Sustainability in Commercial Leasing

While it is customary to blame vehicles for contributing to our carbon footprint, buildings and the construction sector account for close to 40% of global CO2 emissions, compared to just 10% for vehicles. So, it is fitting to consider ways to reduce a building’s carbon footprint. Things have come a long way since the first Canadian “green lease” was proposed by REALPAC in 2008, but we still have a ways to go. In that regard, Canada lags behind its European neighbours, where the European Climate Pact is helping set achievable goals to improve energy performance in existing buildings, and new targets for sustainability in new construction.

While cost concerns have been an impediment to creating more sustainable buildings, experience out of the European Union is that “green” buildings lease for higher rents, have less occupancy downtime, and ultimately have a greater value on sale. Many of today’s top-rated tenants have environmental, social and governance (“ESG”) requirements which lead them to reject so-called “brown” buildings in favour of a more sustainable workplace. In some parts of Europe, tenant and building consumption data is collected and made publicly available, and tenants who consume excessive amounts of power, water or natural gas (and the building owners who permit this) may face a backlash.

Closer to home, the CleanBC Roadmap to 2030 (released in the fall of 2021) established goals for zero carbon in new construction, higher efficiency standards in HVAC and water heating, and the use of low carbon building materials, such as mass timber and carbon absorbing concrete. City of Vancouver recently released its Zero Waste 2040. And retail tenants as diverse as Starbucks and H&M have bold plans to reduce emissions and waste in their industries.

As developers, owners and tenants become more aware of the advantages of constructing and operating a “green” building, and with the possible benefit of government incentives to build lower emission buildings (or disincentives, in the case of existing buildings which are high emission), we’ll hopefully be able to begin to reduce that 40% figure to something more manageable. And while electric vehicles are helping reduce emissions on the road, the real success story will be reducing carbon emissions in commercial buildings.

For more information on commercial leasing and the impact of sustainability initiatives on commercial builders, please contact Peter J. Anderson or Serene S.Y. Chow.