Preserving Value Through Sustainability: It's Getting Specific

Years ago, experts predicted that properties with excessive energy consumption and emissions could lose value. "If no ESG adaptation measures are implemented, this will result in significant losses in property value," was one of the key findings of the Colliers study "Obsolescence Risks as a Challenge for the Office Property Market" (original in German).

These real-world (anonymized) examples illustrate what this means in practice:

• The internal guidelines of a DAX-listed company require that the buildings it occupies meet specific energy efficiency standards. If a building does not meet these criteria, the company must seek alternative rental space.

The owners of one such property approached us for support in improving its energy efficiency—ensuring they can retain an important tenant.

• In Frankfurt, we are assisting a family office in further enhancing the energy efficiency of a modern, largely sustainable building. The owners want to maintain their competitive edge in terms of sustainability and attractiveness—or, ideally, extend it further.

Strengthening the property’s unique positioning is key, especially as several new developments in Frankfurt will be completed in the coming years, increasing competition.

The fact that building users are increasingly demanding sustainable spaces with low operating costs was also highlighted in qualitative interviews we conducted with asset and ESG managers in recent months. Among other things, they noted: “We have to present a sustainability concept to our tenants.” Or: "It has become more difficult to let space. ESG is important for our external image."

The increasing demand from tenants for sustainable spaces with low operating costs is reinforced by stricter regulatory requirements.

The Building Energy Act (GEG) already mandates that energy consumption be digitally analyzed and reduced—an area where Recogizer’s solutions provide targeted support to ensure compliance.

The EU Taxonomy is also playing an increasingly important role in property management. Investment advisors are now required to ask clients about their sustainability preferences. If a client chooses to invest only in sustainable products, these must meet specific requirements—such as a minimum quota of taxonomy-compliant assets in a fund.

A property classified as sustainable gains easier access to green loans and bonds and is more attractive to ESG-conscious investors, as summarized by Ernst & Young denkstatt.

A property can be categorized as sustainable under the taxonomy if it meets both technical and DNSH (Do No Significant Harm) criteria. Recogizer’s solutions support climate protection and adaptation while ensuring compliance with other taxonomy requirements.

Further regulatory tightening is expected—whether through the EU Buildings Directive, an increase in CO₂ pricing, or both.

The revised EU Energy Performance of Buildings Directive (EPBD) is set to be transposed into national law. It introduces multiple new obligations to improve energy efficiency:

• EU member states must establish Minimum Energy Performance Standards (MEPS), requiring the worst-performing 16% of non-residential buildings to improve efficiency by 2030. This requirement will extend to 26% by 2033.
• Additional obligations include regular system inspections, indoor air quality monitoring, and intelligence capability assessments.
• Buildings must not only become smarter but also play an active role in the energy system, for example, by integrating photovoltaic systems, battery storage, or heat pumps.

Recogizer’s solutions support this transition, particularly through demand-side management.

By 2025, the CO₂ price will rise to €55 per tonne, significantly increasing the operating costs of non-residential buildings. Since 2023, CO₂ costs for rented non-residential properties have been shared equally between landlords and tenants.

From 2025, a tiered model — similar to that used for residential buildings — will also be introduced for non-residential properties. The less energy-efficient a building is, the higher the cost burden on landlords.

From 2026 onwards, fixed CO₂ prices will be abolished. Instead, an average price will be set, and by 2027, CO₂ prices will be determined through emission allowance auctions.

Operating buildings with high CO₂ emissions will become increasingly expensive — raising ancillary costs, impacting rental pricing, and ultimately affecting property values.

Both increasing tenant expectations and stricter regulations are driving the need to improve energy efficiency and reduce emissions.

This is precisely where Recogizer comes in. Our solutions create transparency in building operations and automatically, measurably, and verifiably reduce energy consumption. Importantly, they do so without generating high costs for property owners or their service providers. This is what is needed to maintain or even increase property value, ensuring that assets remain competitive and future-proof.