Energy efficiency in real estate is a demonstrated driver of operating income, resilience, and long-term asset value. Properties that use energy more intelligently can reduce costs, attract tenants, and help mitigate risks.
One of the clearest examples comes from an unlikely source: data centers. Often considered the “energy hogs” of real estate, these facilities are showing how energy-conscious strategies can transform risk into resilience and costs into opportunities.
Data Centers: The Energy Hogs of Real Estate
Artificial intelligence, cloud computing, and streaming have fueled unprecedented growth in data center demand.
- According to the Lawrence Berkeley National Laboratory, U.S. data center electricity use grew 18% annually from 2018 to 2023.
- By 2028, AI workloads alone could drive energy use 20–40% higher than baseline forecasts.
- Globally, the International Energy Agency projects data center demand will more than double by 2030, with half of that new demand expected to be met by renewable energy.
For real estate investment trusts (REITs) that own and operate these properties, such as Digital Realty and Equinix (both held in the Vert Global Sustainable Real Estate ETF), energy use is a direct driver of financial performance.
Four Ways Energy Efficiency Creates Real Estate Value
Leading data center REITs and hyperscale tenants like Amazon, Google, and Microsoft are pioneering energy efficiency strategies that support both sustainability goals and financial outcomes.
1. Financing Renewable Energy with PPAs
Power purchase agreements (PPAs) and virtual PPAs give renewable developers the confidence to build new projects. For data centers, PPAs provide stable, long-term energy pricing that helps hedge against volatility. Example: Equinix reached 100% renewable coverage in North America through large-scale solar and wind PPAs.
2. Hourly Energy Matching
Moving beyond offsets, companies are now matching renewable supply to energy demand hour by hour. Google has partnered with AES Corporation to cover 90% of the energy consumed by its Virginia data centers with renewables in real time. This strategy enhances grid reliability while reducing emissions.
3. Properties as an Energy Source
Data centers are integrating on-site battery storage and aligning workloads with renewable availability. REITs like Digital Realty and Equinix use demand-response programs, battery systems, and backup scheduling to ease grid strain while improving resilience for tenants.
4. Rewiring the Grid
Some companies are going further by co-developing energy infrastructure with utilities, from substations to private wires connecting campuses to renewable sources. These projects may enhance capacity, reduce risk, and position properties as critical grid partners.
Why Energy Efficiency Matters for Advisors and Investors
The lesson for financial advisors is clear: even in the most energy-intensive property types, efficiency can drive value. By helping reduce costs, hedging against volatile energy markets, and lowering risk exposure, energy-efficient real estate may support both operating income and long-term resilience.
For investors seeking exposure, sustainable real estate strategies like the Vert Global Sustainable Real Estate Strategy include REITs leading the transition. Companies such as Digital Realty and Equinix demonstrate that efficiency is not a trade-off, but a competitive advantage.
Improving energy efficiency does more than reduce carbon footprints. It strengthens tenant demand, lowers costs, and can increase portfolio resilience. Real estate leaders that prioritize energy-conscious strategies are potentially positioning themselves for long-term financial performance.
Want to dig deeper?
To explore this topic in more detail, read the full feature in GreenMoney Journal: From Energy Hogs to Rewiring the Grid: How Big Tech and Data Centers Are Solving the Cloud’s Growing Energy Appetite with Renewables
Vert Asset Management is a sustainable real estate investment manager dedicated to helping financial advisors build resilient, future-ready portfolios. We connect institutional-quality investments with the long-term goals of clients, focusing on both financial returns and sustainability.
Investors should consult their investment professional prior to making an investment decision.
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