6 Questions to Ask Before Signing a “Green Lease”

You might lease your facility or office, but that doesn’t mean it can’t be green.

More property managers and tenants are signing so-called green leases. While the term is used loosely, these essentially are lease agreements struck between landlords and tenants in buildings that adhere to environmentally sustainable operations and management. The building may be designed in eco-friendlier ways, such as maximizing natural lighting, while building operations may be carefully controlled to minimize energy and water use and waste.

Among benefits for commercial tenants are lower energy costs, better air quality and more comfortable work environments. Some studies, such as this one from the Rocky Mountain Institute, find that green buildings improve worker productivity and lower absenteeism. (Another study found that green buildings have 3.5 percent lower vacancy rates and fetch 13 percent higher rental rates than non-green ones.)

But while more properties are being touted as “green” and marketing themselves to businesses as eco-friendlier alternatives, business owners should do some homework to ensure they’re truly getting a good deal. Remember, the commercial real estate market is still soft, and there’s lots of room for negotiation right now.

Here are some questions to ask before signing a green lease:

1.  Is the building LEED-certified or Energy Star-labeled? A common way for commercial properties to verify they are indeed “green” is by meeting the criteria for two programs. LEED – or Leadership in Energy and Environmental Design – is an internationally recognized building certification system created by the U.S. Green Building Council that promotes green practices in buildings, such as indoor air quality and energy efficiency.

The Energy Star Building and Plants program, run through the U.S. Environmental Protection Agency, provides ratings to buildings on a 1 to 100 scale based on energy use per square foot. Buildings that score at 75 or above – meaning they’re in the top 25^th percentile for energy use – can get the Energy Star label. You can feel good knowing you’re renting space in a building that has at least one of these certifications.

2.  Who pays the utility bills? Lower energy costs are a nice perk of parking yourself in a green building and can help offset any premium you might pay in rent. So it’s worth asking property management beforehand how utilities are handled and how much you should expect to pay for them. One benefit to paying utilities directly (rather than through your rent): You have direct control over your energy costs.

3.   How is the building’s performance measured and monitored? Make sure the landlord has procedures in place for ensuring the ongoing green operations of the building. Perhaps they do an annual audit or have other checks in place.

4.   How close is it to public transportation? It’s not just operations and design that make a facility truly green – it’s also accessibility to public transportation. Remember, employee commutes can take a big toll on the environment. The closer you are to a bus or commuter train or bike path, the more likely it is that employees will forgo cars.

5.   What are the cleaning procedures? Another aspect of green building is cleaning practices. Inquire how the building is cleaned, by whom and whether they can vouch that the cleaning products used are non-toxic.

6.   What’s my obligation as tenant? It’s not unusual for green leases to put some requirements on tenants to uphold green practices, such as recycling certain types of waste or following energy-efficient practices. Make sure you can uphold your end of the bargain before signing on the dotted line.

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