In the United Kingdom, Major Retailer Unveils “Transformative” Green Lease Policy

In a move that it describes as “transformative,” one of the UK’s largest retailers has announced a major initiative that will incorporate green lease obligations into all of its new and existing shopping center and retail park leases.

An M&S BREEAM “Excellent” store on the London outskirts.

The UK-based retailer Marks & Spencer has announced a sweeping initiative that will aim to make green-related clauses standard within all of its leases for new shopping center space across the United Kingdom. It will also collaborate with some of the largest commercial property owners in the UK who make up England’s Better Buildings Partnership – including British Land, Canary Wharf Group, and Hammerson, among others – to retrofit its existing leases to incorporate green provisions.

M&S, which counts 760 stores in the UK, will implement the green lease language initially at 70 locations, including the Brent Cross shopping center in London and Silverburn in Glasgow. M&S was specifically interested in developing a green leasing program for its locations in shared environments like shopping centers and retail parks, where the landlord/tenant relationship is more complex because of the inherent nature of those sorts of leasing structures.

The language, whether in new leases or retrofit agreements, is designed for both landlord and M&S to share waste information and data – gas, electricity, and water – in each demised space to encourage savings (what gets measured gets improved, of course). It also contains what appear to be aspirational green lease goals, encouraging the parties to invest in advanced building technologies like biomass boilers and LED lighting to rainwater harvesting and other systems. But it is unclear exactly how those obligations are set forth in the specific language that is being implemented. Still, M&S’s new lease language is based on the Better Buildings Partnership’s own Green Lease Toolkit, a free guide that aims to “break down barriers between tenants and landlords in order to achieve meaningful reductions in the environmental impact of commercial buildings.”

“The BBP has been developing ways to break down landlord/tenant barriers since its inception five years ago,” Keith Bugden, Executive Director of the Better Buildings Partnership said in a press release. “Our industry leading work on green leases, including the publication of our Green Lease Toolkit, has paved the way for this exciting new initiative and I’m delighted that the hard work and commitment of our members has resulted in such a significant breakthrough. We hope of course that this is just the start and that other commercial tenants will see the benefits to be gained from such a partnership.”

“Currently it can be difficult for landlords and tenants to work together when it comes to a building’s environmental performance, particularly for older leases. There’s often no real structure for measurement, incentives or sharing of goals,” Clem Constantine, Director of Property at M&S said in the same press release. “Green leasing changes this situation as it provides the framework within which both can work together. And both will benefit, a store with a reduced environmental impact and lower costs is more marketable for landlords and more cost effective for tenants to occupy – a genuine win, win.”

Seventeen percent of all carbon emissions in the UK come from commercial and industrial buildings, and M&S is in the throes of trying to reduce energy consumption in its stores, offices, and warehouses by 35 percent by 2015 (against a 2007 baseline). Already the company has dropped consumption by 28 percent.

The UK’s BBP was created in December of 2007 and includes British Land Company, Grosvenor, Hammerson, Hermes Real Estate Investment Management Limited, Land Securities, Transport for London and the Mayor of London, Blackstone Group, Canary Wharf, GE Capital Real Estate, Henderson Global Investors, Legal & General Property, PRUPIM, Quintain, Workspace Group, The Cadogan Estate and LaSalle Investment Management.

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