Written by: Marta Schantz
By now we’ve all heard of green leases, or energy-aligned clauses, in commercial real estate. These leases or clauses often address a requirement for ENERGY STAR certified appliances or LED lighting, which are relatively achievable since they relate to new pieces of equipment or replacement projects. So when it comes to building systems that are already in place, how do landlords and tenants incorporate lease language to cover those systems? Rooftop Units (RTUs), with long lifetimes and high up-front costs, are often untouched and not-prioritized in the leasing process.
To address this, Waypoint partnered with the National Renewable Energy Laboratory, the Department of Energy, and the Institute for Market Transformation to craft green lease clauses specific to efficiency for RTUs. This Retail RTU Lease Language document provides a menu of potential clauses that retailers and landlords alike can select from and insert into leases or work letters, thereby ensuring that RTU efficiency is considered.
The clauses address a wide range of efficiency considerations: RTU usage and operations, repairs and maintenance, and capital replacement. By including clauses that cover these areas in the lease, landlords and tenants can work together to save money, conserve resources, and ensure the efficient operation of buildings.
Take for example the excerpt 1.4 “Addressing Existing Rooftop Equipment at Time of Lease Start” below, which addresses a situation where the RTU equipment at the time of lease start does not sufficiently meet the tenant’s cooling needs:
1.4 Addressing Existing Rooftop Equipment at Time of Lease Start
Because RTUs often already exist on the buildings at the time of a new lease, they are not considered part of an average tenant fit-out scope. Whether tenant space fit-out funding is from a Tenant Improvement Allowance (TIA) or through turnkey improvements, RTUs are generally not a priority in the Work Letter. By including language that addresses efficiency requirements for new RTUs, as well as efficiency usage and operation practices for existing units, the lease optimizes energy efficiency of the units. Including requirements for quality installation and quality maintenance also support this effort.
Clause: Acquisition of New RTUs upon Lease Start Prior to delivery of possession to Tenant, Landlord shall pay for any additional RTUs to cover increased cooling capacity needs. This cost is outside the Tenant Improvement Allowance or Turnkey structure. ANSI/ACCA Standard 5 for HVAC Quality Installation Specification must be followed for installation of any new RTUs.
To take the next steps in implementing an energy-aligned lease, download the Retail RTU Lease Language document for free and incorporate any of the example clauses into your lease when moving into a new space or when renewing an existing space’s lease. Contact Waypoint at info@waypoint-energy.com with questions or more information, or explore the Green Lease Library website for even more green lease resources and examples.