Law Firm Inks ‘Groundbreaking’ Green Lease

NEW YORK CITY-Law firm WilmerHale has signed on for five floors at Silverstein Properties Inc.’s 7 World Trade Center in what’s described as the first leasing deal in the city to incoorporate a newly devised green template. The lease language devised by the Bloomberg administration and commercial real estate industry leaders is intended to overcome one of the key hurdles property owners face in retrofitting their properties for sustainability: the so-called “split incentive,” in which landlords bear the cost of energy-efficiency improvements but tenants reap virtually all the savings benefits.

“This is no standard commercial lease—this is an energy-aligned green lease,” Mayor Michael Bloomberg said Tuesday morning at a news conference at 7 WTC. He said the deal “breaks new ground” and predicted that it could serve as a model for future leasing deals across New York City.

WilmerHale’s 210,000-square-foot lease entails the law firm sharing the costs to make sustainability improvements to the space, by counting its utility savings over the length of a projected payback period instead of the useful life of the improvements. The idea is to shorten the amount of time it takes for the property’s owner to recoup the costs, thus removing a disincentive that Bloomberg said 60% of building owners identified as major obstacle toward their making retrofits.

“The green-lease clause that is in this lease will become part of every lease” for the space in the future, said Larry Silverstein, president and CEO of SPI. He gave the Bloomberg administration the lion’s share of the credit not only for developing the green clause, but also for its long-term, citywide PlaNYC sustainability program. “If not for the efforts of Mayor Bloomberg, we wouldn’t be here today,” Silverstein said.

Dan Tishman, president of Tishman Construction and chairman of the Natural Resources Defense Council, which participated in developing the language, predicted that energy-aligned leases could become “the new norm in New York City over the next five years.” To that end, Steven Spinola, president of the Real Estate Board of New York, said his association would recommend adoption of the green-lease language by REBNY members. Similarly, Bloomberg said all new leases for municipal office space would follow the WilmerHale/7 WTC model, although he ruled out the possibility of making it a requirement for the city’s commercial landlords.

A Studley team including chairman and CEO Mitchell Steir, executive managing director Howard Nottingham and EVP David Goldstein represented WilmerHale in its relocation from 399 Park Ave. SPI SVPs Roger Silverstein and Jeremy Moss represented the building ownership, along with a CB Richard Ellis team of global chairman Stephen Siegel, EVP Peter Turchin and senior financial analyst Christie Harle.