goes into a landfill; and
  13. Allow rooftop or general access and control to install energy generation systems (solar power) and/or other sustainable improvements.

NOTE: For existing tenants, green lease provisions can be added to the existing lease through a “green lease addendum” that replaces or supplements portions of the lease by adding terms and incentives.

As with every lease, both landlords and tenants need to work together to develop the green provisions appropriate to the property, its use and the tenant space. Quantifying the costs and benefits may require a green diagnostic review/assessment which provides a baseline understanding of the current property operations for inclusion as benchmarked sustainability criteria in green leases, or current lease addenda.

Working with an advisor like Emerald Skyline Corporation whose principals understand both commercial leasing and sustainability can help facilitate the negotiations and the accomplishment of both your investment objectives and your sustainability goals.

Using Daylighting to Save Energy and Enhance Views

JulieBy Julie Lundin, NCIDQ, LEED AP ID+C, ASID, Director, Emerald Skyline Corporation

My post on the design and progress of our commercial building focused on an overview of what sustainable design is and how it impacts a building’s design and construction and on-going building operations. You can see that post here. A sustainable building utilizes many concepts, solutions and products to incorporate the six fundamental principles of sustainable design:

  • Optimize Site Potential
  • Optimize Energy Use
  • Protect and Conserve Water
  • Optimize Building Space and Material Use
  • Enhance Indoor Environmental Quality (IEQ)
  • Optimize Operational and Maintenance Practices

This post explores the concept of Daylighting and Views, which impacts two areas of the fundamental principles of sustainable design: Optimization of Energy Use and Enhance Indoor Environmental Quality (IEQ).

Daylighting is the ability to maximize or control the use of natural daylight in a building in order to reduce the need for artificial lighting and reduce energy use. Access to daylight inside a building helps create a healthy, comfortable and productive environment for its occupants while reducing as much as one-third of total building energy costs.

Implementing daylighting on a project goes beyond simply listing components to be gathered and installed. Daylighting requires an integrated design approach to be successful. It can involve decisions about the building layout, site, climate, building components such as windows and skylights, lighting controls and lighting design criteria.

The science of daylighting design is not just how to provide enough direct daylight to an occupied space, but how to do so without any undesirable side effects. Beyond adding windows or skylights to a space, it involves carefully balancing heat gain and loss, glare control, and variations in daylight availability.

To implement daylighting into a project it requires systems, technologies and architecture. Below are some of the typical components that are utilized:

  • Daylight-optimized building footprint
  • Climate-responsive window-to-wall area ratio
  • High-performance glazing
  • Daylighting-optimized fenestration design
  • Skylights
  • Tubular daylight devices
  • Solar shading devices
  • Daylight redirection devices
  • Daylight-responsive electric lighting controls
  • Daylight-optimized interior design (furniture, space planning, room surface finishes)

Since daylighting components are normally integrated with the original building design, it may not be possible to consider them for a retrofit project. We are fortunate that the retrofit of our building in Boca Raton lends itself to use daylighting to positively impact two of the fundamental principles of sustainable design. Below are some of the components that our project will utilize:

  • Optimized Building Footprint – Although usually limited to new construction, our building and site enables us to make design decisions that will allow us to create a daylight-optimized footprint. The redesign of our building will maximize south and north exposures, and minimize east and west exposures. Our new façade will face due south which is the optimal orientation for best solar access and ease of control.
  • Climate-Responsive Window-to-Wall Area – With the building sited facing south, we are specifying high-performance glazing (windows). The area is being designed to be a careful balance between admission of daylight and summertime heat gain since our project is located in South Florida.
  • High-Performance Glazing – High performance windows will generally admit more light and less heat than a typical window, allowing for daylighting without negatively impacting the building cooling load in the summer. For our project, being located in South Florida, high performance glazing is very important.
  • Daylighting-Optimized Fenestration Design – An optimized fenestration design will increase the system performance. Windows have two essential functions in a building. 1) Daylight delivery or admittance, and 2) provide a view to the occupants. Daylight admittance requires a window with high visible light transmittance and windows for view need to be clear. Our daylighting fenestration design will be composed of both of these with correct height requirements.
  • Skylights and Tubular Daylight Devices – Both of these devices utilize what is called toplighting, or admitting daylight from above. We are incorporating the use of tubular devices in our building design. These devices employ a highly reflective film on the interior of a tube to channel light from a lens at the roof to a lens at the ceiling plane. They tend to be much smaller than a typical skylight, yet still deliver sufficient daylight for the purpose of dimming the electric lighting. They will be used on the second floor where there will be interior spaces that do not have access to any windows due to our north side zero lot line site.
  • Daylight Redirection Devices – Redirection devices take incoming direct beam sunlight and redirect it. These devices serve two functions: glare control, where the sun is directed away from the eyes of the occupants, and daylight penetration, where sunlight is distributed deeper into a space that would not be allowed otherwise. We will be utilizing both of these methods in our project.   Lightshelves will be used on the south façade of the building, on both floors. The second floor interior will contain clerestory glass components that will distribute light into rooms that have no access to daylight.
  • Electric Lighting Controls – Lighting controls are essential to any daylighting system. No daylighting design will save any energy unless the electric lights are dimmed or turned off when there is sufficient illumination from daylight. If daylighting features such as windows and tubes are not paired with daylight-responsive dimming controls, then the daylighting-enhanced building will likely use more energy, not less, than a comparable building without any daylighting features. Lighting controls consist of continuous dimming or stepped-ballasts in the light fixtures, and photocells to sense the available light or turn off the electric lighting in response. We will incorporate a lighting control system in our building to take full advantage of our daylighting design and the energy savings it will provide.
  • Interior Design – An often-overlooked element in a successful daylighting design is the interior design. The interior design should consider furniture design, placement, and room surface finishes and how they relate to daylight performance. Interior walls may interfere with daylight transmission into a space. The south facing façade of our project, on the first floor will have an open concept so that daylight can penetrate and distribute more fully into the interior space. Walls and ceilings will be as reflective as possible.

To design and implement a daylighting strategy into a project requires a collaborative design process and the daylighting strategies must balance with other project design goals. Access to daylight inside buildings provides a healthier and comfortable environment for its occupants and is also linked to greater productivity. When designed with proper glare control and minimized solar heat gain, daylighting provides high-quality light while reducing energy use for lighting and for cooling.  

LEED Project Update – Build Better Codes

JulieBy Julie Lundin, NCIDQ, LEED AP ID+C, ASID
Founder, Director of LEED Process Management for Emerald Skyline Corporation

Emerald Skyline Corporation, in conjunction with Golden Spiral Design, is designing, renovating and repurposing an unoccupied industrial building located in Boca Raton, FL. This distinctive commercial building will include many sustainable features with the intent to obtain LEED (Leadership in Energy & Environmental Design) certification from the USGBC. LEED certification recognizes performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. It is a whole-building approach to sustainability which will enable us to save on utilities and maintenance while improving the well-being of our personnel and our clients.

LEED is a third party certification program and the nationally accepted benchmark for the design, construction and operation of high performance green buildings. The LEED Green building rating system encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria.

We continue to modify the design of the building in preparation for submission to the City of Boca Raton Development Services Department. In preliminary meetings with the Planning Department and Traffic Engineers it was determined that the building occupancy will require a minimum of 8+ parking spaces per the existing (dated) Municipal Codes. The limited space for parking on the site will make it difficult to meet these requirements.

Based on our plans intended use of the building, our parking needs for the building are much less than the codes require. Both Emerald Skyline and Golden Spiral employ sustainable business practices which encourages personnel to spend the majority of their time working remotely.

Boca Raton’s current parking requirement is not congruent with sustainable thinking which encourages “hotelling” or “hot desking”, the use of public transportation and alternate commuting methods such as riding a bicycle. In meeting with representatives the City of Boca Raton, they have indicated that they might help us on this initiative as they have special exemptions for sustainable buildings. Our goal is to have the minimum number of spaces necessary to satisfy our needs.

Further, as a LEED certified project, our design goals are to minimize paved surfaces as solid surfaces contribute negatively to our environment. Our vision is to utilize permeable pavers for the parking spaces we will have on-site. Here is why:

Permeable pavers help the environment by:

  • Improving the quality of storm water runoff as it is returned to a ground water source;
  • Providing a solution to soil erosion by allowing grass to grow within the spaces of the block and blend in with the surroundings.
  • Reducing or eliminating storm water runoff, decreasing flooding and relieving sewer system demands while still providing a sturdy surface for vehicle and pedestrian traffic; and
  • Reducing heat that is transmitted into the atmosphere from hot pavement by providing a vegetative and reflective surface.

Rating systems like LEED are critical proving grounds for building strategies that address an inclusive set of risks that require our attention beyond fire safety, disability access and other crucial areas.

Building codes have presented barriers to the application of more forward-looking technologies, materials and methods. Building green requires a multi-disciplinary approach to break down the walls between planning, design and construction. The existing codes have been a factor in the business-as-usual construction process. As the viability, cost-effectiveness, and many benefits of green building continue to prove their worth, code safety needs to evolve to incorporate a broader scope of responsibility that are now expected. We are hopeful that building codes, including those of Boca Raton, will begin to encompass sustainable building needs.


USGBC – Build Better Codes