SFL’s Rives de Seine office building in Paris.
The French bank Natixis recently announced that it has signed a 7-year lease renewal for its office space at the Societe Fonciere Lyonnaise’s (“SFL”) “Rives de Seine” office building at 68-76 quai de la Rapee in Paris’s 12th Arrondissement. The 224,000-square-foot tower is located on the banks of the Seine River near the Gare de Lyon train station. The transaction is important because of the shared environmental obligations that the parties have incorporated into the lease.
The lease keeps Natixis at the Rives de Seine through 2020. It implements a shared environmental program for the space at an office rent of 480 euro per square meter (or about 45 euro per square foot). Although this sum was less than the current rank the bank is paying, according to SFL it reflects current market conditions in the Parisian commercial real estate market. Details are thin on what the specific green obligations incorporated into the lease’s shared environmental program’s might be. But the transaction is still notable for our purposes here at gbNYC+ for several reasons.
First, as we discussed recently here at gbNYC+ in profiling another European lease, in Helsinki, which incorporates green obligations, France’s Grenelle de L’Environnement legislation will require an environmental appendix for leases entered into for office or retail purposes larger than (approximately) 22,000 square feet. The requirement took effect as of January 1, 2012 for leases signed or renewed as of that date. It also triggers on July 14, 2013 for existing leases.
Again, the environmental appendix must include information on actual water and energy consumption, waste treatment, heating, cooling, ventilation, and lighting equipment in the building. It also requires the landlord and tenant to establish a mechanism for continuously monitoring the energy performance of the premises in order to reduce consumption. So it’s not unreasonable to assume that Natixis’s lease includes most – if not all – of those obligations given the looming compliance deadline for existing leases in a couple of weeks.
The Natixis renewal is – in our opinion – indicative of an increasing trend outside of North America where commercial office leases are incorporating environmental obligations. In France, of course, this is being driven by the Grenelle legislation. But in other countries – like Finland and South Africa, for example – the driver appears to be – at least partially – a hedge against future regulatory activity. It’s important to emphasize that we have yet to see anything similar take place in the North American commercial real estate markets. Again, that could change. But until then we’ll keep an eye abroad to see exactly how private sector players are dealing with these increasingly pervasive publicly driven requirements.
