How Does Energy Efficiency Impact Your Property Value?

Buildings underpin all aspects of society and, as the largest global asset class, they play a critical role in ensuring economic stability. In an era of rising costs, climate risks, and resource scarcity, organisations that prioritise green buildings are seeing benefits that extend far beyond achieving sustainability goals.

Below, we explain how the digital evolution of a building – from a simple bricks-and-mortar structure with little to no automation, through to a fully adaptive and energy-efficient ‘smart building’ – creates value, not just in operational performance but across the entire stakeholder ecosystem.

We also share the latest research that shows why investing in specialised software tools and forming strategic partnerships with external vendors is likely to achieve a much better return on investment (ROI) than attempting to develop your own proprietary systems internally.

But first, let's break down the physical and virtual elements of a modern building, and the purposes they serve.

What is the fabric of a building?

The ‘fabric of a building’ – also known as the building envelope – refers to its structural components, like walls, roofs, floors, windows, doors, insulation, and sometimes fixed building services, like plumbing or heating, ventilation and air conditioning (HVAC) ducts.

These tangible elements determine the building’s ability to resist moisture, heat transfer (preventing heat from escaping in cold weather and blocking unwanted heat from entering in hot weather), and minimise energy loss.

Retrofits and upgrades to improve these components are typically the first step in energy efficiency strategies, as they can reduce energy demand at the source. 

What is the digital fabric of a building?

The ‘digital fabric’ refers to a virtual network of systems and technologies that interact with the building envelope by providing data and control signals to components, which in turn affect the building’s performance.

Sensors continuously monitor parameters such as occupancy, temperature, air quality, lighting levels, and energy and water usage, feeding this real-time data into the Building Management System (BMS) and/or other advanced analytics software platforms.

Fundamentally, the digital fabric transforms a static structure into a responsive, measurable system, making energy efficiency strategies far more precise, proactive, and effective. Without this sophisticated network, accurately measuring energy efficiency and optimising operations can be difficult to achieve.

What makes a building ‘smart’?

While a BMS – also called a Building Automation System (BAS) – is a foundational element of a smart building, having one alone does not automatically make a building ‘smart’.

A traditional BMS is mainly about monitoring and controlling core building systems such as HVAC, lighting, power, fire safety, and security. It can centralise control and improve operational efficiency, and typically follows pre-programmed rules, e.g. ‘if temperature reaches 24°C, turn on cooling’. Historically, BMS installations were often closed, hardware-intensive setups managed locally by Facilities teams or Operations teams.

A truly smart building goes further – it uses connected sensors, IoT devices, real-time data analytics, machine learning, and integration with external systems (e.g. energy grids, sustainability management software). The goal is not just efficiency, but also responsiveness, resilience, adaptability, and user experience. A smart building uses predictive intelligence, e.g. ‘based on weather forecasts, occupancy patterns, and energy prices, adjust cooling proactively to minimise cost and carbon’.

Smart building maturity ladder

Data is the bridge between a building’s design and informed decision-making. It gives stakeholders the insights they need to lower costs, cut carbon emissions, and align everyday operations with long-term sustainability strategies. 

Here’s how buildings typically evolve:

Level 1 – Traditional Building

• Systems (HVAC, lighting, security) work independently
• Little to no automation
• Efficiency depends on manual control and scheduled maintenance

Level 2 – Automated Building

• BMS introduced
• Centralised monitoring and control of core systems
• Rules-based automation (e.g. timers, thresholds)
• Energy savings possible, but reactive rather than predictive

Level 3 – Connected Building

• IoT sensors and devices provide real-time data (temperature, occupancy, air quality, energy use)
• BMS connects with additional platforms (metering, access control, energy reporting)
• Systems start to ‘talk to each other’ (e.g. HVAC adjusts to occupancy)

Level 4 – Intelligent Building

• Analytics, AI, and machine learning applied to predict and optimise performance
• Demand-response integration with the energy grid
• Proactive maintenance (predicting equipment failure)
• Advanced sustainability features (carbon tracking, renewable integration, time-of-use controls)

Level 5 – Smart Building

• Fully adaptive and user-centric
• Integrated preventative maintenance apps (one hour of planned maintenance can avoid three hours of repair work)
• Building continuously learns from usage patterns with strong cyber security
• Acts as part of a smart ecosystem (e.g. city grid, EV charging)

Who benefits from smart, green buildings?

• Owners and investors: Organisations with high ESG (Environmental, Social, and Governance) performance have 10% lower cost of capital and 20% higher profitability on average, so owners see smart, green buildings as an attractive asset. Certifications such as LEED or BREEAM can enhance marketability and attract premium tenants. And investors increasingly see buildings with robust sustainability features as future-proofed against regulatory changes and rising climate risks.
• Tenants and occupants: A green building with smart systems that adjust lighting, temperature, and indoor air quality boosts both productivity and well-being for occupants. In fact, retrofitting older buildings has been shown to cut staff sickness by up to 20%. Beyond providing enhanced comfort and potential savings on utility costs, strong sustainability credentials can support tenant branding and corporate ESG commitments – factors that, in commercial spaces, often translate into stronger lease terms and higher retention rates.
• Facilities and Operations teams: A smart building simplifies operations by centralising data and controls. An Energy Manager or Head of Estates can monitor performance in real-time, anticipate maintenance needs, and make evidence-based decisions that reduce downtime and energy waste. This not only improves efficiency but also strengthens the team’s ability to demonstrate tangible sustainability outcomes.
• Communities and regulators: At a macro level, green buildings contribute to reduced carbon emissions and resource consumption, benefiting local communities and helping cities to meet their climate goals. Compliance with regulations is easier, and buildings that support broader environmental and societal objectives often enjoy positive public perception and reputational advantages.

Building your own proprietary systems?

For teams which rely on timely, accurate energy and carbon data for reporting and informed decision-making, developing interoperability frameworks that break down data silos is key. And in an era of advanced AI, many might be tempted to develop their own internal tools. But this comes with a significant health warning...

A new report, State of AI in Business 2025 by MIT’s Project NANDA, reveals that a staggering 95% of AI pilots are stalling out – not due to faulty models, but because of poor integration. While internal teams can create impressive demos that function well in an isolated, controlled environment with clean test data, these tools often fail when attempting to connect to actual, complex systems in the real world.

It’s not just about collecting the data, it’s about connecting the dots

Integration is the critical differentiator. When AI can reliably read and write across multiple systems and present insights through an easy-to-understand interface accessible to all relevant stakeholders, it becomes genuinely useful, yielding financial, operational, and reputational benefits.

The study clearly indicates that organisations succeed far more often by purchasing specialised tools from third-parties and forming strategic partnerships that allow users to leverage the external vendor’s broad expertise, achieving success rates of 67%, compared to purely homegrown solutions which only succeed about a third of the time.

“Employee usage rates were nearly double for externally built tools. These partnerships often provided faster time-to-value, lower total cost, and better alignment with operational workflows. Companies avoided the overhead of building from scratch, while still achieving tailored solutions.” (MIT, State of AI in Business 2025, p. 23)

Shift from building to buying

Organisations do not need to reinvent the wheel. Success lies in connecting tools that are already designed to work with your existing tech stack and have a proven success rate.

“The path forward is clear: stop investing in static tools that require constant prompting, start partnering with vendors who offer custom systems, and focus on workflow integration over flashy demos.” (MIT, State of AI in Business 2025, p. 23)

Green buildings don't just make climate sense, they make business sense

• By improving energy and water efficiency, green buildings lower running costs while enhancing resilience and resource security against environmental changes and economic shocks
• They strengthen long-term asset value and open doors to green finance opportunities
• Inside the workplace, they foster productivity and well-being, increasing employee satisfaction and retention through healthier, inspiring spaces
• Beyond the organisation, climate-resilient design protects local communities and elevates brand reputation by demonstrating bold leadership on climate and social impact
• A sustainable built environment offers greater long-term value to both people and the planet – on which every business ultimately depends