Performance-based leasing helps landlords and tenants comply with new building policies

As demand for climate action soars, more businesses and local governments are realizing that buildings are a huge contributor to carbon emissions, particularly in cities. Local governments are increasingly turning to building performance standards as a way to meet their climate commitments. However, traditional lease structures create a number of hurdles, such as misaligned incentives for landlords and tenants, to improve building operations to meet new performance requirements. The best solution is to replace inefficient traditional leases with high-performing, performance-based ones. IMT’s performance-based leasing toolkit helps both landlords and commercial tenants get started.


Getting Started with Performance-Based Leasing

Get to know your way around the concept of performance-based leases with this high-level primer, which is linked on this page to the right and outlines how growing interest in legislation that sets performance targets for buildings will require changes to traditional lease structures.

“High-Performance Leases: A Solution for Reducing Carbon Emissions in Commercial Buildings”

For more detail on how performance-based leases might be deployed, read this article from Environmental Law in New York‘s June 2021 introduces the concept of performance-based leasing in the context of New York City’s Local Law 97, which is setting carbon reduction-based performance targets for NYC buildings to drive climate action.

Why Traditional Leases Don’t Measure Up and What We Need Instead

This blog from IMT and the NYC Climate Action Alliance also provides more context and background on performance-based leases

A Summary of Performance-Based Leasing Provisions

What does a performance-based lease look like in practice? Get started with this introduction to IMT’s Model Performance-Based Lease Template, providing a high-level summary of key performance-based lease provisions.

IMT Model Performance-Based Lease Template

Take action: This draft lease is a starting point for integrating performance-based clauses into a commercial lease.

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