Carbon Doesn’t Drive Value, People Do

In today’s commercial real estate market, there’s a growing chorus claiming that energy efficiency and carbon performance are the main levers of value. Regulators track them, investors report on them, consultants benchmark them. But let’s be clear: energy doesn’t drive value, people do. Buildings are financial assets only insofar as they meet the needs of tenants—and it is tenant demand, not kilowatt hours, that determines rents, renewals, and ultimately returns.

History offers proof. Prime office towers in New York, London, and Toronto have commanded premium rents for decades—long before “net zero” entered the lexicon. Their strength lies not in energy intensity scores, but in their ability to attract and retain occupiers who want prestige, connectivity, and amenities that drive productivity. Even today, an ultra-efficient building with poor location or weak tenant experience is more likely to sit vacant than outperform. Energy efficiency may lower operating costs, but without tenants, there is no income to value.

That said, the link between sustainability and tenant demand is increasingly evident. Research by MSCI and CBRE has shown that green-certified buildings tend to achieve rental premiums and higher occupancy compared to non-certified peers. The U.S. Green Building Council, for instance, cites data indicating that LEED-certified buildings command an average rent premium of 4–8% and higher asset values. But here’s the crucial point: tenants don’t pay a premium for energy savings alone. They pay for what those certifications signal—healthier work environments, alignment with ESG commitments, and reputational benefits for their workforce and stakeholders.

This creates a subtle but critical distinction. Energy efficiency is a tool, not an end in itself.; it’s a supporting factor, not the foundation of value. A laser focus on carbon metrics can lead to capital being misallocated into projects that reduce emissions but do little to enhance tenant demand. Worse, it risks overlooking the real drivers of performance—location, accessibility, design flexibility, digital infrastructure, and workplace experience. Those are the elements that create competitive differentiation and keep cash flows resilient.

For fund managers, the strategic takeaway is straightforward: value is sustained when buildings meet the evolving needs of people—corporate occupiers, employees, and communities. Energy and carbon efficiency should be pursued vigorously, but always as part of a wider narrative that centers on tenant demand. In the end, energy doesn’t drive value, people do.

At EVORA, we have always understood the true drivers of value: people and the places they choose to work, live, and invest. We develop holistic portfolio strategies from the tenant up – mapping who the space serves, what they need next, and how that demand shapes leasing, capex, and operations.

From there, we set clear targets, align spend, and give your team straightforward ways to track progress. Our advisory and technology work together so decisions are based on clean data, not guesswork. We keep plans practical and reviewed on the regular, so priorities stay sharp, and capital goes where it counts.

The result is steady value: lower risk, resilient income, and assets people find valuable – today and in the years ahead.