The Myth: Green Buildings & Green Leases Don’t Make Sense with Triple Net Lease Properties

A new report from the Institute for Market Transformation (IMT) debunks the anecdotal understanding in the commercial leasing industry in Nevada that Green Buildings don’t make financial sense for the building owner from a net operating income (NOI) basis.

By including a handful of new or modified clauses in a traditional commercial lease, both owners and tenants can better realize the benefits of energy efficiency measures which contribute to higher-quality spaces for tenants, who recoup their investment through lower utility bills, lower state property taxes (up to 35% for 10 years!), and improved productivity and comfort for their employees (employee retention is a big issue with millennials in particular).

The IMT report also explores how green lease clauses improve property values for owners, who enjoy slightly higher rents and lower vacancy (federal and state agencies prefer and often require certified buildings or lease spaces).  The LaPour Building, Molasky Corporate Center, and 302 Carson downtown are good examples of green buildings that have enjoyed higher than average occupancy rates.  These buildings also benefitted from significant state tax abatements available through the incentive regulation in NRS 701A.110, administered through the Nevada Governor’s Office of Energy.

Next month: Commercial Rooftop Solar Alive and Well: PPA’s and the Nevada Revolving Loan Fund

Rick Van Diepen, AIA, LEED AP is a Principal at Greenview Global LLC and serves as co-chair of the NAIOP Sustainable Development Committee