MAGAZINE: Green leases go mainstream

A growing number of property landlords are rolling out green leases as part of their sustainability strategies

German listed company IVG Immobilien may be having trouble restructuring its debt load, but it is well on its way to greening the leases in its property portfolio. In March this year, the Frankfurtlisted company announced that nearly 25% of its new rental agreements included ‘green leases’ in 2012.

A pilot project by the IVG branch in Hamburg in the first two months of 2012 showed that lessees reacted positively to green leases for new and subsequent letting. ‘Many companies are conscious of their obligation to act sustainably and want to use their space in an environmentally aware manner,’ said Peter Forster, chairman of IVG Asset Management. ‘The green clauses in the rental agreements were therefore very well received.’ IVG is striving to expand the proportion of green leases signed. ‘We are only just getting started and want to achieve a ratio well above 50%,’ Forster said. Building on the results of the pilot project, IVG has been including green clauses as standard in contracts for new leases and lease extensions throughout Germany since March 2012. In total, IVG has now let about 76,000 m2 of space under green leases. AXA Real Estate Investment Managers is another pioneer in Germany and has introduced green leases for all its commercial lettings in the country. The lease format is being implemented in France as well and the Parisbased company aims to roll out green leases across its entire portfolio. Deutsche Bank has likewise adopted green leases and has adopted very high standards in this area, according to Elsbeth Quispel, the recently appointed head of sustainability of the Amsterdam-based Global Real Estate Sustainability Benchmark (GRESB). ‘There’s a high level of detail in the contracts. There’s actually a clause in the leases specifying which cleaning fluids should be used in an office.’

Green rating audits at new high in Europe
The Green Rating Alliance (GRA) has issued audits covering more than seven million m2 of commercial real estate
in Europe. The sustainability body expects this growth to continue over the next 12 months. Launched in 2011, the non-profit association counts several leading real estate firms among its members, including AEW Europe, Allianz Real Estate, AXA Real Estate and CBRE Global Investors. GRA chairman and CEO EMEA at CBRE Global Investors Pieter Hendrikse expects membership to expand further in 2013. ‘Increasing the number of audits in Europe was one of the most important goals for 2012. Bringing in two new members, Invesco Real Estate and Valad, means we have also broadened the membership base to underline that the Green Rating Alliance is an initiative truly driven by large European real estate companies,’ he says. In November last year, GRA joined forces with the Global Real Estate Sustainability Benchmark (GRESB) to increase cooperation and data sharing as part of their broader goal to help improve the sustainability performance of investment portfolios and the sector at large. At the time, GRA’s Hendrikse said GRESB was the ‘perfect partner’ for the alliance. Both organisations are committed to independent evaluation of the sustainability performance of the real estate sector and are mutually complementary, he said. ‘While GRA is focusing on property sustainability performance, GRESB is assessing property funds and companies. Both associations will benefit from each other by sharing their knowledge, joint activities and discussions between their members within the international real estate industry.’ The GRA currently has over 20 members. Besides Invesco and Valad, participants include GE Capital Real Estate, KanAm Grund and LaSalle Investment Management.

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