Page 300 - The Green Building Bottom Line The Real Cost of Sustainable Building

278 CHAPTER 9

Once the landlord and tenant have come to agreement on basic terms such as the
amount of space the tenant will lease, the rent the tenant will pay, and the length of
time the tenant will lease the space, the parties can begin negotiating the specific pro-
visions of the lease agreement, including 1) the tenant build-out, 2) the economic
structure of the lease, 3) the costs associated with operating the building, 4) tenant
operations, 5) the rules and regulations governing tenant behavior, and 6) repairs and
alterations. Let’s consider each of these provisions in greater detail.

TENANT BUILD-OUT

One of the first and most important elements of any type of lease is an agreement
between the parties as to the nature of the design and construction of the improve-
ments in the tenant’s space. Depending upon the extent to which the landlord desires
to incorporate the green elements of the building design into the individual tenant
spaces, the lease agreement will need to be highly specific about the design of the
space, as well as the manner of construction. Likewise, if the landlord is requiring the
tenant to construct its interior improvements to a particular standard (e.g., LEED for
Commercial Interiors), this requirement must be specifically set forth in the lease
agreement, along with appropriate tools for the landlord to ensure compliance by the
tenant with this requirement. Examples of specific provisions that may be set forth in
a green lease include requirements for management of any waste resulting from the
demolition and removal of existing improvements, as well as during the construction
of new improvements in the space; the reuse of any existing improvements or fixtures;
the nature and source (e.g., recycled content and/or local sourcing requirements) of the
materials utilized in the construction of the improvements; requirements for the use of
non-VOC emitting paints, stains, and sealants; standards for ensuring and measuring
the indoor environmental quality of the tenant’s space (as well as its impact on the
remainder of the building); the type of furnishings and equipment that may be utilized
in the space; and the incorporation of daylighting, individual climate control, etc., in
the design of the tenant’s space.
There are a number of tools that a landlord can use to regulate and enforce any par-
ticular requirements regarding the construction of the tenant’s space. Most important
is the right to review and approve the tenant’s plans and specifications. Further, the
landlord could require the use of a particular contractor acceptable to the landlord or
reserve the right to approve any contractor selected by the tenant for the construction
of the tenant’s improvements, as well as the right to review and approve the construc-
tion contract with the approved contractor. The lease agreement may also contain a
“work letter” or construction exhibit that prescribes the allocation of responsibilities
between landlord and tenant, establishes timing and approval procedures, describes
the specific materials and fixtures the tenant must use, etc., in connection with the con-
struction of the improvements in the tenant’s space.
Beyond regulating the construction of improvements to the tenant’s space, the land-
lord may have an interest in regulating the type of furnishings and equipment brought
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into the space by the tenant. This may be as simple as requiring Energy Star labeled