ARTICLE
2 October 2023

How Is ESG Changing Commercial Leases In Poland?

P
Penteris

Contributor

In the pursuit of climate neutrality by 2050, the European Union has set forth an ambitious vision encapsulated within the European Green Deal policy.
Poland Real Estate and Construction
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Konrad Pecelerowicz has great experience working with clients active in the Polish and international real estate markets. Konrad has vast experience working on lease agreements of major Polish shopping centres, class A and A+ office buildings as well as warehouses, both on the side of landlords and tenants not to mention great experience in transaction due diligence projects.

European Green Deal and Climate Neutrality

In the pursuit of climate neutrality by 2050, the European Union has set forth an ambitious vision encapsulated within the European Green Deal policy. This sweeping endeavour seeks to transform the European economy into a beacon of environmental responsibility. This transformation extends its green tendrils into various facets of real estate, encompassing both construction and long-term occupancy. Among the manifold consequences of the EU's resolute climate neutrality legislation is the burgeoning evolution of sustainable solutions within the commercial lease sector. For tenants, the pivotal consideration now revolves around whether the premises they inhabit align with sustainability goals. Such spaces promise not only lower utility costs but also enhanced comfort. Simultaneously, landlords reap the rewards, as adopting 'green' tenancy solutions elevates the quality and allure of their offerings, leading to potentially higher rental income.

Unfolding Trends in Sustainable Leases

Beyond the general commitment made by lease agreement parties to uphold sustainable development principles in both their operations within leased premises and the management of the buildings, concrete strategies are materialising in the Polish commercial lease market. These strategies wholeheartedly support sustainable practices within tenant operations and building management. Key among these measures are stipulations regarding waste segregation, encompassing hazardous waste, as well as the promotion of recyclable products. There is also a growing emphasis on the use of environmentally-friendly materials within the leased spaces. Notably, leasing agreements are increasingly delving into highly detailed regulations, often surpassing the requirements of existing 'green certificates.' These regulations cover the gamut of energy-efficient equipment usage, including heating, cooling, air purification, and harnessing greywater.

Electrifying Transport and Renewable Energy

Furthermore, today's standard lease agreements already allocate space for electric vehicle parking and racks for electric bicycles and scooters. In the near future, renewable energy sources will play an even more substantial role in powering commercial structures. Landlords are either striking deals with energy suppliers or opting for photovoltaic panels on rooftops to generate green energy. Challenges still persist, especially with older roof structures that may not be structurally capable of supporting these panels. Nevertheless, new office and warehouse developments are purposefully designed to maximise the utilisation of renewable energy sources. In cases where tenants are responsible for the finishing touches, landlords may exert their influence by mandating the use of sustainable materials, technologies, and even suppliers – a realm ripe for negotiation.

Current Landscape and Tomorrow's Horizons

The journey towards embedding sustainability provisions in commercial leases is far from over; it continues to evolve, inching ever closer to becoming the industry standard. Foreseeably, future changes may encompass the allocation of costs linked to leased space operation and the mandatory reporting of climate-neutral measures undertaken by both parties involved. Expect incentives for tenants to adopt such measures to also gain prominence on this sustainable path.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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