Office Green Leasing in Thailand: Benefits, Process, Barriers, and Solutions

Chakrapan Pawangkarat

Head of Property and Asset Management

JLL Thailand

21 March 2025

Introduction

As Thailand moves towards a low-carbon economy, green leasing has emerged as a key strategy to promote energy efficiency and sustainability in office buildings. A green lease is a rental agreement that incorporates sustainability obligations for both landlords and tenants, ensuring that buildings operate efficiently and with minimal environmental impact.

This article explores the benefits of green leasing for building owners and occupiers in Thailand, the key elements of a green lease, the steps involved in implementing one, and the barriers with solutions to overcome them.

Benefits of Green Leasing

For Building Owners

1. Higher Asset Value and Marketability

   • Green-certified buildings with sustainability commitments attract premium tenants.

   • Improved energy performance enhances a building’s long-term value.

2. Lower Operating Costs

   • Reduced energy and water consumption lowers utility expenses.

   • Preventive maintenance reduces costly repairs.

3. Regulatory Compliance and Incentives

   • Helps meet Thailand’s Energy Efficiency Building Code (EBC) and ESG requirements.

   • Potential eligibility for tax incentives and green financing programs.

4. Improved Tenant Retention

   • Companies seeking sustainability credentials prefer green office spaces.

   • A healthier, more comfortable indoor environment increases tenant satisfaction.

For Occupiers (Tenants)

1. Cost Savings on Utilities

   • Energy-efficient lighting, HVAC systems, and water-saving fixtures reduce operational expenses.

2. Improved Workplace Environment

   • Better indoor air quality and natural lighting enhance employee productivity and well-being.

3. Enhanced Corporate Sustainability Image

   • Aligns with ESG goals, improving brand reputation among stakeholders and customers.

4. Access to Green Certifications

   • LEED, TREES (Thai Rating of Energy and Environmental Sustainability), and WELL certifications support corporate sustainability goals.

Key Elements of a Green Lease

A green lease contains clauses that promote sustainable building management. Key elements include:

1. Energy and Water Efficiency

   • Minimum efficiency standards for HVAC, lighting, and water usage.

2. Renewable Energy and Carbon Reduction

   • Agreements on using on-site solar panels or purchasing green energy.

3. Waste Management

   • Recycling programs and waste reduction commitments.

4. Indoor Environmental Quality

   • Provisions for better ventilation, air filtration, and non-toxic materials.

5. Performance Monitoring and Reporting

   • Regular energy audits and sharing of consumption data between landlord and tenant.

6. Green Fit-Out Guidelines

   • Sustainable materials, energy-efficient office layouts, and eco-friendly furniture.

Process of Implementing a Green Lease

Step 1: Assess Building Sustainability Goals

• Owners should evaluate their building’s current energy use and sustainability targets.

• Tenants should align office space needs with their corporate sustainability strategy.

Step 2: Engage Stakeholders

• Collaboration between landlords, tenants, and property managers is key.

• Legal teams draft lease agreements incorporating green clauses.

Step 3: Define Responsibilities

• Clarify who is responsible for energy efficiency upgrades, reporting, and compliance.

• Set up cost-sharing mechanisms for sustainability improvements.

Step 4: Monitor and Report Performance

• Implement smart meters and sustainability dashboards.

• Regularly review energy use, waste reduction, and carbon footprint.

Step 5: Continuous Improvement

• Use performance data to optimize building operations.

• Adjust green lease terms as sustainability regulations evolve.

Barriers to Green Leasing and Solutions

1. Lack of Awareness and Understanding

Barrier: Many landlords and tenants in Thailand are unfamiliar with green leasing and its benefits.

Solution:

• Conduct training sessions and workshops to educate stakeholders.

• Showcase case studies of successful green lease implementations to demonstrate real-world benefits.

2. Perceived High Costs

Barrier: Landlords worry about the upfront investment in energy-efficient upgrades, while tenants fear higher rent.

Solution:

• Utilize green financing options such as government incentives, tax benefits, and ESG-aligned investment funds.

• Implement cost-sharing models where tenants contribute to efficiency upgrades through lower utility bills.

3. Unclear Responsibilities Between Landlords and Tenants

Barrier: Disagreements over who should bear the costs of sustainability improvements and compliance monitoring.

Solution:

• Clearly define roles and responsibilities in the lease agreement.

• Use performance-based incentives, such as reduced rent for achieving sustainability targets.

4. Resistance to Change from Traditional Leasing Practices

Barrier: Many landlords and tenants are accustomed to conventional lease structures and are hesitant to adopt new sustainability commitments.

Solution:

• Provide financial incentives such as rent discounts for tenants who implement green fit-outs.

• Demonstrate the long-term cost savings from reduced energy and maintenance expenses.

5. Lack of Data and Performance Monitoring Tools

Barrier: Difficulty in measuring and verifying energy savings, waste reduction, and overall sustainability impact.

Solution:

• Install smart meters and automated tracking systems to monitor energy and water usage.

• Establish a data-sharing protocol between landlords and tenants to ensure transparency and accountability.

Conclusion

Green leasing is transforming Thailand’s office market by aligning financial and environmental goals for both landlords and tenants. By adopting green lease agreements, building owners enhance asset value and efficiency, while tenants benefit from lower costs, better working conditions, and a stronger sustainability profile.

While barriers such as lack of awareness, perceived high costs, and unclear responsibilities exist, they can be overcome through education, financing incentives, clear lease terms, and advanced monitoring technologies.

As Thailand’s net-zero carbon transition accelerates, green leasing will become an essential tool for ensuring long-term environmental, economic, and social benefits in the commercial real estate sector.

Are you ready to implement a green lease for your office? Now is the time to act.

Acknowledgement:

"This article was generated with the assistance of ChatGPT, an AI language model by OpenAI, and subsequently reviewed and edited by the author."