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Split incentives are common barriers between commercial building owners and tenants that inhibit improvements to environmental performance. In a gross lease, for example, most commonly used for office spaces, the landlord pays for all services, including utilities, so the tenant has no motivation to limit energy consumption. Another example of a split incentive is found in a triple net lease, common in the retail and industrial sectors. In these arrangements, the building owner is rarely motivated to pay for energy efficiency upgrades because the savings accrue to the tenant. Tenants have little incentive to install efficiency upgrades if the payback period is longer than the lease term. |