New York City Announces Green Lease for Commercial Office Space in World Trade Center
On April 5, 2011, New York City announced that the law firm of WilmerHale signed a commercial office space lease with the developer of the World Trade Center reconstruction project that incorporates language for sharing the costs and benefits of energy-saving measures.
The "green lease" language was developed by real estate industry leaders, environmentalists, and others working with the Mayor's Office of Long-Term Planning and Sustainability. According to the city, it will be used by the Department of Citywide Administrative Services as a model when the city leases building space. Most standard leases have a "split incentive" problem, where owners pay for building energy upgrades while renters reap the savings. However, in this instance, the lease incorporates language requiring tenants to share owner's capital improvement costs. Although traditional commercial office space leases allow tenants to share this cost, the language is rarely used because the period for recouping the costs is too long. The new language counts savings over the length of a projected payback period instead of the useful life of the improvements, thereby shortening the amount of time it takes for the owner to recoup the savings.
According to the city, this project grew out of a Natural Resources Defense Council forum bringing together landlords, tenants, and energy and real estate experts, and is part of a broader green buildings policy pursued by the city that includes, among other things, the Greener, Greater Buildings plan for existing buildings, and the Greening the Codes project, which is looking at ways to green the city's building code. Additional information on the green lease project is available at http://www.nyc.gov/html/om/html/2011a/pr109-11.html.