JLL Says Power Availability Becoming Key Commercial Real Estate Value Driver

(Illustration courtesy of Scott Webb via Pexels.com)

Energy availability and security is fast becoming a defining factor in commercial real estate decision-making—with critical implications for project viability, property values and building performance—according to JLL, Chicago.

JLL released new research, Where Energy Meets Property, that examines how today’s power crunch is reshaping commercial real estate and the challenges and opportunities for owners, developers and occupiers across all major sectors.

The report identified four structural forces disrupting the energy sector and the traditional role of CRE:
• electrification and accelerated load growth;
• both physical and process-oriented grid constraints creating development bottlenecks; • decarbonization and clean power deployment; and
• the digitalization and decentralization of energy systems writ large.

“These forces are creating the ‘perfect storm’ by significantly disrupting real estate and energy, two legacy sectors,” the report said. It noted this convergence is expanding real estate’s role in the energy value chain and creating new competitive advantages for properties with reliable power access.

 “Energy disruptions are becoming a widespread business reality across sectors such as data centers, advanced manufacturing and life sciences,” said Josephine Tucker, head of energy advisory and sustainability with JLL. “Tenants are demonstrating clear willingness to pay higher rents for properties with dependable energy systems and we’re already seeing measurable power premiums–49% in some cases.”

Tucker noted the classic real estate priorities are evolving from purely location-based “to include energy resilience as equally critical factors.”