How smart is green?

Green leasing, which sees building owners and tenants introduce sustainable practices into building operations to mutual advantage, has taken off internationally.

In South Africa, however, awareness of the concept is just filtering through to larger organisations. With the Green Building Council of South Africa (GBCSA) about to release its first Green Leasing guide and toolkit early in 2012 -- and our energy bills scheduled to go up again by 25 percent next year -- Johnson Controls Energy Solutions takes a closer look at the challenges and opportunities.

Says Karl van Eck, Regional General Manager: Johnson Controls Energy Solutions Africa: "Green leasing offers enormous benefits to property owners, tenants, governments and, of course, the planet. By making use of new approaches, technologies and equipment to, among others, conserve the use of water and energy and better manage waste, tenants and owners can cut costs and emissions - reducing their carbon footprint."

For the tenant it means a healthier environment and greater staff productivity, lower utility bills and meeting triple bottom line requirements. For the building owner, a green rating increases the marketability and market value of the asset. LEED rated buildings in the USA, for instance, have an eight percent higher occupancy rate and a 17 percent higher rental return for owners.

Despite these clear advantages, introducing green leasing clauses or getting buy-in from a building owner to implement green practices, can be challenging. It's not just about committing to and recovering the investment needed to green a building, it's about getting buy in, agreeing on the way forward, then measuring, monitoring and enforcing those agreed green practices.

The investment for a building owner can be significant, as greening a building may include replacing or upgrading lighting as well as heating, ventilation and air conditioning (HVAC) systems; possibly integrating disparate systems to a single building management systems to ensure optimal energy usage; or even adapting the 'skin' of a building for better insulation and to promote greater use of natural light. Recovering those costs could take a number of years. As benefits of greening mostly accrue directly to tenants, who not only save on energy use but can offer staff more pleasant, healthier surroundings, it makes sense for the building owner to recover all of the costs through amended lease clauses. These can, however, prove difficult to negotiate, especially if you are talking about a 20-storey building with more than 100 tenants whose leases all expire at different times.

For tenants a key underlying driver in South Africa is the cost of energy that rises by 25 percent yearly. "While tenants who are committed to sustainable operations can implement a number of actions to shrink their company's carbon footprint – like monitoring and better managing their own energy and water consumption and introducing green waste practices – green leasing will only become a reality when owners and tenants all buy into and enforce the practice of green building operation principles," says Van Eck.

An important driver is increasing awareness of the benefits of green leasing, he notes, and making use of practical tools to facilitate tenants and owners on their journey to achieve this status.

The GBCSA, which has to date created a number of Green Star SA rating tools for new builds and major refurbishments, has over the last 4 months been hard at work with partners and industry stakeholders like the South African Property Owners Association (SAPOA) to put together guidelines and a practical toolkit to introduce green leasing to the South African market and facilitate its implementation.

Says Manfred Braune of the GBCSA: "While it's been very important and useful to put in place a South African green building rating system for new structures and major refurbishments, similar to the USA's LEED rating system, for the bulk of building stock in South Africa once-off large refurbishments are often too costly and thus not done - going green, to be viable, has to be feasible in smaller incremental steps, and in a way that landlords and tenants can both share in the benefit of improved building performance. The Green Lease Tool Kit identifies ways in which this can be done, and provides tools for South African landlords and tenants to collaborate towards this common goal."

The Green Lease Tool Kit looks at how tenants and owners can benefit from green leasing, at ways of engaging to achieve this, and the challenges and opportunities that arise at different stages of greening an operational building.

"Green leasing introduces a new relationship dynamic to overlay on the traditional interactions between landlords and tenants. To achieve green goals there needs to be an open relationship – transparency and willingness to share benefits – with regard to building performance, operations and cost. Key indicators like water and energy use, waste generation and its disposal need to be disclosed. That information needs to be collated and made available to all stakeholders; and a concrete plan for year on year improvement must be put in place," says Braune.

There are benefits for both tenants and landlords, he says. By openly engaging and negotiating how those benefits will be shared, everybody wins. The alternative is that everyone loses.
"Johnson Controls manages over 100 million square meters of property for clients across the globe. Introducing sustainable green practices and especially green energy solutions are becoming best practice. South Africa can learn and benefit from these best practices – it's not just the right thing to do, it's the smart thing to do," says Van Eck.

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