Navigating market shifts: ESG compliance and retrofit challenges reshape global real estate
LONDON, 22nd September 2025 — The commercial real estate sector is approaching a critical juncture, driven by increasing ESG compliance requirements, tightening retrofit deadlines, and shifting investor expectations. At a closed-door summit held at The Cadogan Hotel in London, senior leaders from RICS, PAREF Group, BuildingMinds, Arcadis, Leon Capital, VerusSol, GRESB, Longevity Partners, and Optiml highlighted the strategic challenges ahead and the unique opportunity for the industry to reinvent itself through innovation, collaboration, and forward-looking investment strategies.
“We’re not talking about gradual transition. We're seeing portfolios where most assets will require immediate action to retain marketability.”
— Dr. Jens Hirsch, Chief Scientific Officer, BuildingMinds
Mortgage Defaults Surging, Portfolios “Technically Insolvent”
“We are seeing a tremendous amount of mortgage defaults,” stated Maureen Ehrenberg, RICS Acting President-Elect. “Investors are bundling shopping centres and commercial portfolios to offload at rock-bottom prices. The capital necessary to convert or upgrade them simply isn’t there.”
Ehrenberg called on asset owners to conduct immediate risk assessments: “Some portfolios may already be technically insolvent—and don’t know it yet.”
From Asset to Liability: Resilience, Climate Risk & 14 Threat Factors
“We’ve moved beyond energy efficiency. We’re seeing risk repricing in real time—driven by insurers. From seismic activity and droughts to aging infrastructure and climate migration, owners are evaluating portfolios against 14 risk dimensions—and the numbers are devastating.” — Maureen Ehrenberg, RICS Acting President-Elect.
Data Breakdown Paralyzes ESG Finance
“It’s madness. Asset managers are still manually collecting invoices, chasing tenants across portfolios of 100+ buildings. This isn’t sustainable.”
— James Fenna, Head of Data & Digital Transformation, Longevity Partners
Banks and ESG lenders now demand automated, verifiable data pipelines before unlocking finance.
“We’re advising most of our clients to abandon outdated collection models and move to live metering and direct database. Without real data, decarbonization dies on paper.” James Fenna — Head of Data & Digital Transformation, Longevity Partners
"Garbage In, Garbage Out": AI needs good data
“If you want to use AI for decision making, you must ensure high quality data foundation. Although AI can help, you cannot AI your way out of garbage data.”
— Dr. Michael Soucek, Chief Data & Analytics Officer, BuildingMinds
From Brown to Investable: Data-driven strategies as catalysts to unlock scalable capital flows
“Retrofitting existing buildings isn’t just about sustainability mandate and meeting ESG labels, it’s a value play coupled with long-term asset resilience. Backed by real data and credible governance, brown-to-green approaches can outperform through increased tenant demand, regulatory alignment, and a tangible green premium.”
— Jacek Kulakowski, Executive Investment Director, PAREF Group
Regulation Defines Minimum Expectations but Leaves Leadership Unrecognized
“Regulation tends to establish a ‘new floor’ that all must meet, but it falls short of rewarding those who push beyond compliance. Real competitive advantage will come from measured performance and continuous innovation” said Mathilde Petriat, Chief Customer Success Officer at GRESB.
Moving forward, consistent frameworks will be crucial to highlight the differences between minimum compliance and true leadership in the market.
Data’s Impact on Capital Raising and Pricing
“Portfolio managers with a proven track record of improving their ESG scores are diversifying the sources of capital they can access, particularly in Europe. While ESG data may not always move valuations directly, it absolutely affects pricing and investor due diligence. Without credible data, improvements simply aren’t reflected in purchase prices.”
— Trisha Taneja, Head of ESG Investment Advisory & Strategy, Arcadis
What Now?
For Investors:
Conduct whole-portfolio ESG and mortgage exposure reviews; transition will determine survival.
For Asset Owners:
Install metering, digitize emissions data, and implement transition strategies—delay equals capital loss.
For Regulators & Governments:
Standardize valuation risk models, accelerate retrofit incentives, and enforce ESG audit compliance.
For Pension Funds:
Scrutinize sustainability plans—and exit exposure where transition is unverifiable.
“We're seeing buildings devalued, tenants walking away, and insurers redlining entire asset classes. This is not tomorrow’s problem — it’s unfolding now.”
— Maureen Ehrenberg, RICS Acting President-Elect.
About BuildingMinds
BuildingMinds is a real estate software-as-a-service (SaaS) provider that offers a comprehensive, data-driven platform for optimizing building performance and sustainability. Through innovative technology and analytics, BuildingMinds enables real estate owners and managers to monitor, analyze, and optimize their assets, supporting the transition to a more sustainable and data-driven real estate industry.
