The impact of minimum energy performance standards on the commercial real estate market

Why office energy rules matter for everyone

Office buildings quietly consume a large share of the world’s energy, driving part of the climate problem and affecting the costs of doing business. This study looks at what happens when a country stops merely encouraging energy savings and instead requires a basic level of efficiency from its offices. By tracking thousands of buildings in the Netherlands over more than a decade, the authors show how a simple rule can push owners to upgrade their properties and how financial markets quickly reward or punish buildings based on their energy performance.

A new rule for Dutch office buildings

The heart of the story is a Dutch rule known as the “label C obligation.” It says that, starting in 2023, most office buildings larger than 100 square meters must meet at least a mid-level energy rating called label C. Buildings rated worse than that are not supposed to be used as offices. The government first floated the idea in 2016 and wrote it into law in 2018, giving owners several years to act. Banks also reacted: one major lender announced it would stop financing energy-hungry offices, reinforcing the message that inefficient buildings could soon be in trouble.

Tracking how buildings responded

To see whether this rule actually changed behavior, the researchers combined two national databases. One tracks official energy labels for commercial buildings; the other records sales and rental deals for offices, shops, hotels, and more. This allowed them to follow individual buildings over time, see when owners requested new labels after upgrades, and compare offices covered by the rule with other commercial properties that were not. Using statistical tools that look at changes before and after the policy, and between treated and untreated groups, they isolated the effect of the label C rule from broader market trends.

More upgrades and a clear price signal

The clearest effect of the rule was on energy upgrades. After the policy was announced, office buildings were significantly more likely to improve their labels than other commercial properties. The impact was strongest for offices that started below label C: these buildings were about one and a half times more likely to move up the label ladder after the rule was introduced. Many owners did not stop at the minimum requirement. A large share of upgraded offices jumped all the way to the best labels, suggesting that owners often choose deeper renovations, especially when they can combine them with other planned work and anticipate future tightening of standards.

Investors react, tenants mostly do not

The financial side of the market told a different but related story. Office buildings that met the label C standard or better saw their sale prices rise by around 22 percent after the rule took shape, compared with similar but less efficient offices. The sharpest penalty fell on the worst performers: offices with the lowest label category sold for roughly half the price of comparable buildings after the rule was in view. By contrast, rents barely moved. Tenants did not pay noticeably more for efficient offices, nor did they strongly avoid inefficient ones in the short run, possibly because leases are long, enforcement has been perceived as mild, and tenants themselves are not directly punished for non-compliance.

Costs, incentives, and remaining blind spots

The authors also look at what it costs to bring a poor-performing office up to higher standards. Case studies suggest that moving a building from a low label to label C can cost tens of euros per square meter, with deeper upgrades to top labels costing more but still often less than the increase in sale value that the study observes. Tax breaks and other incentives can further soften the burden, especially for large institutional owners. Still, smaller landlords may struggle with upfront costs, and many buildings do not yet have any official label at all, which hides part of the true energy picture and complicates enforcement.

What this means for climate and cities

Overall, the study shows that setting a clear minimum energy bar for offices can nudge owners to make efficiency investments and that investors quickly factor these rules into what they are willing to pay. Even without very strict enforcement, the combination of regulation, market expectations, and financing conditions made inefficient offices less attractive assets. For a layperson, the message is straightforward: sensible energy rules for buildings do not just help the climate; they reshape property markets so that money flows toward cleaner, better-performing offices and away from energy-hungry ones.

Citation: Eichholtz, P., Kok, N. & Sun, X. The impact of minimum energy performance standards on the commercial real estate market. Nat Commun 17, 4038 (2026). https://doi.org/10.1038/s41467-026-70684-w

Keywords: building energy efficiency, commercial real estate, energy performance standards, office buildings, green building policy