Region Where LT Leases are NOT Common

Raymond Loo

Senior Manager, Corporate Services

MEA & Associates Limited (Hong Kong)

LEEDuser Basic Member

62 thumbs up

July 28, 2011

Has anyone in a region where long term contracts are not common, had experience (of if you have any comments) dealing with USGBC on this credit? Do they consider the circumstances that a 5+5 year contract in these regions is somewhat equivalent to a 10 year lease in most of U.S.? In Hong Kong, long term leases are rarely ever entertained because of the significant cost of space as well as the large fluctuations. Both the landlords and the tenants usually do not want to commit to long term deals. In our case, our client has already been in this space for many years and is about to renovate their space. They are going to sign a 5 year lease but is willing to entertain a 5+5 year deal if this credit will be awarded. Any comments appreciated.

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Steve Khouw

Principal

DNA GreenDesign

LEEDuser Basic Member

126 thumbs up

Thu, 08/25/2011 - 03:58

Hi Raymond, LEED reviewers will treat each application case-by-case, although nowadays they are much more rigid than in the past in sticking to the letter of the requirement. First, a 5+5 lease will be more acceptable if your Client can demonstrate firm economic commitments of a 10 year + occupation, eg heavy CAPEX with long payback periods. Second, the 10 year rule starts when the tenancy agreement was signed, so if this is a renovation project of an existing tenancy, you count backward to the start of the lease. Now if that lease is already a 5+5 you can argue your case with a head start.

Raymond Loo

Senior Manager, Corporate Services

MEA & Associates Limited (Hong Kong)

LEEDuser Basic Member

62 thumbs up

Fri, 08/26/2011 - 13:11

Hello Steve, thank you for your reply. I will check with our client to see how long they have already been in the premises and the start date of the current lease agreement. I will check for history of contract renewals/extensions. Thanks again for your tips!