7 WTC (right) is now 90 percent leased and the first to use NYC's new 'green' lease details

A major new tenant at 7 World Trade Center (WTC) yesterday became the first participate in a new energy-conservation incentive model that allows building owners and tenants to share in sustainability benefits. Mayor Michael Bloomberg made the announcement on April 5th, alongside WTC developer Larry Silverstein and law firm WilmerHale’s co-managing partner William Perlstein.

“This agreement between Silverstein Properties and the law firm WilmerHale breaks new ground in the field of energy conservation -- and we expect it will be a pioneering model for commercial leases,” said Bloomberg. “This is part of our broad campaign to increase the energy efficiency of large buildings all across the city. When it is fully realized, this ‘Greener, Greater Buildings Plan’ -- the first of its kind in our nation -- will be the equivalent of making a city the size of Oakland, California completely carbon neutral.”

Now the official tenant of 7 WTC’s floors 41 through 45, former midtown firm WilmerHale is the first to incorporate new language crafted by industry leaders to promote enhanced energy efficiency and sustainability.

Under traditional leases, building owners are responsible for the upfront cost of energy efficiency improvements. Tenants, however, are the immediate beneficiaries of those upgrades, in the form of reduced energy costs. Because owners do not share in the benefit, they have little incentive to invest in energy upgrades.

Building on the insights developed by the Natural Resources Defense Council Green Lease Forum, the Mayor’s Office of Long-Term Planning Sustainability brought together a group of real estate, energy efficiency, and legal experts to develop new commercial lease language that allows tenants, such as WilmerHale, and owners, such as Silverstein Properties, to share the costs, as well as the benefits, of energy efficiency improvements.

Current commercial-office-space leases allow for tenants to share the costs incurred by owners for capital improvements, but they seldom do because of the often-lengthy timeframe for recouping the costs.

The lease announced today counts savings over the length of a projected payback period, instead of the useful life of the improvements, shortening the amount of time it takes for the owner to recoup the money from savings -- and thereby making it more likely the owner and tenant will make capital improvements.

The city’s commercial office space leases are negotiated by the Department of Citywide Administrative Services, which Bloomberg said will add the green lease language to all new lease negotiations.

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