SP Digital | The Growing Allure of Green Leases
The Growing Allure of
Green Leases
These days, organisations are looking beyond location, size and price when it comes to choosing the ideal office space. A building’s ‘green factor’ has become part of their considerations.
In a recent Business Times article1, an industry expert stated: “In today’s context, ESG (environmental, social, and governance) compliance for office buildings is no longer a good-to-have, but a must-have, especially for large and multinational corporations.”
Green features draw ESG-minded tenants, who see the value of incorporating green clauses into their lease agreement – otherwise known as green leases.
According to BCA’s Green Lease Toolkit2, a green lease is an agreement between landlord and tenant that sets out environmental objectives for how the building is to be improved, managed, and/or occupied in a sustainable manner.
This yields cost optimisation in energy and water, which can be shared among parties, and also results in a better indoor environment for occupants.
For instance, installing energy-efficient lighting reduces cooling costs as they generate very little heat. Landlords and tenants thus benefit from reduced lighting and air-conditioning energy consumption.
In a green lease, clauses from the Toolkit’s Green Schedule form part of the tenancy agreement. This helps improve the environmental performance of the building in a collaborative manner.
Green leases are flourishing across Asia Pacific. A 2022 survey3 noted that up to 42% of occupiers and large developers have signed leases incorporating green clauses. What’s more, 65% of sustainability leaders believe that green leases would replace conventional leases by 2025.
This demand translates to higher rents for green building owners. 67% of corporate tenants indicated they would be willing to pay a premium of less than 5%, while 33% are willing to pay a premium of 10% or higher.1
Green leases are not just for Super Low Energy Buildings (SLEB). Existing buildings can also meet the sustainability checklists of eco-conscious tenants with SP Digital’s Green Energy Tech (GET™) solutions.
Our GET™ suite enables building owners and facility managers to leverage smart insights to optimise energy efficiency, enhance occupant experience, and advance greening efforts. Think of it as your springboard to sustainability.
Inspired to go green? Here are some solutions to explore:
GET™ Insights
Energy and water consumption make up a significant portion of a building’s operating expenses. GET Insights lets you keep tabs on their usage in real-time across your property portfolio via a single utilities dashboard.
You can obtain granular data with which to analyse trends and glean insights, and even receive alerts on possible anomalies so you can rectify issues quickly.
GET™ TenantCare
If you have multiple tenants, such as in a retail or commercial setting, put this in place to increase operational efficiency and productivity.
GET TenantCare is a tenant submetering solution that uses smart meters to give you automatic and accurate readings. You’ll gain energy consumption insights and tips to improve energy efficiency and advance sustainability efforts collectively with your tenants.
GET™ Control
GET Control is a game changer for energy and carbon efficiency. Our innovative microclimate control system utilises AI and IoT to optimise air-conditioning and energy efficiency, based on occupancy and ambient weather conditions.
You can quickly retrofit devices to your existing air-conditioning and mechanical system (ACMV), and save up to 25 man-hours compared to a Variable Air Volume (VAV) system replacement. The gains are significant: potentially save up to 30% on cooling energy and 18% on carbon emissions.
The authorities are encouraging buildings to go green as part of Singapore’s goal to achieve net-zero emissions by 2050. This helps to shield our vulnerable island state from the effects of climate change and safeguard our future.
On the demand side, more organisations are doing their part by seeking responsible leases, even though they cost more. Greening our built environment is the way forward.
An industry expert stated: “Buildings that do not keep up will face obsolescence, penalised by a heavy brown discount and risk becoming stranded assets.”1
SP Digital is here to ensure that your buildings are ready to fulfil green leases. Talk to us to explore customised solutions for your needs. Contact us now.
Footnotes
1Singapore office landlords bank on green leases, ESG compliance to woo tenants at higher rents, Business Times, Jan 2024
2BCA Green Lease Toolkit, www1.bca.gov.sg
3Green leases: Setting the tone for responsible leases, jll.com.sg