Anyone here have experience pushing through sustainability initiatives in leases? I’m in an a position to influence the future negotiations, but curious to hear your experiences.
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[{"id": "gis3u7a", "text": "Can you elaborate on what you mean by \u201cpushing through sustainability initiatives\u201d? What exactly are you asking? Environmental issues?", "replies": [{"id": "gis6u0m", "text": "Solar panel installs, gray water systems, rain water storage/usage, implementing recommendations brought forth by third-party vendors like carbon lighthouse, etc.", "replies": [{"id": "gis8v78", "text": "Who\u2019s paying for it?  If tenant, then your rent is going to be lower.  Otherwise they\u2019re going down the road to the next box owned by someone else.", "replies": [{"id": "gisnbbo", "text": "That\u2019s the question I guess. I\u2019m looking to see if anyone has had success with value-add projects aside from incremental changes with LEDs , efficient aerators, etc.", "replies": [], "depth": 4}], "depth": 3}, {"id": "gishru5", "text": "Please find other sources to answer your homework question", "replies": [{"id": "gism6zt", "text": "Ha ok cool. Will do \ud83d\udc4d", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gis80bv", "text": "I don't think that has anything to do with the leases. This would start at building ownership/stakeholders first. They are the ones that will need to find the capital to make the improvements, then the leasers would simply reap the benefits and likely sign new leases with higher premiums to accommodate the improvements. \n\nAre you seeking LEED certification?", "replies": [{"id": "gis9kj4", "text": "Understood. I am on the principal side and we have capital if it makes sense.\n\nLEED is certainly a possibility since is a recognized entity,  but I\u2019m looking at it from a little bit more of a 30,000 foot view. I\u2019m looking to combine my na\u00efvet\u00e9 with wanting to do the right thing and doing the fiduciary duty for our LPs.", "replies": [{"id": "giswe3d", "text": "LEED certifications can mean big tax breaks. You can offset upfront costs by using back end tax breaks and improvement incentives. For example, I volunteered on an environmental board for a small township, which was able to have a 5000 solar panel field installed (over $250k investment) for about $5k-10k (lawyer/engineer fees) while the principal was awarded by Gov Environmental programs. This decision saved the township thousands of dollars per month in energy costs, and has allowed for the town to take these savings and reinvest in improvements to the municipality. \n\nFollowing LEED guidelines also can be a great marketing tool. You can advertise lower operating costs (energy efficiency), healthier work environments, etc. Ultimately, LEED and sustainable development is about conserving resources, using them more efficiently and saving money (from an economic standpoint). These are the arguments I would use with stakeholders.\n\nYour best bet would be hiring an outside LEED consultant to examine the current structure, and design a plan to move forward sustainably. I would be happy to discuss this further with you and see where else I can help out, feel free to DM me.", "replies": [{"id": "gitfxir", "text": "Thanks, I\u2019ll reach out.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gisa7gz", "text": "If they are existing leases and coming up for renewal, I\u2019d avoid these kind of items. You\u2019re tenants have an increased risk of walking.\n\nNew leases, you have access to the space for their improvement at the beginning but you are going to be expected to fork over more money to help pay for the improvements to the infrastructure of the building. \n\nPersonally, in light industrial the tenants are the ones who would push sustainability issues as it saves them the money not the building owner. If your doing build/lease for the tenants, it works but otherwise they won\u2019t care really. \n\nFor tenants that you are the one paying utilities for and just give sqft utility fees to, I\u2019d look at how you can add upgrades to save you the money or properly proportionally bill the tenants for their usage. Water meters, electrical meters, energy meters. Those kind of things.", "replies": [], "depth": 1}, {"id": "gisbbxi", "text": "Upgrade the lights to LED and then upgrade your water fixtures (e.g toilets). Stagger the improvements over a few years but keep it under a certain threshold as per the lease (if not silent) and run it through CAM.", "replies": [{"id": "gisebi4", "text": "That\u2019s essentially what we\u2019re doing right now. Better than nothing, I guess", "replies": [], "depth": 2}], "depth": 1}, {"id": "gise374", "text": "With NNN I think the only way to pass through the capital expense is via a PACE financing", "replies": [{"id": "gise9th", "text": "Thanks for passing that along!", "replies": [], "depth": 2}], "depth": 1}]