8.2.5 Green financing
Economic considerations are always a major concern to the property owner when planning environmental friendly
installations in the building. In this regard, a decision to fund green improvements to buildings by calculating the payback
period is justified.
As sustainability is a relatively new concept, and exactly who pays for what is still being determined, landlords and
tenants will have to discuss and decide who should pay.
In reality it is a combined approach. As benefits flow to both the owner and the tenant, both need to invest in the
sustainability of the building. Although the landlord can ensure that the building operates in a sustainable way, the tenants
are responsible for their actions within the building and how they use the space.
The following are some examples of compromises between landlords and tenants when deciding which party should pay
for the capital investment work:
• The tenants pays for sustainability attributes (e.g. increased construction costs or equipment costs to meet higher
performance standards) by sharing capital payments or amortising the cost over the term of the lease.
• If the shop’s fitting-out needs to meet a certain green standard or is required under the lease to achieve a certain green
certification standard, the landlord pays for part of the cost for green certification or discounts the rent as an incentive
to the tenant.
• The landlord covers part of the cost of the facility management process for the tenant if certain processes need to be
followed by the tenant in order to meet the green performance objectives of the landlord.
• The green rating achieved by the tenant will be reflected in the rental under the rent review clause in a lease.
8.2.6 Incentives for tenants to adopt a green lease
Tenants are more and more concerned about the green performance of their building and tenancy. Tenants with green
commitments who want to reduce their
s
are likely to be attracted to buildings that demonstrate a high
level of green performance. Green lease also offers a good opportunity to create a valuable relationship between the
landlord and the tenant and, as a result of their joint efforts, the environmental performance of the whole property could
be improved.
Lease terms that require tenants to renovate within a few years or to relocate their shop within the shopping mall, based
not on the tenants’ need but rather as a standard landlord requirement, should be removed from the lease if the tenant
agrees to adopt a green lease and is willing to pay for the cost for fitting out their shop to meet green performance
objectives set by the landlord.
Under a green lease, a landlord can offer free green renovation and facility management advice and support to tenants.
This will encourage tenants to learn about and adopt green measures in carrying out renovations and in their operations
which will help them to fulfill their targets under the lease.
8.2.7 Professional help
It is important to engage professionals for detailed consultation prior to the introduction of green leases for shopping malls
and shops. The following is a list of references for obtaining professional help:
• Registered professional surveyors (RPS) general practice – Appendix A (9)
• Lawyers – Appendix A (10)
8
Incentives for tenants and shoppers
8.2
Green lease
Green is everybody’s business:
Shopping mall developers, owners, facility managers,
shop tenants and staff shoppers
Hong Kong Green Building Council 177
