Artificial Intelligence Steps In to Lower Carbon Footprint of Buildings
Property companies are increasingly offering AI energy software to help cut the greenhouse-gas emissions of buildings
Property companies are increasingly offering AI energy software to help cut the greenhouse-gas emissions of buildings
Artificial intelligence is starting to help buildings go greener.
Keeping our buildings running contributed roughly 26% of global energy-related greenhouse-gas emissions in 2022, according to the International Energy Agency. For the world to reach net-zero emissions by 2050, the agency says the energy that these buildings consume per square meter (around 11 square feet) needs to decline by around 35% by 2030.
Developers and construction companies have pursued more-efficient energy use in buildings over the past couple of decades. Leadership in Energy and Environmental Design, or LEED, certifications are given to buildings that meet standards that conserve energy, water, waste and other environmental goals.

Governments are also introducing increasingly stringent energy codes for commercial spaces. Still, more than 80% of buildings don’t have smart systems to efficiently manage their energy use.
JLL, which manages billions of square feet of commercial real estate around the world, has been making a string of investments to bring AI systems to companies looking to cut their emissions. The business case: Eco-friendly buildings charge higher rents and are on the market for less time. JLL says it expects 56% of organisations to pay a premium for sustainable spaces by 2025.
“We want to make every building out there as smart as it can be,” said Ramya Ravichandar, JLL Technologies’s vice president, technology platforms—smart and sustainable buildings. “If you can’t measure what matters, you can’t make the change.”
JLL’s investments include in Turntide, a company based in Sunnyvale, Calif. that installs electric motors coupled with small computers which learn from patterns to more precisely control heating and cooling, and Envio Systems, a Berlin-based company that develops sensors to track a building’s use, occupancy and other factors to adjust lighting, cooling and similar energy-related activities.
“Do I need to keep the lights on? Do I need to turn off the air conditioning on floor three because the entire company is working from home this week?,” Ravichandar said. “If you have a system, it is relentless and constantly processing this information.”
Generally, AI building systems learn from historical patterns and the daily habits of occupants to predict and power things on and off. For instance, software and hardware that automatically manages lights, heating and cooling can help buildings cut 20% or more of their yearly energy use.
Nevertheless, hurdles remain to installing more AI systems, including gathering data from a wide range of sources in buildings, such as sensors, which often aren’t interconnected enough. “Retrofitting existing buildings with such sensors and infrastructure, as well as ensuring consistent data quality, can be resource intensive,” Ravichandar said.
AI has big potential to cut the emissions of buildings, but it is only as good as the data it learns from. Only 10% to 15% of buildings have the equipment or systems in place to gather the data needed to support AI, said Thomas Kiessling, chief technology officer of Siemens Smart Infrastructure. “AI in buildings works if you have the data,” he said. “Bad data means you can’t do any kind of schedules, rules or more sophisticated use cases around artificial intelligence. You have to have the data.”
Siemens uses AI to compare one building to a thousand similar buildings to predict what the energy savings could be after an upgrade to a smart-energy management system.
“Even if you just know the address of that commercial building, and maybe you have the energy bill, and maybe you have some high level information of what kind of HVAC brand the building uses, that is these days enough to compile a profile of the building with respect to what is likely you could reap,” Kiessling said.
Otherwise, lower-cost sensors, such as for lighting and cooling, can help save energy for companies that don’t have a sophisticated management system.
Venture-capital firm Fifth Wall’s $500 million fund is focused on decarbonising buildings and invests roughly a third of its money in startups with some kind of AI offering, both in software and hardware, the fund’s co-manager Greg Smithies said. A bigger focus is using more sustainable materials, such as concrete and steel made with renewable energy.
Smithies says AI can help with quickly and cheaply identifying where it makes economic sense to upgrade buildings, fill out permits that vary between countries, draw up mock-ups of designs and come up with chemistry for sustainable materials.
“The main message overall is we’re not going to save the planet with software, and AI is software,” Smithies said. “But AI is an interesting piece of the puzzle.”
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Strong consumer spending and tight supply have driven retail to the top of commercial property, but signs of pressure are starting to emerge.
Australia’s retail property sector entered 2026 as the strongest performing commercial asset class, but rising geopolitical risks and cost pressures are beginning to test its resilience, according to new research from Knight Frank.
The latest Australian Retail Review shows the sector rode a wave of consumer spending and constrained supply through 2025, delivering total returns of 9.2 per cent and driving transaction volumes up 43 per cent year-on-year to $14.4 billion.
That momentum carried into early 2026, with around $3.6 billion in deals recorded in the first quarter alone.
“Retail clearly emerged as the standout commercial property performer in 2025,” said Knight Frank Senior Economist, Research & Consulting Alistair Read.
“Improving household spending, limited new supply and stronger leasing fundamentals combined to drive better income growth and renewed investor confidence in the sector.”
Spending rebound drives retail strength
A lift in household spending has been central to the sector’s performance. Consumer spending rose 4.6 per cent year-on-year to February 2026, supported by easing inflation and improving real incomes.
That shift flowed directly into retailer performance, with average EBIT margins across major retailers rising to 8.9 per cent in the first half of 2026, their strongest level in several years.
“Stronger consumer spending was critical in restoring momentum to the retail sector,” Mr Read said.
“Retailers have generally been better able to absorb costs, rebuild margins and support sustainable rental outcomes, particularly in higher-quality centres.”
Improved trading conditions also pushed leasing spreads up 4.2 per cent in 2025, reinforcing income growth and supporting capital values.
Geopolitical tensions begin to bite
But the outlook has become more complicated. The report warns that escalating conflict in the Middle East and its impact on fuel prices, supply chains and interest rates could weigh heavily on consumer spending.
“Higher fuel prices, flow-on cost pressures across supply chains, and recent interest rate increases are collectively squeezing household budgets, and early consumer sentiment data suggests confidence is already softening,” Mr Read said.
“While household balance sheets remain generally resilient, heightened uncertainty over future costs is likely to weigh on spending — particularly in discretionary categories — in the months ahead.”
The impact is already being felt in investment activity. While the year began strongly, transaction volumes slowed in March as investors paused amid the uncertainty.
“Early indicators suggest elevated uncertainty has already begun to affect the market. While retail investment enjoyed its strongest start to a year in a decade, with nearly $3 billion transacted by the end of February, activity stalled in March, as investors took a pause amid elevated uncertainty,” Mr Read said.
Solid foundations support medium-term outlook
Despite the near-term headwinds, Knight Frank maintains that the sector’s underlying fundamentals remain strong. Limited new supply, high construction costs and population growth are expected to continue supporting rental growth over the medium term.
“Retail has entered this period of uncertainty from a position of strength,” Mr Read said.
“Supply-side constraints, population growth and improving income fundamentals remain powerful structural supports for the sector.”
The report highlights several trends shaping the year ahead, including steady yields as interest rates rise, mounting pressure on tenant margins, continued outperformance of prime centres, the growing need for logistics integration, and risks linked to underinvestment in capital expenditure.
For now, retail remains a sector with momentum, but one increasingly at the mercy of forces far beyond the shopping centre.
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