Energy Efficiency Lowered Commercial Costs Through 2024
Building efficiency improvements significantly reduced operating expenses for commercial real estate owners by 2024.
Updated on Sept. 23, 2026 in Commercial
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Data through 2024 shows that energy-efficient buildings cost between 43% and 75% less to operate than less efficient properties. These savings reflect the impact of rising electricity costs and evolving regulatory standards on commercial real estate overhead.
Why it matters
As commercial electricity prices surged 11% to 91% above local inflation from 2020 to 2024, energy-conscious building management became a primary driver of bottom-line performance. These savings help mitigate the financial pressure caused by aging infrastructure and higher utility rates.
Energy-efficient buildings saved $1.58 to $5.13 per square foot annually compared to inefficient peers. In Los Angeles, savings reached $4.06 per square foot in 2024, up from $2.78 in 2019, while New York City offices saw savings grow to $2.69 from $2.27 over the same period.
The players
JLL
A professional services firm that provides analysis on commercial real estate markets and building performance data.
The details
Efficiency savings materialize as building owners reduce utility consumption to combat electricity price hikes that have outpaced inflation. These financial gains are realized by upgrading systems that manage heat, light, and power throughout aging commercial properties. By minimizing energy waste, owners realize lower annual operating costs despite broader market pressures on utility bills.
Timeline
2019 marked the baseline for energy savings tracking in Los Angeles and New York City.
2020 through 2024 saw commercial electricity prices rise 11% to 91% above local inflation.
2024 served as the final year of data collection for these energy savings metrics.
Money Landscape
This trend highlights the growing importance of building performance in a market defined by the post-2020 surge in commercial electricity prices. Property operators are increasingly prioritizing efficiency as a strategy to offset utility costs that have consistently outpaced local inflation.
Property owners and commercial tenants should review their utility expenditure and lease terms to determine if energy-saving upgrades offer potential cost relief. Decisions regarding building retrofits or efficiency investments are complex, and owners should discuss the projected return on investment with a qualified professional.
The takeaway
Energy efficiency has evolved from an environmental goal into a critical lever for controlling rising commercial operating expenses. Property stakeholders should track utility spending trends in their local market to identify when investments in building systems will provide the best long-term budget stability.
Further reading
For more information on property trends, visit the Commercial section.
Source note: This article includes information reported by Institutional Real Estate, Inc..
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Do you believe commercial property owners prioritize energy efficiency enough to lower operating costs?
