Addressing environmental performance through best practice leases

by FM Media
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How to tackle the obstacles to addressing environmental performance through best practice leases is noted by the Better Buildings Partnership.

Ninety-eight percent of the buildings that tenants will let in the next 30 years already exist today. This means the majority of Australia’s commercial office buildings will experience significant refurbishment in that period. These will largely need to occur with tenants in situ.
Balancing capital works and performance upgrades with the day-to-day needs of tenants will inevitably require a lease that encourages owners and tenants to collaborate and share environmental savings and benefits in the spirit of partnership.
As a model, a best practice lease has no fixed form, but simply provides a framework that facilitates the building’s usage in a more efficient way. This framework encourages the collaboration between tenant and owner, and broadens that concept to include the wider audience of operators and occupants of the space, enabling either party to conduct works where standard practice has historically restricted it.
The facilities manager’s role in delivering this vision is critical, given that they are primarily tasked with optimising performance within the bounds outlined in the commercial lease between owner and tenant. As leases have evolved in the Australian market, a number of overly prescriptive clauses have crept in, dictating the range of a building’s performance.
This is a divergence from global best practice of collaborative performance-based space operation and often actually reduces both the environmental impact and productivity of the leased space. Examples of these restrictive lease conditions include:

  • over-prescriptive measures relating to temperature set points
  • the presence of non-negotiable make-good clauses often agreed some 10 years prior to actually taking effect, and
  • the inflexibility of clauses that explicitly prevent effective tenant and building owner engagement around potential environmental initiatives.

These clauses slow the ability to improve Australia’s commercial building stock, an issue that will only continue to magnify as electricity prices increase and climate conditions potentially become more volatile.

In order to understand the true needs of the industry and establish the most feasible path forward, the Better Buildings Partnership has engaged with leading decision-makers within each specialist field of the leasing process (building operators, transactional agents, lawyers, owners and occupants).These representatives have identified three key areas of activity to help unlock the barriers to best practice leasing, and which the Better Buildings Partnership will focus on in the coming months:

  1. Facilitation of the leasing process through mapping the process and ensuring the early provision of good information and engagement of the right expertise
  2. Negotiation of the best lease for all parties, balancing a level of risk management within the document itself
  3. Education of the occupiers, designers, agents and facilities managers that interact with the leased space, but do not sign a legal document

In order to get started on encouraging the uptake of best practice leasing across the industry, we first need a shared understanding of what this process looks like. The Better Buildings Partnership’s Leasing Lifecycle Tool seeks to improve the facilitation of the leasing process by sharing information on who to engage, when to engage them, what resources to have and the questions to ask. It is the role of the facilities manager to demonstrate the opportunities that exist.

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