New researchby re:sustain highlights the magnitude of the problem faced by European real estate institutional investors due to assets with poor energy efficiency.
Re:sustain surveyed 200 European real estate institutional asset managers in the UK, Germany, France, Netherlands, Spain and Italy, with a combined AUM of EUR296 billion.
Over half (58 per cent) of respondents said that between 10 per cent and 30 per cent of their commercial real estate portfolio has poor energy consumption i.e. that which is materially above expected energy benchmarks for that asset type and location. One third (33 per cent) said between 30-50 per cent of their portfolio was performing badly and 11 per cent said that more than 50 per cent of assets in their portfolio have poor energy consumption.
Not only are investors facing declining values as a result, but 69 per cent have also seen energy costs rise between 20 per cent and 30 per cent over the past two years, with 31 per cent citing increases of more than 40 per cent across their portfolios. However, the majority (95 per cent) of those surveyed have plans in place to improve the energy efficiency of their real estate portfolio, with 82 per cent targeting energy consumption reductions of between 10 per cent and 30 per cent across their portfolios over the next three years.
In terms of tackling the problem, the research shows that for 58 per cent of respondents, modernising systems such as HVAC and electrics is a priority, followed by making greater use of technology to improve optimisation of existing systems such as controls, set points and scheduling (48 per cent). Modernising building management systems where needed was the third most likely action (45 per cent) and demolishing poorly performing buildings came fourth (44 per cent).
However, making changes to commercial buildings can be difficult, with respondents citing the complexity of coordinating landlords and tenants as the greatest challenge, with the capex and investment commitment second. Business interruption while work and upgrades take place ranked third, followed by navigating complex regulations. Economic and political uncertainty and a lack of professional expertise were also cited as challenges by respondents (ranked 5th and 6th respectively).
Commenting on the research Katie Whipp, Chief Business Officer at re:sustain, says: “The market has already changed — this research shows what’s actually happening. Poor energy performance is no longer a future risk; it is already impacting asset values, operating costs, and portfolio risk today.
“The findings highlight the scale of underperformance across real estate portfolios but also make clear that the barrier to action is not intent — it is execution. Delivering improvements in live, multi-tenant environments without disrupting income remains a fundamental challenge.
“As a result, we are seeing a shift toward approaches that can optimise assets in use quickly, with minimal operational impact. Improving energy performance is not just about reducing consumption — it is about strengthening resilience in an increasingly volatile energy landscape and protecting long-term returns.”
