Research suggests the green building benefits can add 7% to rents but the message isn’t getting through to landlords yet.

This was identified at the earlier Low Carbon Champions programme and the recent SABRE close out event.  Landlords face a dilemma when matching the term of low carbon investments which can be as long as fifteen years with lease commitments which can be as short as six months.

The problem for landlords is how to recoup energy saving investments.  Typically energy costs will be charged directly so tenants enjoy the cost reduction not them.  The main options are a surcharge on energy prices and/or on rent.  This can work but only if the linkage is both plausible and explicit and at Neutral Territory we follow a simple 3-step Measure, Reduce, Balance model.

• First, we Measure energy use and cost out viable reduction projects.
• Second, we calculate the cost of energy Reduction projects and amortize these over the payback period of a maximum of ten years. This is then clearly charged on to tenants (£1.00 per sq foot) at above the market rent.
• Finally, we make a small surcharge on energy use (£0.15 per sq ft) to pay for Balancing (i.e. offsetting) the remaining carbon through World Land Trust.

We encourage tenants to pay this due to the resultant savings in energy and their commitment to a green economy.