COP26 is another reminder of the need to consider all opportunities for reducing emissions and waste as part of our industry’s daily practice. Often, that means revising the basic assumptions of our work. Dilapidations is a process that seems inherently wasteful. But is there a way around that? Yes.
We have found new mechanisms for reducing waste and carbon emissions throughout an asset’s life, reimagining the cycle of removal and installation of similar – if not identical – commercial tenant fit-outs.
For the easiest wins, we start at the end of the process: the dilapidations dispute. TFT’s green dilapidations process halts the automatic strip-out of a tenant’s space before marketing, enabling tenant and landlord to collaborate on presenting a market-ready space without the waste. The key is to repair and retain a portion of the older fit-out, showing its most attractive and sustainable iteration, as opposed to the standard practice of presenting bare spaces to the market. If a new tenant likes what they see, the remainder of the space can be improved in the same way ahead of their arrival, saving time, money and carbon in the process.
This is underpinned by a memorandum of understanding, signed by the parties. This covers the various circumstances that can arise in dilapidations or lease discussions, guiding the parties through each decision point with responsibilities agreed upfront to defuse arguments about supersession or responsibility for repair. This is one means of creating a more sustainable outcome for ‘non-green’ leases.
We can do even more by revising another basic assumption. Most leases state that landlords should ‘be reasonable’ when approving tenants’ works. But what is ‘reasonable’ in a climate emergency? Landlords can lead the way here if they assess tenant fit-outs on expanded criteria, including future reuse, ease of disassembly, sustainable sourcing and requirements for items stripped out to avoid landfill or other carbon-intensive recycling.
Case law might need to catch up with this approach, but we already see interest in these approaches. In the short term, the market will drive green dilapidations forwards.
Jon Rowling is technical partner at TFT Consultants