Real estate decarbonisation: why property owners are stalled and how an innovative model breaks the deadlock

Decarbonising the building stock has become a central issue in the energy transition, regulatory compliance, and corporate responsibility. Buildings account for a significant share of energy use and CO₂ emissions, and regulators across Europe are steadily tightening their requirements to accelerate change. For property owners, this means that sustainability is no longer an optional ambition but a condition for maintaining the value, attractiveness, and resilience of their assets. Yet despite regulatory pressure, market expectations, and the availability of financial incentives, many owners remain hesitant to commit to large-scale decarbonisation. The obstacle is not simply financial, nor is it purely technical. The true barrier often lies in the legal and organisational complexity of existing lease structures, which make it difficult to distribute both the costs and the benefits of renovation works between landlords and tenants. This structural misalignment is slowing down energy transition in large parts of the real estate portfolio and explains why so many projects remain on hold, despite their long-term economic and environmental rationale.

Structural Barriers to Decarbonisation

The first major challenge property owners face is lease renegotiation. In most office and retail assets, the systems that consume the most energy — heating, cooling, ventilation, refrigeration — are shared across multiple tenants. Financing significant improvements, whether through modernisation of equipment or integration of renewable energy, often requires changing how operating costs are allocated. This means revising lease clauses, a process that is time-consuming, legally complex, and rarely welcomed by tenants. Tenants may resist shouldering additional costs, even if those costs would ultimately translate into lower energy bills, because the link between the investment and their short-term benefit is not always clear.

Beyond the legal complexity lies a deeper misalignment of interests. Owners must bear the weight of the initial investment, whether that involves new equipment, insulation, or energy optimisation systems. Tenants, however, are the ones who immediately benefit from lower energy bills and improved comfort. Unless there is a clear and transparent mechanism to share these benefits, owners perceive a real financial risk. Even when long-term profitability is demonstrable, the asymmetry between who pays and who benefits discourages investment. To this, one must add the potential disruption caused by the works themselves: interruptions to heating or cooling, modifications in shared spaces, and the inevitable disturbance to the day-to-day experience of tenants. For many owners, the fear of damaging tenant relations weighs as heavily as the financial uncertainties, creating a strong incentive to postpone or avoid ambitious decarbonisation.

Building the Case for an Aligned Model

And yet, when owners and tenants manage to align around decarbonisation, the benefits are undeniable. For owners, there is a triple advantage: financial, because energy savings and optimisation translate into reduced operating costs and increased asset value; strategic, because compliance with regulation shields assets from devaluation and strengthens their attractiveness to tenants and investors; and reputational, because high-performing buildings embody a credible ESG commitment that enhances corporate positioning. For tenants, the gains are equally clear. They enjoy better thermal comfort, lower energy costs, and the reassurance of working in an environment that meets modern sustainability standards, without necessarily having to take part in the investment process. For the environment, the impact is immediate and measurable, with significant reductions in CO₂ emissions that bring the sector closer to its climate objectives. The challenge, therefore, is to design operational models that make this alignment automatic, reducing the friction that has historically paralysed investment.

Overcoming Barriers Through Operational Innovation

This is where innovative models such as Newable’s come into play. Instead of forcing owners into lengthy lease renegotiations or asking them to shoulder all upfront costs, the model redefines the role of the energy operator. Newable takes direct responsibility for the operation and optimisation of the building’s energy systems — heating, cooling, ventilation, refrigeration — with the explicit objective of reducing consumption and emissions. The savings generated by these optimisations are then shared with the owner, providing direct, predictable remuneration that is no longer dependent on tenant negotiations. In this structure, the financial and operational risks traditionally borne by owners are transferred and managed by the operator. For property owners, this means that decarbonisation is no longer a gamble on future returns or tenant cooperation but a secure, performance-driven partnership.

The impact of this model is a paradigm shift. What was once a structural barrier — the need to renegotiate leases and reconcile conflicting interests — simply disappears. Projects that would have stalled under the weight of legal and financial complexity become immediately feasible. Owners can improve their assets, enhance their value, and meet regulatory targets, while tenants enjoy continuity of service and improved comfort, with no disruption to their lease agreements. The model reframes decarbonisation not as a source of friction but as a lever of competitiveness and resilience, embedding sustainability directly into the operational core of the building.

Conclusion: Decarbonisation Without Friction

For too long, the decarbonisation of buildings has been slowed by legal inertia, misaligned interests, and the fear of financial or relational risk. Yet these barriers are not insurmountable. By rethinking the operational model and aligning the incentives of owners, tenants, and operators, the path to decarbonisation can be made simpler, safer, and more rewarding. Property owners no longer need to choose between regulatory compliance and tenant satisfaction, or between financial prudence and environmental responsibility. With the right approach, they can achieve all of these goals simultaneously.

The lesson is clear: the energy transition does not have to be obstructed by outdated lease structures or concerns about cost allocation. With innovative operational models, decarbonisation becomes both a business opportunity and a societal responsibility, ensuring that the buildings of today remain valuable, sustainable, and attractive long into the future.