The financial interests of building owners and tenants can sometimes seem completely at odds. But, according to a recent telebriefing hosted by Chambers for Innovation and Clean Energy, local chambers of commerce can help bridge the gap by opening a conversation about “high performance leases” that can align interests of building owners and tenants so they can work together to save money while saving energy.
According to the participants of the telebriefing, leases are typically not structured in a way that promotes energy savings. Under most gross leases, for example, tenants have no incentive to save energy in their leased premises because energy costs are based on tenant square footage. Under most net leases, building owners have no incentive to invest in efficiency for their building systems because the operating expenses are passed through to tenants, who would therefore receive all of the energy cost savings.
High performance leases, however, create structures that can equitably align the costs and benefits of efficiency investments between building owners and tenants and save both money.
During the telebriefing, Nicole Stika, Senior Director, Energy Service at the Greater Cleveland Partnership’s Council of Smaller Enterprises, described her chamber’s partnership with the Cleveland 2030 District to identify opportunities for high performance leases across 73 million square feet of downtown office buildings. “Our ultimate goal is to transform our downtown and offer both landlords and tenants a positive return on investment,” Stika said.
“This is a critically important conversation between landlords and tenants,” Stika said. “It needs to start somewhere. Why not the chamber?”
Other speakers included Adam Sledd, Program Director, Commercial Real Estate Engagment, at the Institute for Market Transformation, and Jodi Mansbach, Vice President at Jamestown Properties. One of Sledd’s target audiences is chamber of commerce executives; he has also presented to the New England Association of Chambers of Commerce Executives and the Montgomery County Chamber of Commerce in Maryland.
The Institute for Market Transformation has an online library here about high performance leases. Information about the Cleveland’s engagement can be found here.