Location, Loca..., No, Power, Power, Power

CHICAGO -- 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.

JLL’s new research, Where energy meets property, reveals how today’s power crunch is reshaping the industry and the challenges and opportunities for owners, developers and occupiers across all major sectors.

“Energy is no longer a background operating cost; power availability, reliability and costs are increasingly shaping site selection, development feasibility and asset performance,” said Paulina Torres, Global Research Director for Sustainability at JLL.

JLL identifies four structural forces disrupting the energy sector and the traditional role of commercial real estate (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. 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, JLL Head of Energy Advisory and Sustainability, Americas. “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. The classic real estate priorities are evolving from purely location-based to include energy resilience as equally critical factors.”

Demand surges as grid infrastructure lags
Electricity demand is rising after decades of stagnation, driven by AI, data centers, onshoring and reshoring, advanced manufacturing, automation and EV charging. The IEA estimates growth of around 40% or more by 2035, far outpacing overall energy demand.

This surge is colliding with grid infrastructure designed for slower, more predictable growth patterns. The electricity system is evolving from a linear chain of centralized generation through transmission networks to end users toward a more decentralized network where energy is increasingly generated, stored and managed closer to where it is consumed. Digital controls, distributed energy resources and intelligent demand are shifting capability toward the grid edge, fundamentally reshaping the relationship between energy and the built environment.

Grid connection timelines for large new loads are approaching five years on average across major data center markets, turning access to power into a binding constraint well before construction begins. Industrial power prices across major economies rose by approximately 18% between 2019 and 2024, compared with just 4% growth in the preceding five-year period. Physical constraints and aging grid infrastructure, coupled with antiquated planning, permitting and regulation, are mounting pressure for utilities as they struggle to keep pace with consumer demand.

Key industries navigate growing energy constraints
Industry sectors driving today’s economic expansion find themselves exposed to the power crunch. Data centers have emerged as the most visible symbol, with JLL Research projecting the addition of nearly 100 GW of global capacity this decade. Despite their visibility, data centers are projected to account for less than 10% of global electricity demand growth by 2030, behind several other industries.

Industrial and logistics properties are experiencing similar pressures as automation and electrification reshape operations. Manufacturing facilities with AI-driven processes, robotic systems and electrified equipment find their power requirements can be several multiples higher than traditional operations.

The expansion of EV charging beyond single-family homes into workplaces, retail and logistics properties is creating additional strain across property types, as unmanaged EV charging infrastructure can more than triple a site’s peak power demand. Healthcare facilities, life sciences labs and other mission-critical facilities face additional complexity, as sectors requiring continuous, highly reliable power are reinforcing their importance as a non-negotiable requirement.

“We’re seeing energy infrastructure and real estate values become permanently interlinked across major property sectors,” said Guy Grainger, Global Head of Sustainability Services at JLL. “Properties equipped with smart energy management and on-site power generation capabilities have a clear competitive advantage in today’s constrained environment. Energy security at operational facilities is now a boardroom discussion for business.”

On-site energy solutions gain momentum
Digital controls and distributed energy resources are emerging as practical system responses, allowing buildings to manage peaks, improve resilience and reduce exposure to volatility. Modern energy management platforms now integrate on-site generation, battery storage, building systems and EV charging into a single control layer, allowing operators to manage peaks, shift load and prioritize lower-cost and lower-carbon power by hour and location.

“We predict that battery energy storage systems (BESS) will be the key to solving challenges with intermittent clean energy sources, while satisfying the needs for key sectors like industrial and data centers to have uninterrupted power,” Tucker added. “BESS is going to be a big game changer.”

Market forces reshape real estate values
Clean energy has accounted for over 90% of new power capacity added globally since 2020, with solar alone accounting for roughly two-thirds of total additions. This shift is driven primarily by economics rather than policy alone, as declining costs, shorter development timelines and modular deployment have made renewables the fastest way to add new capacity.

Global annual energy transition investment reached a record $2.3 trillion in 2025, more than doubling compared to 2020, with commercial distributed energy resources expanding fivefold over the same period. The research emphasizes that buildings sit at the center of today’s power crunch, accounting for 30% of final energy consumption while representing one of the most adaptable levers in the energy value chain.

“As digital and decentralized capabilities expand, real estate is beginning to interact more directly with power system operations rather than simply consuming electricity, creating new opportunities for competitive advantage,” concluded Torres.

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