Getting Started with Performance-Based Leasing

As cities, counties, and states across the U.S. seek to reduce carbon emissions and associated energy use, an increasing number of jurisdictions are exploring building performance standards that set and enforce performance targets for buildings. These performance-based policies and laws will require changing how landlords and tenants interact with one another to drive better overall building performance, including through their leases. This primer provides a high-level introduction to the concept of performance-based leases, which adjust traditional lease structures to resolve split incentives currently preventing landlords and tenants from increasing building performance (and thus complying with forthcoming legislation). It is part of a performance-based leasing toolkit, the whole of which can be accessed at imt.org/performance-based leasing.

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