Renew, Retrofit or Relocate: The 14-Month Lease Decision

The decision is a ten-year total cost of occupancy comparison, not a rent comparison.

Include:

• Rent and escalations for both options over 10 years, discounted.
• Energy and utilities, using the new building's lower intensity but adjusting for actual hours and density - do not accept the landlord's design figure as the operating figure.
• Fit-out and move costs: USD 4.5M amortised over the term, versus USD 1.2M refresh, plus double-running costs, IT, churn downtime and lost productivity during the move.
• Base-building capital under the renewal: who pays, and whether it lands in rent.
• Residual/exit risk: the value of flexibility at year 10, and whether a 10-year commitment at a 1998 building with a 1998 plant is prudent.

Handle productivity carefully. Absenteeism and satisfaction gaps are real but monetising them invites attack. Present them as a labelled sensitivity (e.g. a range of USD X–Y per year at stated assumptions), not as a hard number in the base case. Show the decision does or does not flip across that range.

State what is unknown: whether the new building actually performs to its certification, and whether the landlord's renewal scope will be commissioned and verified. Recommend making both contractual.

Every clause below converts an aspiration into an enforceable obligation:

• Capital scope with commissioning and a performance test. Specify the chiller/AHU replacement, require commissioned handover and a measured performance check before rent steps up. Otherwise the tenant pays for equipment that underperforms.
• Cost-sharing and rent treatment. Agree who funds what and how it appears in rent, so the FM can defend the deal internally.
• Submetering and data access. Tenant-level electricity and thermal data, delivered on an agreed frequency and format. Without it, the tenant cannot report, verify, or manage.
• Operating standard and setpoints. Define temperature, humidity and outside-air ranges and the hours of service, so energy disputes are resolved against a document.
• Green/cooperation clause. Landlord cooperation with certification documentation, waste data and refrigerant records; a commitment not to operate systems in a way that defeats tenant certification.
• Restoration and alteration rights. Protect the tenant's right to install metering, EV charging and efficiency measures without restoration penalties at exit.
• Renewal/expansion options and an exit route. Preserve flexibility given the 10-year term.

Rationale: the split incentive is the core risk. Each term shifts information, cost or control to where the savings actually occur.

Separate the decision to pursue certification from the claim of performance, and hold the announcement until the evidence exists.

• Do not pre-announce an outcome. Announce the commitment and the standard being pursued, with the scope stated (whole building vs. tenant space; design vs. operations).
• Certify operations, not intentions. A design-phase award says nothing about the energy and air quality the occupants will experience. Prefer an operational rating, and fund the measurement that supports it - metering, commissioning, a year of utility data.
• State the boundary. If the landlord's base building is not covered, say so; do not let the certification imply portfolio-wide performance.
• Reconcile with the numbers already published. The 12% emissions claim and the site's energy and satisfaction data must be consistent with any new claim, or the credibility of both is lost.
• Give legal and communications the underlying evidence file - certificates, commissioning reports, utility data, and the assumptions behind any savings figure.

Reasoning: reputational benefit comes from verified performance. A premature claim converts a genuine improvement project into a disclosure liability, and the FM team is the party who will have to defend it.