'Green' leases seen as wave of future

Allan and Anita Malbranck, owners and developers of a recently completed green commercial building at 1735 Corydon Ave., figured if the building is green, it made sense to go with green leases, as well.

A green lease incorporates sustainable development principles into the terms of the lease to minimize a building's impact on the environment.

The Real Property Association of Canada (REALpac) developed the country's first standard green lease for the Canadian office rental market last year. It enables landlords and tenants to set targets for things like energy and water consumption, indoor air quality, recycling practices and the use of sustainable building materials, furniture and equipment in their building.

Allan Malbranck said that as far as he can tell, their building is the first multi-tenant retail building in Manitoba to require its tenants to sign green leases.

Ken Jones, past-chairman of the commercial division of the WinnipegREALTORS, said although there are quite a few green commercial buildings now in Winnipeg, he's not aware of any that have taken it one step further by switching to green leases, as well.

"But it's definitely something that's going to be the wave of the future," he said.

REALpac CEO Michael Brooks agreed. He said while the use of green leases is still in its infancy stages in North America, that will change as more green buildings are built and more businesses start paying attention to energy conservation and protection of the environment.

Brooks said it's impossible to say how many commercial buildings in Canada are using green leases because no one, including REALpac, tracks that at the moment.

"I would say (the number) is limited, but it's growing."

Although Brooks wasn't aware of the Malbrancks' decision to adopt green leases for their building, he said they should be commended for doing so.

"We need more poster children like them in Canada."

The Malbrancks' jewelry store -- The Diamond Gallery -- occupies about 1,400 square feet on the main floor of their new 12,800-square-foot building. They plan to rent out the rest of the building to either retail or office tenants.

Only one tenant has been signed since their building was completed in June. Lux For Sprouts, a local children's clothing and toy store, has leased the rest of the main floor (about 4,100 square feet), and hopes to be open for business by Nov. 1.

Allan Malbranck said it likely would be easier to attract tenants if they didn't have the green-lease requirement. He said a number of leasing agents and prospective tenants have inquired about the space, but backed off when they found out about the green leases.

"They didn't come right out and say it, but you got the sense it was an issue with them."

But despite that, he and Anita remain committed to the concept.

"It's part of the vision we have for the future of the Diamond Gallery," Allan said.

Lux For Sprouts owner Lysa Porth said one reason she chose the Malbrancks' building over space on Kenaston Boulevard was the green lease.

Porth said her one-year-old store carries a lot of green products and has incorporated a lot of green practices into its everyday operations. That includes using bags made from recycled materials, reusing packing boxes whenever possible, and emailing receipts to their customers instead of giving them a paper version.

"We were trying to (reduce the store's environmental footprint) anyway," she said. "So it's a really good fit for us to be in this building."

Know of any newsworthy or interesting trends or developments in the local office, retail, or industrial real estate sectors? Let real estate reporter Murray McNeill know at the email address below, or at 697-7254.

murray.mcneill@freepress.mb.ca

How it works

Allan and Anita Malbranck, owners and developers of a new "green" retail/office building at 1735 Corydon Ave., are believed to be the first landlords or property managers in Manitoba to require their tenants to sign "green" leases. Here are a few questions and answers about green leases:

Q: What are they?

A: A green lease incorporates ecologically sustainable development principles to minimize a building's impact on the environment. The Malbrancks, for example, require their tenants to deposit their waste paper, plastic and glass containers and materials in recycling bins set up on the property. They're also required to use energy-efficient light bulbs and office equipment; to use environmentally friendly flooring, cabinets and building materials, and to avoid using chemicals that are harmful to the environment -- for example, soaps that contain phosphorous.

Q: How common are they?

A: Michael Brooks, CEO of Toronto-based Real Property Association of Canada (REALpac), says they're quite common in Australia, but relatively new in North America. He said while no one is tracking how many are in use in Canada, the number is "limited but growing."

Q: How do landlords benefit?

A: It helps to maximize the long-term return on their investment because the operating and maintenance costs are considerably lower for green buildings. Research also indicates some tenants are willing to pay a little more for space in a green building, and green buildings often attract a higher price when sold.

Q: What are some of the benefits for tenants?

A: Allan Malbranck said utility bills and other operating costs are usually lower for tenants of green buildings. A tenant in his building -- Lux For Sprouts owner Lysa Porth -- said she's also found it easier to attract and retain employees because green buildings provide a healthier work environment. It's also good for her company's image to be located in such a building.

Q: Where can I get further information about green leases?

A: The REALpac website: www.realpac.ca

Republished from the Winnipeg Free Press print edition September 21, 2009 B3