Sustainability is shifting from rhetoric to results. Investors are re-evaluating value and resilience as climate pressures intensify and tenant expectations rise.

For years, sustainability in real estate was treated as an accessory to the business. Labels proliferated, strategies were branded and ESG sat merely adjacent to investment decisions. Now, as sustainability feeds directly into cashflow and regulations change around the world, the industry is reassessing what will make an asset competitive in the years ahead.

Three themes are actively moving to the forefront: sustainability is now viewed as a tangible driver of value, climate resilience has become a critical component of future-proof assets and technology is reshaping how managers pursue decarbonization. Together, these forces are redefining sustainable investing and raising expectations for measurable performance.

For example, Global Real Estate Sustainability Benchmark’s real estate benchmark 2025 data shows an increase in the share of real estate entities with net-zero policies currently in place – now at 81.5 percent, up from 78.8 percent in 2024 – while the number of firms with future net-zero commitments declined slightly. This policy growth, paired with commitments leveling off, suggests that managers are shifting from ambition to implementation, according to GRESB. This is supported by the rise in the number of participants with net-zero targets, which climbed to 66.4 percent in 2025, from just 50.4 percent back in 2023.

Investors see an opportunity in identifying assets and strategies that convert sustainability into measurable financial advantage while positioning portfolios to withstand the next generation of climate and regulatory pressures.

Sustainability is becoming a direct lever for value creation

Sustainability is being tied directly to returns and managers are quantifying how energy performance can influence property performance. Across portfolios, sustainability is less a marketing theme than a practical lever that influences tenant demand, cost structures and asset liquidity.

Corporate occupiers increasingly seek assets to support emissions and reporting requirements. If a property cannot show credible performance on energy or environmental metrics, it often does not make the shortlist, regardless of its location or amenities. This filtering effect has strengthened demand for efficient, well-managed buildings that reduce operating costs and improve employee wellbeing.

Leasing resilience is reinforcing the value proposition. Energy-efficient buildings tend to secure longer commitments, experience shorter downtime and maintain steadier cashflow. These patterns are becoming more visible in office markets, where upgraded buildings consistently outperform those that have fallen behind on efficiency or wellness expectations.

Financing conditions are also shifting. Lenders are showing stronger appetite for assets aligned with modern sustainability standards, while energy-inefficient buildings face tougher scrutiny and reduced access to capital. On the equity side, investors pursuing deeper refurbishments are seeing the benefits reflected in exit pricing.

Climate resilience and risk analysis are reshaping deals

The rapid rise of climate resilience is becoming a central investment discipline. Investors are incorporating hazard data earlier in the deal process and using it to shape valuation decisions. Resilience has become a defining component of prudent underwriting and a determinant of which assets remain viable over a full market cycle.

This approach begins with a more granular view of risk. Rather than relying solely on regional climate indicators, managers are layering asset-specific insights on water exposure, storm patterns, heat projections and structural capacity. Recent extreme weather events have exposed shortcomings in some model outputs, reinforcing the need for human judgment alongside analytics.

Mitigation planning and asset assesments increasingly influence capex decisions and acquisition pricing. Even relatively simple operational improvements are being deployed as first-line measures to address cost and risk. Heat exposure is drawing new attention as tenants in historically temperate markets begin to demand cooling capabilities, a shift that will carry real financial consequences.

Insurance volatility adds another pressure point. As premiums rise and coverage availability tightens in climate-sensitive regions, owners are being forced to adjust underwriting and reserve strategies. With limited visibility into future pricing, many investors are adopting more conservative long-term assumptions.

Digital technology is lighting the path to decarbonization

The growing role of technology in digital systems, smart-building tools and the rapid expansion of data infrastructure are changing how managers reduce emissions and operate assets. Technology is no longer a peripheral tool but an essential driver of competitiveness.

At the building level, advanced controls and sensor networks are delivering notable efficiency gains. Monitoring occupancy, temperature and equipment performance allow real-time adjustments that significantly cut energy use. These systems reduce costs and help tenants meet reporting obligations, increasing retention.

Major refurbishments are similarly benefiting from technological integration. Managers are using digital platforms and AI-enabled tools to forecast energy loads and optimize operational strategies. When upgrades are timed with the asset’s natural life cycle, costs and disruptions shrink.

Digital infrastructure itself is becoming a focal point. Demand for data centers and AI-related computing to handle these new technologies is growing rapidly, raising concerns about high energy consumption. At the same time, these very same technologies can improve efficiency, renewable integration and enable smarter building performance.

Investors are navigating a complex balance: supporting digital expansion while ensuring that new or existing facilities can credibly align with decarbonization goals.