Real Estate — Sustainable Development

The past few years have seen an exponential growth in sustainable development. Green and sustainable real estate development, while once a trend or fringe concept, is now rapidly redefining real estate development practices in many different jurisdictions. The growing momentum toward green development is the result of a combination of factors – state and local government mandates, corporate sustainability initiatives, and owner and tenant demand, as well as the lower operating and maintenance costs that energy-efficient buildings can provide over the life of the building. The public sector, including all levels of government, is increasingly focused on green and sustainable real estate development. In fact, the U.S. federal government and many state and local governments have mandated that publicly financed real estate development projects meet certain green standards. Increasingly, these requirements are also becoming an important component of privately financed real estate development projects. Additionally, increasingly across the United States in particular, whether a project will be green or a sustainable development plays a major role in determining whether the project will receive the necessary financing, public support, and governmental approvals to move forward. Owners, investors, and developers increasingly recognize that green buildings are effectively redefining what constitutes Class A office space and understand that they risk being at a competitive disadvantage unless buildings are constructed (or retrofitted) to new green standards, particularly as the economy rebounds. This is also true of the retail and industrial sectors.

Green issues have the potential to impact just about every aspect of a green building project, including site selection and due diligence, financing, tax and other financial incentives, entitlements, design, construction, tenant build-out, leasing, maintenance and operations, statutory and other compliance, third-party sustainability certification, insurance, renewable energy and carbon credits, and so on. Whether the standards and expectations associated with green buildings in a particular jurisdiction are in their infancy or relatively well-developed, this is a rapidly evolving area, making it increasingly critical that the attorneys who advise clients pursuing these transactions are well-informed not only regarding best practices but also the potential problems and pitfalls associated with practice in these fast-developing areas. Our lawyers are well-positioned to assist our clients with every aspect of the financing, entitlement, and construction processes associated with green and sustainable development projects. With respect to the financing process, we assist our clients with the myriad of financial incentives and tax benefits that exist for green projects. In the context of the entitlements process, we assist our clients with public and governmental relations outreach efforts and with necessary amendments to local regulations and approvals processes that often are required to move a project through the entitlements process. Finally, with respect to the design and construction process, we assist clients with the unique issues that arise in the context of design and construction contracts for green projects and projects for which third-party certification, such as LEED, will be sought.

Most major corporations have developed public sustainability policy statements and are under increasing pressure to operate sustainably - whether from their investors, customers, or shareholders. However, "going green" can be a seemingly daunting task, and many corporate executives and managers are actively seeking innovative and effective sustainable real estate solutions that can be implemented to meet corporate sustainability goals. While sustainability certification (primarily LEED certification) for new construction and renovation projects is well understood and provides a ready opportunity for building owners to meet sustainability goals, few people realize that a tenant can often secure LEED certification for the leased premises on a stand-alone basis regardless of the certification status of the building within which the premises are located. For those corporations that do not own the buildings that they occupy, the ability to pursue certification for the build-out of the leased premises provides a valuable and highly achievable opportunity both to achieve LEED certification at little or no additional cost and to communicate the tenant corporation's environmental stewardship to the marketplace. Recognized nationally for their leading edge work in this field, our lawyers have not only developed industry-leading lease and related documents which track and support LEED certification for the premises, but they have also negotiated sustainability provisions across a wide variety of leases, assisting both landlords and tenants with all aspects of the lease negotiation process, including site selection, RFP, LOI, and lease negotiation, as well as the build out and ongoing operations within the premises and building.

K&L Gates is a member of the United States Green Building Council (USGBC), an organization committed to a prosperous and sustainable future for our nation through cost-efficient and energy-saving green buildings.

The U.S. Green Building Council (USGBC) is a 501(c)(3) nonprofit composed of leaders from every sector of the building industry working to promote buildings and communities that are environmentally responsible, profitable, and healthy places to live and work. K&L Gates has permission to use the USGBC logo, which is a trademark owned by the U.S. Green Building Council.