High performance multi-tenant buildings

Published: March 3, 2016

  • OVERVIEW
  • GUIDELINES
  • REFERENCES

Constructing high performance multi-tenant commercial buildings is a challenge because of the complex relationship between the developer (and investors) and the prospective tenants. Both the developer and the tenants make decisions that will influence the energy performance of the building. The developer makes decisions affecting the building overall (shape, exterior walls, windows, some mechanical systems), while tenants make decisions affecting the build out of their space (interior wall placement, lighting systems).

Potter Lawson (Nels Akerlund Photography)

Because of the cost pressures in the multi-tenant building market—building developers and owners need to keep rental rates reasonable in order to attract tenants—a building developer can’t construct a high performance building simply by purchasing high performance technologies. This constraint is exacerbated by the fact that owners will not see the direct benefits (energy cost savings, productivity gains, improved occupant health, among others) of an increase in building performance. Those benefits will accrue to the building’s tenants who pay the utility bills and whose employees work in the space. Tenants are mainly concerned with building out their space quickly and within a pre-determined budget so they can move in without losing too much productivity.

As a result of these constraints, the majority of high performance buildings today are either public or owner-occupied. But there are building developers willing to embrace and overcome these challenges and create sustainable multi-tenant buildings. Their tenants appreciate the higher quality and performance of the building components, the improved indoor environment, and a chance to commit to sustainability. As a result the buildings are not only good for tenants, but also for owners.

Green Lease Library, http://www.greenleaselibrary.com/ (a clearinghouse for publically available green lease resources)

Assessing the Value of Green Buildings, Institute for Green Buildings (Johnson Controls), http://www.institutebe.com, 2012

U.S. Department of Energy, Better Buildings Challenge, ""Green" Buildings Thriving in LA Real Estate Market, According to CoStar Report" Aug. 6, 2014. http://la-bbc.com/news/green-buildings-thriving-in-la-real-estate-market...

Barriers and Breakthroughs for Multi-tenant Developments, Rocky Mountain Institute. http://www.rmi.org/Knowledge-Center/Library/2008-12_BreakthroughsMultiTe...