The purpose of this paper is to identify the factors present in successful energy efficiency investments that might indicate how to resolve the landlord-tenant dilemma in existing and new commercial property.
The paper reviews literature to indicate the importance of energy efficiency in buildings and to explore the barriers to such investments, including problematic landlord-tenant relationships. Such relationships have been investigated by the International Energy Agency, and a similar approach is used here in two case studies in new and existing buildings. These studies explore the nature of landlord-tenant relationships and the importance of policy and standards of building performance.
In neither case did landlord-tenant issues constitute barriers to investments in energy efficiency, however, these investments were made for other reasons than simple cost savings. Construction of new commercial property to Passivhaus standards ensures a high-build quality and a comfortable building with low-energy costs. The added value to tenants may justify the cost of construction. The cost of investments in energy efficient buildings can also be justified by the enhanced reputation of landlords which may be more valuable than a DEC rating. In neither case was the commercial Green Deal felt to be an attractive funding mechanism.
Conclusions based on these case studies must be regarded as tentative, so future studies of successful energy efficient buildings should be undertaken to explore the motivation to invest, particularly the relative importance of indirect benefits of energy efficiency.
One of the case study buildings is exceptionally energy efficient and is the result of a particularly open and effective contractual relationship. Further study of such cases may suggest a new approach to landlord-tenant problems of energy efficiency, even in refurbishment of existing buildings.
The authors gratefully acknowledge the help of Interserve Construction in preparing this paper.
Greenough, R. and Tosoratti, P. (2014), "Low carbon buildings: a solution to landlord-tenant problems?", Journal of Property Investment & Finance, Vol. 32 No. 4, pp. 415-423. https://doi.org/10.1108/JPIF-09-2013-0060Download as .RIS
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