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A new JLL analysis highlights how rising and volatile energy costs are reshaping operating strategies for commercial real estate owners and occupiers. Energy underpins virtually every building function, from lighting and climate control to technology and overall performance, making it a critical operating expense and a growing risk factor.
The report notes that buildings currently account for about 75% of U.S. electricity consumption and are forecast to represent 25% by 2030. At the same time, much of the installed building equipment was not designed for today’s more extreme weather conditions, contributing to more frequent outages and operational disruptions. These pressures are compounded by sharp cost increases: between 2020 and 2025, U.S. commercial electricity prices rose approximately 33% after a relatively flat prior five-year period.
Given the lack of a single universal solution, JLL outlines a set of short- and long-term measures that owners and operators can tailor to their portfolios. For near-term impact, the report emphasizes detailed utility bill audits to uncover overcharges and mistakes related to meters, tariffs, or clerical errors. These discrepancies can represent roughly 1% to 5% of a property’s annual utility spend, providing a straightforward opportunity to reduce operating costs when corrected.
On-site reviews and retro-commissioning are also positioned as high-return, relatively low-cost actions. By closely examining building systems in the field, JLL reports that many clients are able to cut energy consumption by 20% to 30%, saving hundreds of thousands of dollars annually on existing utility bills while identifying issues before they become larger capital or maintenance expenses.
The report further points to negotiating or renegotiating contracts with energy providers as another immediate lever. Owners who revisit contract structures and explore options such as time-of-use pricing or long-term power purchase agreements can improve rate certainty and lower exposure to volatility. Power purchase agreements that lock in fixed prices over 10 to 25 years are highlighted as a way to manage future price swings and stabilize long-run energy costs.
Looking beyond quick wins, JLL details several longer-horizon strategies that can reshape how buildings source and manage power. On-site energy generation using distributed resources such as solar panels and batteries can both supply a building’s energy needs and, where regulations allow, generate additional revenue by selling surplus power back to the grid. The report indicates that, under favorable conditions, this approach can increase an owner’s revenue by 25% to 50%.
Battery storage is another focus area, with the report noting that costs for energy storage systems have fallen by about 75% since 2015. Storage enables owners and operators to capture excess power when prices are lower and deploy it during peak periods, helping to mitigate price spikes and support resilience during grid disruptions.
JLL also highlights an Energy-as-a-Service model, under which building owners invest in and operate on-site energy infrastructure while selling power to tenants through power purchase agreements or community solar structures. This shifts energy from a pure cost center to a potential revenue stream and service offering.
The report concludes that deferring action is increasingly risky. JLL’s analysts argue that proactive, decisive steps on energy management can help owners protect asset values and create new income sources, while occupiers can reduce costs and lower the risk of business disruption linked to energy reliability and pricing.
The post JLL Report Details CRE Energy Strategies Amid Rising Costs and Grid Challenges appeared first on CRE Market Beat.
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