Countering rising energy costs in commercial real estate

75% of Europe’s buildings have poor energy performance, yet tenants are putting increasing pressure on real estate owners for more energy efficient, sustainable, and affordable buildings. Not to mention the fact that energy costs have risen significantly over the past few years. 

But that doesn’t mean that property owners and managers can’t take action to make their buildings more energy efficient and reduce their energy bills. Here are some ways that you can counter rising energy costs in commercial real estate:

• Upgrade outdated infrastructure: modernize HVAC and lighting systems and improve building insulation to eliminate hidden energy drains caused by outdated equipment. 
• Use a building optimization platform: by combining real-time data with automation, AI-driven insights, and expert advice, property owners and managers can take action to reduce energy waste and lower energy costs without compromising on tenant comfort. 
• Engage tenants: educate tenants on energy efficiency and provide custom dashboards to foster a culture of avoiding excess energy use. 
• Explore sustainable subsidies and tax benefits: look into your options for subsidies or tax offsets for investments that make your buildings more energy efficient and reduce your overall emissions. 

Want to see how all of this comes together in practice? In this blog, we’ll walk through these strategies to reduce your energy costs and practical ways to implement these across your property portfolio.

Financial and environmental benefits of improving energy efficiency

Energy efficiency isn’t just a box to tick, it can help property owners and managers to create more sustainable and profitable buildings. From cutting daily operating costs to boosting long-term asset value, the impact of improving your buildings’ energy efficiency goes far beyond your utility bill. Let’s break down how more energy efficient buildings benefit both property owners and tenants: 

Reduced operational costs

By investing in improving a building’s energy efficiency, you can significantly reduce its operational costs. These costs range from lower energy bills to less maintenance costs to less admin costs of dealing with tenant complaints. The savings achieved also help offset the high initial capital costs of purchasing buildings, leading to an improved bottom line and faster ROI.   

With the help of building optimization platforms, property owners and managers can monitor and compare energy use and costs for buildings across their portfolios. This helps identify opportunities to further reduce operational costs through investing in energy efficiency measures or adjusting building controls. 

Smaller carbon footprint

Beyond cost savings, energy-efficient buildings have less greenhouse gas emissions than buildings with poor energy efficiency. As ESG requirements and sustainability regulations tighten across Europe, reducing the emissions of your property portfolio is becoming more and more important. 

By improving the energy efficiency of your buildings, you not only ensure compliance with sustainability regulations but also strengthen your ESG position and contribute to decarbonizing the real estate sector. 

Increased asset value

Energy-efficient buildings consistently outperform outdated ones when it comes to market value, tenant satisfaction, and long-term ROI. Properties with strong EPC (energy performance certificate) ratings are more appealing to both investors and tenants, commanding higher rental rates, longer lease terms, and greater stability in occupancy.

For example, retrofitting a building from an EPC label G to B can generate a 10% internal rate of return (IRR), showing how investing in improving your buildings’ energy performance can increase your returns and overall asset value. 

Higher tenant satisfaction

Energy efficient buildings provide more comfortable indoor climates to their occupants, such as improved air quality, stable temperatures, optimal lighting, and more. All of this impacts tenant well-being, productivity, and ultimately satisfaction. That’s why improving your energy performance helps keep your existing tenants longer and also helps attract new tenants.

3 strategies (and 12 ways) to improve building energy efficiency and cut costs

Improving your buildings’ energy efficiency doesn’t happen by accident, it’s the result of smart, intentional choices. Below, we break down 3 key strategies and 12 practical ways to make your building perform better, waste less, and cost you less. Let’s get into it. 

1. Upgrade outdated building infrastructure

Before you can make your energy use smarter, you need to have the right foundation in place. In the EU, 85% of buildings were built before 2000, so as you can imagine, many of these buildings will have poor insulation, outdated HVAC systems, inefficient lighting, and other legacy systems. 

These Inefficient building systems are often silent energy drains that result in higher energy costs and poor building performance. By upgrading your buildings’ infrastructure, you lay the groundwork for real, measurable cost savings, while also improving the indoor climate of your buildings. Here are some ways to do this: 

Invest in energy-efficient HVAC systems

Heating, ventilation, and air conditioning (HVAC) systems account for 40-60% of a building’s total energy use. Upgrading to high-efficiency units with smart controls allows for zoned heating and cooling and automatic adjustments based on real-time occupancy and outside temperature. The result? Lower energy bills, fewer HVAC maintenance issues, and a more comfortable indoor climate for every building occupant.  

Upgrade insulation and window glazing

Poor insulation leads to energy loss, making heating and cooling systems work harder to maintain the desired temperature. Upgrading wall, roof, and floor insulation, along with installing double or triple-glazed windows, significantly improves heat retention within buildings. This reduces strain on HVAC systems and reduces excess energy use, without compromising occupants’ comfort.  

Retrofit LED lighting

Lighting is another major energy drain in commercial buildings, but one that can be easily fixed. Switching to LED lighting systems uses 75% less energy than conventional lighting and lasts up to 25 times longer. 

But it’s not just about swapping the bulbs to LED bulbs. We also recommend adding motion sensors, daylight harvesting sensors, and smart scheduling to ensure lights are only on when they are actually needed. This ensures your buildings remain bright and comfortable places to live or work, while also avoiding excessive energy use by your lighting systems.  

Install smart energy management systems

Once you start modernizing your buildings’ infrastructure, it’s important to implement a smart building energy management system (BEMS) to get the most out of your buildings. BEMS enables you to optimize the energy use of your buildings by providing real-time control, identifying inefficiencies, automating usage based on occupancy and weather, and helping you make better investment decisions. 

Think of it as the brain of your building, working 24/7 to minimize energy use while creating optimal indoor climates.

2. Implement tech solutions

You can’t manage what you can’t measure, and that’s where tech comes in. From smart sensors to automated systems, technology gives you the insights and tools to take full control of your building’s energy usage. It’s not about adding complexity, it’s about simplifying decisions and savings in ways you didn’t know were possible. Here are some ways that tech can help reduce your energy costs: 

Use smart building optimization tools

AI-powered building management platforms are becoming the backbone of modern building management. These tools can analyze thousands of data points in real-time, from occupancy levels to outside temperatures, translating them into tailored insights to reduce energy use. Over time, they learn from patterns in a building’s usage, allowing for continuous improvement of the building’s performance.

That’s exactly why VORM implemented Healthy Workers’ building optimization platform. And the results were clear–within 24 months, VORM reduced energy use by up to 23% across four buildings, and is on track to secure an A energy label for its entire portfolio within the next 5 - 6 years. 

Implement automation for HVAC and lighting systems

Manual control of HVAC and lighting systems will soon be a thing of the past, as it’s simply no match for intelligent automation. By combining real-time building data and automation, you can make the control of your HVAC and lighting systems fully autonomous. That way, these systems never run unnecessarily, reducing wear and tear and cutting energy costs. 

Benchmark energy data

Benchmarking the energy use of your buildings against other buildings helps to bring context to your data. By comparing energy usage across buildings, timeframes, or industry standards like BREEAM and WELL, you can quickly spot inefficiencies that might otherwise go unnoticed. And building optimization platforms make benchmarking quick and easy.  

Benchmarking is especially useful for portfolio managers who need to compare the performance of buildings across their portfolio to help them prioritize investments with a high return on investment (ROI). 

Test use of IoT and smart sensors 

IoT and smart sensors can give you eyes and ears on every floor of your buildings, in terms of heating, cooling, occupancy, humidity, and much more. Smart sensors provide granular data on how equipment is performing and alert you the moment something deviates from the norm. This early detection prevents issues from escalating, reduces downtime, and ensures energy isn’t being unnecessarily wasted. 

Paired with a centralized BEMS, IoT and smart sensors help you gain full visibility and control over how your buildings use energy, minute by minute. However, it’s worth noting that some building optimization platforms can actually make your buildings smart without the need for custom sensors, so keep that in mind when choosing the best building optimization platform for you.  

3. Engage tenants to encourage smarter energy use

Even the smartest building can’t become energy efficient without support from the people who manage and use it. When building occupants understand how their behavior impacts energy consumption, it’s possible to make significant energy savings. From small habits to shared goals, here’s how you can get your team onboard with energy efficiency: 

Educate tenants on energy efficiency 

It all started with education. Tenants usually don’t waste energy on purpose, they just don’t necessarily understand how their actions are creating excess energy use. Clear communication on your approach to energy efficiency, a custom energy dashboard for each tenant, and small nudges can shift behavior in meaningful ways and help reduce overall energy use across your buildings.

Introduce energy usage policies

Introducing policies on energy use can provide structure, but they need to make sense in practice. Think beyond technical rules: involve tenants in shaping energy usage guidelines that create better indoor climates while also contributing to reduced energy use. 

Also consider what features can help create good habits e.g. motion-activated lighting can reinforce the habit of always checking lights are off when a room is not in use. 

Carry out regular maintenance

All systems lose efficiency without upkeep, even the best-designed ones. Filters clog, light bulbs stop working, and seals degrade, all of which quietly increase energy waste. A structured maintenance plan not only prevents breakdowns but ensures your infrastructure performs at the level it was designed for. 

If you don’t have a building optimization platform in place, then you’ll need to rely on tenants to let you know when there is an issue that needs to be addressed. And this is why many property owners and managers are now using building optimization platforms to identify issues in real-time and implement preventative maintenance strategies. 

Conduct energy audits

Think of audits as regular check-ins with your building’s energy health. They reveal patterns you’d otherwise miss, like overuse of energy on weekends when an office building is empty, and help quantify where to act next. 

With each audit, you get smarter about what works, what doesn’t, and where your next energy savings are hiding. Plus, if you use a building optimization platform, you can easily analyze and audit your buildings’ performance in one place. 

Subsidies available for energy efficiency improvements

Government incentives and tax benefits can significantly reduce the upfront costs of energy efficiency upgrades. PwC highlights programs such as the EIA (Energy Investment Allowance), which allows you to deduct up to 45.5% of your investment costs in sustainable technologies from your taxable profit. Taking advantage of these types of schemes can accelerate your ROI and make long-term energy savings more accessible. 

Still, many organizations struggle to access these benefits because finding the right scheme, at the right time, is easier said than done. That’s why it pays to work with partners who understand both the energy landscape and the subsidy framework. It’s not just about knowing what’s available, but about knowing how to use it effectively.

At Healthy Workers, we’ve experienced this firsthand. We received a significant sustainability subsidy ourselves, which proves that there is sustainability funding available once you know how to access it. Now, we often help our clients identify and secure subsidies and other funding that helps them to increase the energy efficiency of their buildings. 

Why taking proactive measures will mitigate rising energy costs 

At the moment, energy prices aren’t just rising, they’re also becoming less predictable. This volatility leaves you exposed to sudden energy cost spikes that can quickly increase your costs and erode margins. 

That’s why you need to ensure your buildings are energy efficient and you’re optimizing energy use across your portfolio. Every month of inaction can result in higher energy bills, more energy waste, and missed opportunities to optimize your buildings for both energy efficiency and tenant comfort.

Next to the financial implications of rising energy costs, there’s also growing regulatory pressure to reduce energy waste, from stricter EPC requirements to ESG reporting obligations. As the market changes, buildings that don’t meet modern energy efficiency standards will become harder to lease or sell, and become too expensive to operate. The good news? You don’t have to figure out how to cut energy costs and reduce energy usage alone, we’re here to help. 

Partner with Healthy Workers to reduce your energy costs and optimize building performance

Your building is full of hidden opportunities, you just need to know where to look. By combining real-time building data with hands-on support, we help you identify ways to increase the energy efficiency of your buildings and reduce energy costs, without compromising tenant comfort. 

Here’s what partnering with Healthy Workers looks like:

• Real-time insights: see where energy is wasted and where savings are hiding.
• Predictive maintenance: prevent breakdowns of HVAC and other systems before they happen.
• Smart automation tools: automate control of lighting, HVAC, and other systems to optimize indoor climates without wasting energy. 
• Portfolio-wide benchmarking: compare your buildings’ performances so you can prioritize high ROI investments. 
• Expert consulting: make better investment decisions, easily comply with ESG goals, and prepare for future regulations.

Whether you manage a single building or an entire portfolio, Healthy Workers gives you the visibility, tools, and guidance to stay ahead in the highly competitive real estate market. Book a free demo with our building optimization experts to learn how we can help you improve your buildings’ performance and reduce your energy costs.