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Jenney Pidgeon

Where next for landlord tenant collaboration?

The last few years have seen rapid change in the openness of many landlord tenant relationships. Driven by the requirement to meet ever more stringent environmental legislation and reduce occupational costs, the two parties are increasingly working together to overcome the traditional ‘split incentive’ when it comes to allocating the costs and benefits of energy efficiency measures.

The last few years have seen rapid change in the openness of many landlord tenant relationships. Driven by the requirement to meet ever more stringent environmental legislation and reduce occupational costs, the two parties are increasingly working together to overcome the traditional ‘split incentive’ when it comes to allocating the costs and benefits of energy efficiency measures.

Last month, Marks & Spencer launched an industry-leading agreement to sign a ‘green’ Memorandum of Understanding (MoU) with all members of the Better Buildings Partnership, comprising nine leading UK landlords, including Henderson. Green leases and MoUs are nothing new in the industry, but this is the first time that such a collaboration has been led by a retailer and at such scale.

Clem Constantine, Director of Property at M&S, said: “70% of current commercial buildings will still exist in 2050, so if we are genuinely going to tackle the problem we have to invest in eco solutions for existing buildings. Green leasing … provides the framework within which (landlords and tenants) 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.”

As the requirements to meet planners’ BRE Environmental Assessment Method (BREEAM) standards, achieve higher Energy Performance Certificates (EPC) ratings, reduce occupational costs and improve the energy efficiency of our buildings increase, it will be interesting to see what the next development in ever-closer landlord tenant relationships will be.