Stephen Del Percio of Green Real Estate Law Journal recently participated on a panel in New Yourk discussing challenges of smaller companies negotiating green leases. Following the panel discussion, Del Percio received news of a successful green lease negotiation involving two smaller tenants at a site in Oregon.
I point this out in light of a recent report from Portland, Oregon that two small commercial tenants have signed green leases with Unico Properties at the historic 13-story Commonwealth Building, located downtown at 421 SW 6th Street between Washington and Stark Streets. The Northwest Energy Efficiency Alliance (?NEEA?) and Green Building Services (?GBS?) took 20,000 and 10,000 square feet, respectively. According to a Unico press release, ?[b]oth NEEA and GBS required green lease provisions which contractually bind both tenant and landlord to choose green products and practices. Green leases are relatively new in the Portland market and they include . . . following strict sustainability LEED-CI guidelines for tenant improvement projects.? In the release, Unico?s general manager for its Portland portfolio, Brian Pearce, said that ?[a]lthough Unico does many of these things voluntarily, we want our tenants to know that sustainability is not an option for us- we are fully committed to it.?
I had the opportunity to speak with Mr. Pearce about the green obligations in each of the two leases. Interestingly, NEEA actually approached Unico about inserting certain green provisions into its lease, including dedicated recycling space, access to bicycle storage, changing rooms, and showers, and a definition of building operating expenses that allows Unico to recover the costs of any capital improvements to the building which increase the tenant space?s energy efficiency. ?The $65,000 question is whether any other tenants come along like NEEA,? Mr. Pearce said. Unico has also set LEED-CI certification as a ?green benchmark? for all of its tenant improvements. ?LEED-CI certification is important to these types of tenants, so baiting them with Certified spaces made sense for us,? he noted, ?but if tenants want to go beyond Certified, that?s on their nickel.? Mr. Pearce also explained that although Unico has ? in other deals ? provided allowances to certain tenants for various levels of LEED certification or other green improvements, the two leases in the Commonwealth Building were turn-key. During our conversation, I was particularly interested to hear that both NEEA and GBS also asked Unico to commit in their leases to pursuing a LEED-EB rating for the property, but for many of the legal reasons which we have stressed here at GRELJ previously, Unico refused to make that representation. ?Certification is handed down by a third-party entity over which we have no control,? Mr. Pearce said.