Commercial Tenant Resources | ClimateWise Building Challenge

Successes in Sustainability: Landlords and Tenants Team Up to Improve Energy Efficiency

Case study examples of how landlords and tenants are tapping into the power of collaboration to overcome barriers to high-performance buildings.

Successes in sustainability: key points and summary

A summary of the key points taken from the Energy Star document referenced above

Hines developed and launched the internally focused HinesGO (GREEN OFFICE) program to measure and reward sustainable practices in the firm's more than 200 offices worldwide. Tenants began to ask property teams for ways to improve sustainability in their leased spaces.

Hines recognized the value of interacting with tenants around sustainability — in terms of fostering stronger landlord-tenant relationships, as well as the energy and environmental benefits for the company’s portfolio
Owner Challenge	Seeks opportunities for positive interactions with tenants that deepen relationships, enhance customer service, and achieve sustainability objectives
Tenant Challenge	Seeks help to make their office space more sustainable, validate existing practices, and gain recognition for achievements
Owner Benefit	Use recognition as a powerful tool to motivate tenants to take efficiency and other sustainability actions.
Tenant Benefit	Help to build strong landlord-tenant relationships. Tenants are eligible to be awarded the GREEN OFFICE designation
Building	All leased offices in Hines-managed buildings
Lease type	Range of lease types represented across more than 100 million square feet
Owner / PM	Hines
Tenant	KPMG LLP, and Various Tenants

A building in Philadelphia's Center City, offered much more than an opportunity to reduce operating expenses — it had the potential to position Reed Smith as a sustainability leader and to set an example for the community
Owner Challenge	Wants to maintain a top-performing, competitive building
Tenant Challenge	Wants to differentiate itself as a thought leader by committing to the health and wellness of its employees, its community, and its environment in a fiscally responsible way.
Owner Benefit	Benefit is a strong relationship with a new tenant and a more sustainable and valuable tenant space within an ENERGY STAR certified building
Tenant Benefit	Estimated that it will take Tenant less than 2 years to earn back in energy savings the less than $300,000 initial investment, with savings accruing every year after that through the remainder of the 16-year lease*
Building	Three Logan Square, Philadelphia, PA
Lease type	Modified Gross (Tenant is billed by landlord for actual energy use)
Owner / PM	Brandywine Realty Trust
Tenant	Reed Smith LLP
NOTE: A projected 35% reduction in energy use compared to standard, code-compliant systems:* Basic upgrades: Lighting HVAC optimization plug and process load management Best Practices: daylighting occupancy sensors ENERGY STAR equipment smart power strips variable frequency drives high-performance lighting package

NEEA needed to find a new home in downtown Portland, Oregon, one that would allow the organization to create a showcase energy-efficient, green office. When the team was ready to hire a broker, they looked beyond the standard qualifications to find a partner who understood the organization's unique goals and who would seek a property owner and manager willing to collaborate on and support NEEA's energy performance focus.
Owner Challenge	Sought to position the Commonwealth Building as a green, high-performance building.
Tenant Challenge	Searching for a highly energy-efficient space that would allow the organization to remain fiscally prudent on behalf of its regional utility and energy-efficiency stakeholders.
Owner Benefit	Funded the upgrades — even those that cost more than an agreed-upon budget — because it felt confident that the investment would increase the value of the space and make it attractive to future tenants
Tenant Benefit	Embarked on a unique negotiation process that ultimately benefited both Owner and Tenant
Building	Commonwealth Building, 421 SW Sixth Avenue, Portland, OR
Lease type	Triple Net (Tenant pays energy bills directly to the utility)
Owner / PM	Unico Properties
Tenant	NEEA

Vornado Realty Trust, one of the largest commercial real estate investment trusts in the United States, is a leader in sustainability and energy efficiency. Realizing that energy use in common areas was going down but energy use in tenant spaces — accounting for up to 70% of energy consumption — was staying flat.

Vornado is helping its tenants understand their energy consumption and make improvements to reduce usage. Their Energy Information Portal (EIP) where tenants can connect their actions to actual energy savings, gaining a way to understand the impact of their behaviour and motivation to improve.
Owner Challenge	Wanted to engage tenants in achieving and maintaining top energy and environmental performance across the portfolio.
Tenant Challenge	Lacked insight into their own energy consumption and did not have a meaningful way to track usage.
Owner Benefit	Save energy costs by reducing energy use with smart facilities management and sustainable improvement, and to better serve tenants.
Tenant Benefit	This approach breaks down the figurative walls between landlord and tenant to benefit both and the environment.
Building	Many buildings
Lease type	Modified Gross (Tenants are billed by landlord for actual energy use)
Owner / PM	Vornado Realty Trust
Tenant	Many groups

Lessons Learned to support Tenants to score big in energy efficiency:

Use recognition as a powerful tool to motivate tenants to take efficiency and other sustainability actions
Capitalize on the opportunity to lead by example
Landlords and tenants can engage on energy efficiency regardless of lease structure
Engagement around sustainability can help to build strong landlord-tenant relationships

Lessons Learned for a good relationship with Tenants for energy reduction behaviour:

Closely track energy data, particularly sub-metered data, to identify trends and make strategic time and resource investments.
Landlords: Motivate tenants to take action by making energy and cost data available and understandable.
Landlords: Seeing your role as an “ambassador” to tenants for energy and environmental opportunities may increase tenant willingness to engage in green initiatives.

Lessons learned for Tenant with no sub-meter based on above cases:

Take advantage of a move or lease renewal to design and build a green, high-performance space.
Leverage the direct financial benefits of green, efficient space and, more importantly, the potential positive impact on employees, organizational brand, and community relations.
Designate a motivated and knowledgeable sustainability advocate who is adept at communicating benefits to all levels of the company.
Tenants: Consider asking your landlord for help in finding guidance and partners in your green build-out.

Lessons learned in Tenant who pay utilities based on above cases:

When seeking a new space, form a selection team that includes senior management and staff. Make sustainability a key goal for the team.
Choose brokers and other external partners who understand the importance of achieving an organization’s sustainability goals.
Identify ways to achieve efficiency and sustainability goals that benefit both tenant and landlord, be willing to negotiate, and document agreed-upon measures.
Be responsive to the efficiency and sustainability ideas prospective tenants and landlords bring to the table.
Consider how efficiency improvements in tenant spaces — at build-out and beyond — can increase a building’s and organization’s value and attract and retain tenants.