For commercial property landlords, sustainability has moved from a nice-to-have to a strategic concern. Tenants, investors, and lenders are all paying closer attention to how buildings perform environmentally – and that's starting to shape the commercial property landscape in real, measurable ways.
For owners holding commercial assets – or thinking about acquiring them – green leases (commercial leases that build sustainability commitments into the landlord-tenant relationship) are emerging as one of the more practical tools for navigating that shift.
Sean Grove – Business Growth & Commercial Manager for the Rawson Property Group's Commercial division – says the change is being driven by tenants as much as by policy.
Why are tenants leading the conversation?
Many of South Africa's larger commercial tenants – particularly in finance, tech, and professional services – now have internal sustainability commitments or carbon reduction targets they need to meet. For these businesses, the building they occupy is part of their own environmental footprint, and that's changing how they choose space.
“Tenants are walking into negotiations with a much clearer view of what they need from a building,” Grove explains. “They're asking about energy efficiency, water usage, waste systems, and whether the building has any green certification. If a property doesn't measure up, they'll keep looking.”
He notes that this isn't limited to multinationals. Local businesses with international clients, or those preparing for new sustainability reporting requirements, are increasingly making the same demands.
“What used to be a niche concern is now mainstream. Landlords who understand that early are positioning themselves well. Those who don't are starting to feel it in their vacancy rates.”
The financial case is getting clearer
Beyond tenant demand, the underlying economics are shifting in favour of green-certified properties – and the gap between sustainable buildings and the rest of the market is starting to show up on the balance sheet.
“Green-rated buildings are performing better on almost every metric that matters to a commercial landlord,” Grove says. “Tenant retention is higher, vacancy periods are shorter, and the operational savings – particularly on energy – flow through to better net income.”
For investors, that translates into a more resilient asset. Properties that meet sustainability standards are also better positioned as funders become more selective about what they back, with lenders and institutional investors increasingly factoring environmental performance into their decisions.
“There's a growing risk that buildings without any green rating will start to be discounted by the market,” Grove cautions. “We're not there yet, but the direction of travel is clear. The earlier landlords engage with this, the smoother the transition will be.”
What does a green lease actually involve?
A green lease is, at its core, a commercial lease that explicitly aligns landlord and tenant on sustainability goals – and clarifies who is responsible for what. It addresses a long-standing problem in commercial property: landlords often pay for the upgrades, but tenants enjoy the operational savings, which can leave neither party motivated to invest. Green leases solve that by sharing both the costs and the benefits.
In practice, green lease provisions can include:
- Energy efficiency measures – solar PV installations, LED lighting, smart metering, and shared visibility on consumption data so both parties can track and reduce usage.
- Water-saving infrastructure – low-flow fittings, rainwater harvesting, greywater systems, and consumption monitoring, which is particularly relevant in water-stressed regions like the Western Cape.
- Waste reduction and recycling – separation-at-source systems, organic waste handling, and clear commitments around how waste is managed throughout the building.
- Green building certification – pursuing or maintaining a Green Star SA rating from the Green Building Council of South Africa, which provides an independent benchmark and signals credibility to tenants and investors alike.
“The point of a green lease isn't to add complexity,” Grove says. “It's to remove the ambiguity that's traditionally held back sustainability investments. When both parties know what they're committing to, and how the costs and benefits are shared, it becomes much easier to actually move forward.”
How can I get started?
For landlords who haven't yet considered greening their leases, Grove's advice is to start with an honest assessment of the building.
“Understand where you are before you decide where you're going. An energy audit, a water assessment, and a look at current waste systems will tell you where the easiest wins are. From there, you can structure conversations with current and future tenants around what's possible – and what makes commercial sense.”
He also stresses the importance of partnering with experienced advisors.
“Green leases are still gaining ground in South Africa, and getting the contractual side right matters. The goal is alignment, not legal complexity. With the right guidance, even smaller commercial landlords can start incorporating these principles into their portfolios.”
A long-term play
Grove is clear that greening a commercial portfolio is a long-term strategy, not a quick fix. But he believes the landlords who engage with it now will be best placed for what comes next.
“Commercial property has always rewarded the owners who think a few steps ahead. Sustainability is just the next chapter of that. The buildings that perform well over the next decade are the ones being prepared today.”
