Energy, climate adaptation, and retrofitting reshape APAC commercial real estate priorities in 2026

SINGAPORE, 9 February 2026 – Asia Pacific’s commercial real estate market is encountering new challenges and opportunities in 2026. Climate-related losses, rising energy costs, and a growing share of aging office buildings are prompting owners, occupiers and investors to rethink how they manage risk and create value. JLL’s (NYSE: JLL) latest research highlights how practical resilience, retrofitting, and smarter energy choices are becoming essential tools for leaders across the region.

APAC accounted for almost half of the world’s tropical cyclone losses in 2025 and faces $26.8 billion in annual coastal flooding damage, a trend that puts many assets and communities at risk. While 18 of the region’s 22 largest cities have published climate adaptation plans, translating these strategies to everyday property operations is still a work in progress. For cities like Singapore, Sydney and Kuala Lumpur, closing this gap is both a significant challenge and an urgent priority.

“Asia Pacific’s commercial real estate leaders are at a crossroads, where resilience is no longer optional and energy efficiency is critical for long-term value. The urgency to upgrade aging assets, optimize smart energy solutions, and translate climate adaptation plans into practical outcomes has never been higher. The most successful organisations will be those that proactively align their buildings and operations with rapidly changing occupier and investor expectations,” said Kamya Miglani, Head of Research, Work Dynamics, Asia Pacific.

Owners are feeling the pressure to modernize buildings, and retrofitting is now a priority, with mature APAC markets leading the charge. 62% of the region’s premium office stock is over 10 years old, and 81% of CRE leaders in Singapore and 73% in Sydney report shifting firmly toward asset renewal over new build. This includes upgrading systems and facilities to make spaces healthier and more energy efficient. However, current retrofit rates must increase nearly fivefold to support APAC’s net zero ambitions by 2050. JLL research shows 61% of investors cite retrofits as their main strategy to manage obsolescence risk, yet six in ten CRE leaders see high costs and uncertain ROI as ongoing barriers.

Electricity price volatility, up 30% in Singapore and 44% in Japan since 2020, is making energy security a critical factor in location strategy and asset performance. JLL Global Research finds that energy costs now account for up to a quarter of operating expenses in some buildings. 87% of occupiers across APAC cite energy savings as a top C-suite priority, and landlords are expanding the use of smart systems and on-site renewables to respond. Two-thirds of investors expect lower energy costs from assets equipped to mitigate climate risk. While smart energy systems and on-site renewables are expanding rapidly, only 40% of deployed systems report efficient operations, underscoring the need for implementation and ongoing management.

The supply-demand gap for sustainable office space is widening. By 2030, 78% of future office demand from top occupiers will be tied to carbon reduction targets. Yet in key cities, 63% of forecast demand for low-carbon leases will not be met by current supply pipelines. Markets like Kuala Lumpur, Melbourne, and Sydney face especially acute shortages, creating compelling opportunities for strategic investment and development.

Investor and tenant priorities have evolved. The top non-negotiable investment features over the next three years include energy efficiency, renewable energy, performance data and healthy building certification. More than half of CRE leaders now see enhanced employee wellbeing, productivity, and talent retention as direct outcomes of retrofitting, linking sustainability strategy with operational success.

Evidence from Australia confirms the premium: highly energy-efficient assets command up to 7% higher rents, 45 basis points lower yields, and 5% less vacancy compared to market averages. Electrified buildings record even stronger performance, illustrating the commercial and operational gains of rapid adaptation.

Foo Yu Lin, Manager, Sustainability Research APAC, said, “Sustainability is here to stay, but the conversation has shifted from ethics and compliance to operational resilience and competitive advantage. Owners, investors and developers across APAC must act decisively to mitigate climate risk, accelerate retrofitting, and rethink their energy strategies to secure asset value. As occupier demand and regulatory expectations grow, the market is redefining leadership in resiliency and sustainability for years to come.”

For the full analysis and data, refer to JLL's APAC Sustainability Trends to Watch 2026 report here.