Commercial market report

From office and retail tenant protections to REITs rushing the green bond market, a look at some of the latest news in the commercial sectors

Commercial landlords face new fines as City Council passes anti-harassment bill

The New York City Council approved a bill in late September that broadens the definition of commercial tenant harassment and hikes fines against landlords to as much as $50,000.

The council voted 39-5 for the measure, which increases the penalties for harassing tenants of commercial buildings to a range of $10,000 to $50,000. The fines currently run from $1,000 to $10,000.

The bill, sponsored by Bronx Democrat Vanessa Gibson, also expands the definition of commercial tenant harassment, listing 13 actions that qualify, including using force, making threats and interfering with a tenant’s business with unnecessary construction. The measure also allows courts to order the Department of Buildings to deny construction permits to landlords found to have harassed their tenants.

The real estate industry had opposed an earlier version of this legislation that required landlords to acquire a certification of no harassment before obtaining permits for renovation or demolition work. The Committee on Small Business approved an amended version of the bill earlier in September.

And the Real Estate Board of New York, the industry’s largest trade group, reportedly approves of the latest iteration of the bill.

“It’s going to punish those people who are guilty of harassment, as they should be,” Reggie Thomas, REBNY’s senior vice president of government affairs, told the Wall Street Journal.

The city already requires some residential landlords to obtain a certificate of no harassment to get certain building permits. A pilot program launched last year applies to more than 1,000 buildings. — Kathryn Brenzel

Real estate firms get (green) thumbs down as they jump into climate bonds

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Green bonds, a source of financing designated for climate-conscious projects, have seen a surge over the past 15 months among U.S. real estate investment trusts.

REITs have issued more than $3 billion worth of the sustainability-focused corporate debt, The Real Deal found after analyzing data compiled by the Climate Bonds Initiative.

But as the green bond market picks up steam, real estate’s most active issuers are eschewing some of the industry’s best practices when it comes to transparency. And critics says the green bonds program has failed to live up to its goal of providing a cheap source of funding to promote environmental projects that otherwise wouldn’t get off the ground.

“The entire green bond market is more or less a greenwashing instrument,” said Stanislas Dupré, founder and CEO of the think tank 2° Investing Initiative, one of the biggest critics of climate bonds.

“If you take a LEED-certified commercial building in Manhattan, or a prime residential in an expensive part of Brooklyn, there’s no shortage of financing for that,” he added, noting that very few bonds are priced at a point where they make the financing materially less expensive.

“I think by design you can never reach this point,” Dupré said.

Yet even those who fault the green bond program praise the fact that developers tapping the market are usually on the cutting edge of developing efficient buildings to such high standards as LEED certification.

And the REITs say that as long as they’re developing environmentally friendly buildings, they see value in the growing climate bonds market.

Alexandria Real Estate Equities co-president and chief financial officer Dean Shigenaga, whose company has issued $1 billion worth of green bonds since last summer, said there was an increase in investor demand for the firm’s green offerings.

“There’s no question there’s more demand from investors who wanted to increase allocations for their sustainability or green initiatives,” he said. “If we had a choice between a green bond and a regular bond, I think we would always lean toward green.” — Rich Bockmann