Responsible Investment

Green leases can help fully utilize the sustainable potential of real estate

May 15, 2012
Image ‘Rhetorica Office Space’ by Tobias Mikkelsen (CC BY-NC-SA 2.0)

The recently published Office Service Charge Analysis Report (OSCAR) by Jones Lang LaSalle (JLL)2, suggests that buildings with a better energy label (A – C) do not automatically have lower energy and service costs than non-green buildings (label D – G). The OSCAR benchmark, which was executed for the third time in The Netherlands, analyses the service costs from 2006 to 2010 on component costs and building characteristics such as year built, size, number of floors, location and the energy label of a building. The costs for electricity and heating for buildings with energy label A through C, are respectively 10.85 euros and 6.80 euros per square meter floor space. For buildings with labels D to G these costs are9.17 eurosand 6.36 euros.

However, the statistical significance of these figures is somewhat limited because only a small portion of the screened buildings (75 of total 272) have an energy label, and among these, only 24 have energy label A – C. “It is therefore difficult to draw unequivocal conclusions”, Jones Lang LaSalle states. Additional qualitative research by JLL offers an explanation for the higher energy costs for buildings with energy labels A to C. These usually newer and sustainably designed buildings are often more intensively used, for instance because the occupier encourages employees to share workplaces. Therefore, when more people use fewer square meters it would be good to not only measure the service charge per square meter but also the integrated housing costs per full-time equivalent (FTE).

Head of Property Management at Jones Lang LaSalle in the Netherlands, Jac Bressers, also recommends drawing up green leases. “In the examined portfolios, we see that the tenant and the landlord often have not made concrete agreements on sustainable use, such as office opening hours and the time periods and parts of the building in which employees can work during the evenings. If one doesn’t do this, it is just like driving fast and sporty in a fuel-efficient car. Spending will then be higher in comparison with a less efficient car with someone behind the wheel who drives economically. So we believe there is room for profit by using a green lease.” According to the Platform Sustainable Housing, at present several Dutch companies have made use of a green contract in their lease negotiations, such as Corio, Bouwfonds, CBRE, Jones Lang LaSalle and DTZ Zadelhoff (the figures in the benchmark are based on the final accounts of the service costs over 2010, which are generally available in July 2011.)

References

1 ‘Guideline Green Lease’ (in Dutch: ‘Leidraad Green Lease’) via NL Agency, Dutch Ministry of Economic Affairs, Agriculture and Innovation: http://www.agentschapnl.nl/content/leidraad-green-lease-eindrapport (in Dutch).

2 ‘Office Service Charge Analysis Report, Netherlands benchmark for service charges in office buildings’ via Jones Lang LaSalle: http://www.joneslanglasalle.nl/ResearchLevel1/JLL_OSCAR_2012_definitief_ENG.pdf.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Green leases can help fully utilize the sustainable potential of real estate”, Ingrid Ramaan, www.tias.edu, May 15, 2012.

Read more

OSCAR 2012
Guideline Green Lease

Author(s)

Ingrid Ramaan
Administrative Editor FSinsight

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