What are Green Leases?

Green leases (also known as aligned leases, high performance leases, or energy efficient leases) align the financial and energy incentives of building owners and tenants so they can work together to save money, conserve resources, and ensure the efficient operation of buildings.

Why Are Green Leases Important?

Building leases lay out how energy costs are divided between tenants and owners. Often, these leases are not structured in a way that promotes energy savings. Under most gross leases, for example, tenants have no incentive to save energy in their leased premises because energy costs are based on tenant square footage. Under most net leases, building owners have no incentive to invest in efficiency for their building systems because the operating expenses are passed through to tenants, who would therefore receive all of the energy cost savings.

Green leases promote energy efficiency by creating lease structures which equitably align the costs and benefits of efficiency investments between building owners and tenants.

Real Success Stories

As a participant in the Department of Energy's Better Buildings Challenge, the Tower Companies implemented green leases throughout their portfolio. David Borchardt, Chief Sustainability Officer of Tower Companies, describes the impact green leases have had in the below video.