The Future Tenant: Why Energy Performance is Becoming a Leasing Priority

For years, energy efficiency was treated as a bonus for forward-thinking building owners. Yet, over the last few years, the market has changed dramatically. Today’s tenants, especially those in the corporate, institutional, and tech-sectors, are asking hard questions about how a building performs before they sign the lease.

This shift in the industry isn’t just about sustainability. It’s about cost, comfort, compliance, and corporate reputation. In fact, many experts are labeling these as the new metrics of value in commercial real estate.

Rising Energy Costs Make Efficiency a Business Strategy

Energy is no longer a static overhead expense. Volatile rates across California — coupled with tightening building performance ordinances like Los Angeles’ EBEWE, San Francisco’s EBO, and San Jose’s BPO — mean that inefficient buildings directly affect the bottom line. After all, we’re only as strong as our weakest link.

Tenants have also noticed. A growing number of commercial leases now factor in operating expense pass-throughs, meaning the tenant ends up footing the energy bill. In response, large tenants are becoming more selective, choosing buildings with proven energy performance records. Ideally, they look for those with completed audits, retro-commissioning (RCx), or ENERGY STAR certification.

When owners invest in efficiency, it’s not just compliance, it’s a competitive differentiator.

ESG Reporting Is Changing Leasing Behavior

Public companies are under immense pressure to disclose and reduce their carbon footprints. A company that occupies a 200,000-square-foot building can’t credibly talk about sustainability if its leased space is energy-inefficient or non-compliant.

That’s why tenants increasingly evaluate the EBEWE compliance status of Los Angeles buildings or look for benchmarking transparency in markets like San Francisco or Berkeley (BESO Benchmarking). If a landlord can’t demonstrate strong energy performance, that building risks being filtered out before the first property tour even happens.

Energy performance data has become part of corporate ESG reporting, and buildings that don’t provide it are quietly losing relevance.

Comfort and Productivity Drive Retention

While compliance gets the headlines, comfort keeps tenants. Efficient buildings often have better air quality, more consistent temperatures, and smarter lighting systems. All of these are factors that boost occupant productivity and satisfaction.

Studies have shown that small HVAC and controls upgrades can reduce complaints and churn more effectively than expensive aesthetic renovations. In other words, the most profitable lease renewals are often built on invisible improvements instead of flashy remodels.

The Rise of the “Smart Tenant”

We’ve entered the era of the smart tenant: data-savvy, sustainability-conscious, and unwilling to settle for outdated systems. Tenants now use public benchmarking data to compare properties, verify compliance, and even negotiate lease terms based on efficiency scores.

Some tenants go even further — asking for submetering, renewable energy sourcing, or proof of ASHRAE Level II audits before committing to a lease. That trend will only accelerate as California expands decarbonization mandates across major cities.

What This Means for Building Owners

For owners and asset managers, energy performance has quietly become part of the marketing package. It’s not just about avoiding EBEWE fines or submitting reports on time. It’s about being able to demonstrate efficiency in a way that resonates with tenants and investors alike.

That means:

• Keeping benchmarking data current and accessible

• Conducting regular energy audits and RCx to stay compliant

• Highlighting energy savings and sustainability achievements in leasing materials

• Partnering with an energy compliance service that helps translate technical data into tenant-facing value

When your building performs well, it doesn’t just meet standards, it sells itself.

Looking Ahead: Efficiency as an Asset Class

In the coming years, as carbon disclosure laws tighten, energy-efficient buildings will command a premium. We’ll likely see a market divide: buildings that can demonstrate performance and those that can’t.

For forward-thinking owners, now is the time to invest in performance documentation, not just retrofits. The next generation of tenants will treat efficiency data the same way they treat square footage or parking ratios, as a leasing essential.

The Bottom Line

Energy efficiency has moved from a facilities concern to a financial one. Buildings that can prove strong performance through EBEWE compliance, benchmarking, and audit transparency aren’t just saving on utilities. They’re gaining a market edge.

At Inland Empire Energy, we help owners bridge that gap, translating compliance requirements into real-world value that tenants can see, understand, and trust. Because when your building runs efficiently, it doesn’t just meet code. It becomes the kind of property every tenant wants to call home.