Alongside traditional loans and leases, green loans and car leases have made their mark, with a fairly clear aim: to encourage more energy-efficient living or the purchase of an electric car. While the concepts of 'green loans' and 'green car leasing' are already relatively common, 'green lease’ is a new concept for many. However, it can be expected to become the norm in the future. Meelis Sokman, a sustainability spokesperson of Summus Capital, one of the largest private property owners in the Baltics, explained what exactly it is and how widespread this type of contract is.
Green leases bring an important change in the nature of the real estate relationship - they signify a commitment to sustainable actions by both parties. Yes, actions, not just words and slogans. While many companies still only talk about sustainability, green leases require companies to act accordingly, because the terms of the lease include sustainability goals and practices.
On the one hand, it could be argued that green leases are still in their early stages, as the concept is relatively new. On the other hand, it is gaining momentum every day as more and more companies and organisations realise that reducing their environmental footprint is essential.
This is boosted by the European Union's ESG policy, but it is also becoming increasingly important, for example, when applying for funding. In addition, growing awareness and technological advances are driving green leases.
What is a green lease?
A green lease means strong commitments for both tenant and landlord. We expect tenants to reduce energy and water consumption and to manage waste properly. This means, for example, working at certain times of the day or monitoring consumption patterns using meters, energy management systems and Internet of Things devices. These technologies will give both building owners and tenants an immediate insight into consumption and enable more informed decisions.
But why should all this be done if it means extra effort and, of course, extra costs for the parties involved? There are many advantages. From an environmental point of view, green leases contribute to significant reductions in CO2 emissions and energy consumption. Economically, they lead to cost savings for both tenants and landlords through energy efficiency improvements. In the long run, everyone wins: the environment, building owners and tenants.
A green lease requires a long-term view. Today's outlays on more expensive building materials and techniques, efforts on electricity and water consumption, and exemplary waste management will not yield tangible results immediately. Their real impact will be felt in five years' time. This is sufficient time for significant differences to emerge, for example in energy and water consumption.
Green leases are the future
Summus Capital started signing green leases in the third quarter of last year, being one of the first, if not the first, in Estonia to consciously take such a step and embrace the new concept. Currently, Summus has an estimated 8,800 square meters of green leasable space which currently represents 4% of the total portfolio. In the future, we expect all leases signed to be driven by sustainable objectives.
A good example is SYNLAB Estonia, the anchor tenant of the Veerenni Health Centre - one of the first in Estonia with whom Summus Capital has already signed a green lease. One of SYNLAB's main goals is to reduce the environmental impact of the services they provide, and this is supported by their presence in a LEED-certified building equipped with solar panels and electric car chargers. In addition, a contract was signed for the purchase of green electricity. These are important steps for both partners, demonstrating a strong partnership and forward-looking attitude.
In addition to Estonia, Summus has also signed green leases in the Nordika centre in Lithuania. There is no doubt that in the near future the share of green leases will increase even further, and it is expected that in the future this will become a normality.
Summus Capital (www.summus.ee) is a real estate investment holding company established in 2013. The Group owns a portfolio of 14 properties in three Baltic countries in the retail, office, logistics and medical sectors, with a leasable area of more than 218,000 sqm and a value of approximately EUR 400 million. The asset and ESG manager of the Summus Capital portfolio is Green Formula Capital.