Commercial real estate (CRE) owners managing mid-sized properties face mounting pressure to decarbonize, but the real driver is financial opportunity. The challenge lies in accessing capital and technical expertise to capitalize on these returns. CBRE’s Decarbonizing Commercial Real Estate report provides a roadmap for reducing the 37% of global emissions from buildings through energy efficiency, electrification, and renewables. For efficiency-focused mortgage lenders like Sustainable Credit Partners, this is an opportunity to offer tailored first-mortgage financing coupled with technical support, boosting property value via strategic investments. 

CBRE's research shows energy-efficient properties deliver compelling returns regardless of regulatory requirements, and the benefits aren’t limited to U.S. assets. The report highlighted that UK assets with top sustainability ratings achieved 16.2% total returns since Q1 2021 versus 11.2% for inefficient properties, with 2.4% rental growth in H2 2024 compared to 1.5% for less efficient assets. While building performance standards like NYC's Local Law 97 and Boston's BERDO add compliance pressure for many U.S. properties, the economic case stands on its own merit. 

Here are our key takeaways from the report, and thoughts on how lenders can empower middle-market owners.

Financing Energy Efficiency: Immediate Returns, Low Risk

Energy efficiency upgrades cut costs and emissions while enhancing property value, making them a low-risk investment for lenders.

Retrofit Loan Models: CBRE's partnership with Redaptive saved $55M by upgrading 139,000 lighting fixtures across 174 locations, reducing 410M kWh over 10 years through no-upfront-cost loans for LED lighting and HVAC upgrades. Another CBRE client cut emissions by 3.2M metric tons of CO2 annually by addressing high-risk HVAC assets across 1,300 locations—a model scalable for middle-market properties with repayments tied to energy savings.

Efficiency-Aligned First Mortgage Loans: Owners can finance similar projects as part of their first-mortgage loan by partnering with lenders like SCP and consulting partner GreenGen, who can validate the benefits of planned projects or, as an additional scope, provide property-specific upgrade roadmaps (including lifecycle assessments that strategically time system replacements with natural equipment end-of-life cycles).

Case Study: GreenGen retrofitted a 250,000 sq. ft. mid-sized office building in Chicago, achieving $1.2M in annual energy savings and a 12% emissions reduction through HVAC and lighting upgrades. By aligning with the larger debt strategy and maturity timeline for the asset, owners can integrate efficiency savings into their overall financial performance.

Funding Electrification: Future-Proofing Assets

CBRE notes that all-electric buildings provide a shield against gas price volatility, cutting costs and risks while enabling tenants with clean energy and carbon goals to have more flexibility in their approach.

Key Opportunities:

• Heat Pump Financing: Heat pumps can be three to five times more efficient than electric resistance systems, enabling loan repayments to be offset by savings

• Smart Building Systems: Finance IoT-based platforms to optimize energy use, with technical partners streamlining implementation for owners with limited expertise

• EV Charger Infrastructure: EV charging stations were a top tenant priority per CBRE's 2024 Americas Office Occupier Sentiment Survey, driving higher occupancy and rents

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CBRE client data shows electrification upgrades reduced emissions by 30% for a tech company's portfolio, enhancing asset value. Loans can cover installation, with owners recouping costs via tenant fees.

The Lender Role in Middle-Market Decarbonization

Middle-market CRE owners need capital and expertise to decarbonize. Lenders like Sustainable Credit Partners can deliver by financing efficiency and electrification, renewables, supply chain improvements, and offsets. These investments drive value—evidenced by the strategies and examples shared by CBRE as well as GreenGen Solutions. Large-scale operators can scale these models, but the middle market’s potential is ripe. By offering innovative loans and technical partnerships, lenders can transform CRE into a greener, more valuable market.

Ready to finance a sustainable future? Contact SCP to collaborate with experts to deliver capital and solutions, unlocking value for middle-market CRE and beyond.