The Indian real estate sector is undergoing a transformation, driven by a growing focus on sustainability. Green leasing is emerging as a key driver of this change, offering a win-win situation for both landlords and tenants.

What is Green Leasing?

Green leasing is a type of commercial lease agreement that incorporates sustainability-focused clauses and incentives. It goes beyond the traditional lease by promoting practices that improve the environmental performance of buildings. These practices can include water conservation, energy efficiency, waste reduction, and promoting occupant health.

Benefits of Green Leasing for Everyone

Green leases offer a range of advantages for both landlords and tenants:

• Reduced Operational Costs: Energy-efficient measures, like improved lighting and heating, ventilation, and air conditioning (HVAC) systems, can lead to significant savings on utility bills for tenants. Landlords can also benefit from lower maintenance costs associated with sustainable practices.
• Enhanced Occupancy Rates: Studies show that green-certified buildings command rental premiums and enjoy higher occupancy rates. Tenants looking for a sustainable workspace will be drawn to properties with green leases.
• Meeting Sustainability Goals: Green leases can help both parties achieve their environmental targets. Landlords can showcase their commitment to sustainability, while tenants can reduce their carbon footprint.
• Improved Indoor Air Quality: Green leases can promote better air quality through measures like proper ventilation and filtration, leading to a healthier and more productive work environment for tenants.

What’s Included in a Green Lease?

There’s no one-size-fits-all green lease. The specific clauses will depend on the priorities of both parties. However, some common elements include:

• Energy Efficiency: This might involve installing energy-saving lighting or requiring tenants to turn off equipment when not in use.
• Water Conservation: Low-flow fixtures and responsible landscaping practices can be encouraged by the lease.
• Waste Management: Provisions for recycling and composting programs can be included.
• Indoor Air Quality: The lease might address ventilation, air filtration, and the use of eco-friendly cleaning products.
• Data Sharing: Sharing energy and water consumption data can help monitor progress and identify areas for improvement.

The Rise of Green Leasing in India

The Indian real estate market is witnessing a surge in green leasing adoption. Green-certified buildings are not only environmentally friendly but also financially rewarding. They command rental premiums of 9-13% and boast occupancy rates 300-500 basis points higher compared to conventional buildings.

Learn more about Sustainability in REMI’s 1-day executive program on Sustainability and Green Building.

With the Indian government’s ambitious net-zero targets, green leasing is expected to play a crucial role in achieving environmental goals. By incorporating sustainability into lease agreements, both landlords and tenants can contribute to a greener future for the Indian real estate sector.