According to a recent report by JLL Research, titled “Where Energy Meets Property,” energy availability and security are fast becoming defining factors in commercial real estate (CRE) decision-making, with critical implications for project viability, property values, and building performance. (JLL Research is a global commercial real estate services and investment management company.)

The report revealed how today’s power crunch is reshaping the industry and the challenges and opportunities for owners, developers and occupiers across all major sectors.

JLL identified four structural forces disrupting the energy sector and the traditional role of CRE:

– electrification and accelerated load growth,

– physical and process-oriented grid constraints creating development bottlenecks,

– decarbonization and clean power deployment, and

– the digitalization and decentralization of energy systems.

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.

She went on to say, significantly, that: “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.”

Electricity demand is rising after decades of stagnation, driven by AI, data centers, onshoring and reshoring, advanced manufacturing, automation, and EV charging. The International Energy Agency (IEA) estimates growth of around 40 percent 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,” said the report.

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 percent between 2019 and 2024, compared with just four percent 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,” said the report.

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,” said the report. “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,” said the report.

“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.”