JLL Suggests that Energy Efficiency Can Be a CRE Operating-Cost Advantage

What was once considered an effort for sustainability is now an essential part of the commercial real estate operating budget.

The main reason is money. A recent JLL article reported that the most efficient office buildings in seven global markets cost 43% to 75% less to operate annually than the least efficient buildings in the same cities. The savings were between $1.58 to $5.13 per square foot.

As electricity costs rise, regulations tighten, and power availability becomes a growing constraint, that price gap is becoming increasingly important for owners and occupiers.

“Rising energy costs have shortened the payback window, turning efficiency from a long-term, nice-to-have improvement into an immediate, practical way to cut costs,” JLL said.

Electricity changes the equation

One issue is that electricity prices have increasingly outpaced inflation across major markets. Between 2020 and 2024, commercial electricity prices rose 11% to 91% more than local inflation across six markets studied by JLL.

In comparison, electricity costs between 2016 and 2026 ranged from 14% below inflation to 13% above it.

JLL reported that electricity costs in the United Kingdom and Australia increased by 37% to 45% from 2021 to 2026, compared with approximately 26% inflation over the same period.

For building owners and occupiers, energy costs are adding to grid pressures, including electrification, data-center demand, manufacturing reshoring and costs associated with upgrading older infrastructure.

JLL pointed out that energy efficiency can help reduce operating expenses while limiting exposure to price volatility.

Then, there’s regulation

JLL found that 41% of the 75 major cities tracked in its City Climate & Resilience Policy Tracker require enforceable building performance standards to target “the largest end-user of energy: buildings.”

In the U.S., 16 jurisdictions have building performance standards. New York City is already imposing fines under Local Law 97, while the European Union is moving toward minimum energy performance standards for buildings.

This means that regulatory requirements play as large a role in energy performance as operating costs and asset values.

The readiness gap

While sustainability pressures are growing, CRE might not be prepared to respond.

JLL previously studied 46,600 buildings across 14 global markets and found that about 66% of them performed poorly against leading building performance standards.

JLL’s 2026 Future of Work survey found that energy efficiency to mitigate rising costs and grid constraints ranked fourth among “the scenario leadership sees as a most transformative for the CRE portfolios.” Meanwhile, CRE teams rank their own preparedness as seventh out of eight.

That gap could become more of a problem as energy-inefficient buildings face higher operating costs and growing regulatory requirements.

Efficiency doesn’t always require a major retrofit

JLL’s research also suggests that closing the efficiency gap does not necessarily require a large upfront capital investment.

Operational changes, better controls, preventive maintenance and more active management of existing building systems can lead to measurable savings.

In one example, an office property reduced energy use by 27% through HVAC temperature and scheduling optimization, saving about $100,000 annually without a capital investment.

“It’s a reminder that closing the readiness gap can come down to getting the right people speaking and aligning regularly to get results,” the article said.

For owners, JLL suggested treating power access, energy intensity and energy sources as part of standard due diligence. Meanwhile, occupiers, especially those with power-intensive operations, should examine power availability and reliability in site selection and lease negotiations.

“The organizations that treat energy efficiency as core infrastructure will be best positioned for what comes next,” the article said.

Photo: Andrej Rostek/Shutterstock