Energy is a top priority for corporate boards, yet many real estate portfolios are ill-prepared. Rising power costs, tightening regulations and shifting investor demands mean energy-efficient buildings are no longer just a sustainability goal – they are a core commercial imperative.
Corporate boards increasingly see energy as a strategic concern, but most real estate portfolios aren’t set up to deliver on that vision.
For one US technology company, that gap became impossible to ignore when three of its US sites covering 880,000 square feet (74,322 square metres) were consuming energy at unsustainable rates, and threatening its 2030 net-zero commitment. At one in particular, energy use intensity exceeded local building performance standards, exposing it to potential financial penalties.
It’s far from alone. JLL’s 2026 Future of Work research found that executives rank energy-related factors as the fourth most important issue shaping strategy over the next three to five years, yet their corporate real estate teams are underprepared.
The reasons are practical. Budget silos often separate capital costs from operating savings. Site teams can lack the time, resources and expertise to prioritize energy projects. Urgent repairs take precedence over longer-term investments. And because energy has traditionally been seen as a cost to manage rather than a strategic priority, projects can lack a senior sponsor.
Now that disconnect has real commercial impact – and the market is starting to price the difference.
Energy efficiency as a competitive edge
Today’s growing energy instability – marked by soaring demand, constrained supply and unpredictable pricing – is affecting operational resilience, regulatory compliance and long-term asset performance. Buildings are the largest consumers of energy, so integrating energy and real estate strategies is essential.
Electricity costs are rising sharply across many markets and increasingly outpacing inflation. JLL’s research on the acceleration of the efficiency premium in real estate found that commercial electricity prices in six markets increased between 11% and 91% above local inflation from 2020 to 2024. That’s a sharp shift from 2016 to 2019, when electricity costs in those same markets ranged from 14% below inflation to just 13% above it.
As costs rise, the efficiency gap between buildings is growing. JLL data shows that the most efficient buildings across 4,437 offices in seven global markets cost 43% to 75% less to run than the least efficient, a saving of $1.58 to $5.13 per square foot a year. The value of that gap varies with local electricity market fundamentals – it’s around three times larger in Paris than in Chicago.
That makes energy efficiency one of the few no-regrets investments for today’s business leaders. It’s the quickest way to cut a building’s operating expenses. It’s also the first step towards active energy management – laying the groundwork for the sustainable, low-carbon buildings that occupiers and regulators increasingly want.
The economics of efficiency measures have changed too. Efficiency investments have always helped lower operating costs, but the returns were often seen as too slow to compete with other capital priorities.
As energy costs rise and price volatility increases, payback periods are shortening. That turns efficiency from a long-term improvement into an immediate, practical way to cut costs and reduce exposure to an increasingly unstable power system.
Beyond operations, debt and equity markets increasingly price energy performance into asset values, factoring transition risk into investment decisions. Major lenders, including ING, BNP Paribas and NAB, have introduced green loan frameworks that reward borrowers for meeting energy performance targets or penalize them for falling short.
Institutional investors are moving in the same direction. Pension funds and real estate investment trusts increasingly build energy performance into acquisition criteria and portfolio strategy, with poor Energy Performance Certificate ratings and high energy intensity viewed as potential indicators of stranded asset risk.
Staying ahead of evolving regulations
Regulation is expanding from decarbonization goals to managing energy demand more effectively, driven by growing government concerns about energy security and mounting pressure on electricity grids. The best way to make the grids more resilient is to have more efficient, energy-smart buildings drawing on them.
Across the 75 major cities tracked in JLL’s City Climate & Resilience Policy Tracker, 41% now reference enforceable building performance standards, showing how quickly these policies have moved from niche to mainstream. Many of these are in the US, where national and local policy can be completely different, and buildings are directly impacted by local policy.
For owners and occupiers, better energy management is becoming business-critical – it avoids the scramble and inflated costs of reactive upgrades. In New York, Local Law 97 will tighten emissions limits significantly from 2030, and first-round non-compliance penalties are landing now. Yet only around 20% of affected properties currently fall below the required thresholds.
Meanwhile, the European Union is requiring member states to bring minimum energy performance standards into force by 2027. These will target the renovation of the worst-performing 16% of non-residential buildings by 2030, rising to 26% by 2033.
Closing the energy gap
As we move further into an era where energy availability, affordability and reliability are central to business performance, the financial gap between energy-smart and energy-inefficient buildings is likely to widen.
Closing it takes two things working together: technology that identifies inefficiencies in real time, and human expertise that resolves issues and continuously improves performance.
For the technology firm, energy audits, energy conservation measures, retro-commissioning and ongoing monitoring and improvement cut over $690,000 from combined annual energy bills and eliminated more than 1,870 metric tons of CO₂e – roughly the annual emissions from 406 cars.
It’s a similar story in other industries. Chicago’s Rush University Medical Center has delivered more than 110 energy projects over five years, saving almost $9 million, with over $500,000 in utility incentives helping to offset capital investment in areas including building system improvements and chiller and cooling tower upgrades.
Better energy management is evolving from a defensive planning exercise into a competitive differentiator. It’s becoming one of the clearest indicators of which buildings will continue to perform, compete and hold value. The boardroom is taking notice. Now buildings need to catch up.
