The Asia Pacific (Apac) commercial real estate landscape is being redefined by climate and energy concerns. According to JLL’s Apac Sustainability Trends to Watch 2026 report, climate-related losses, rising energy costs, and a growing proportion of ageing office buildings are prompting owners, occupiers and investors to rethink how they manage risk and create value.

“Apac commercial real estate leaders are at a crossroads, where resilience is no longer optional and energy efficiency is critical for long-term value,” says Kamya Miglani, head of research, work dynamics, Asia Pacific at JLL. This, in turn, is underlining an urgent need for owners to modernise buildings, adopt smart energy solutions and safeguard against intensifying climate hazards.

Sustainability has become increasingly fundamental to Apac real estate, with JLL noting that nine out of ten investors now integrate sustainability in deal decisions. In addition, the firm estimates that by 2030, 78% of future demand from top office occupiers will be tied to carbon reduction targets.

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However, the supply-demand gap for sustainable office space is widening. In key cities, 63% of projected demand for low-carbon leases will not be met by current supply pipelines, with shortages particularly significant in cities such as Kuala Lumpur, Melbourne and Sydney.

At the same time, rising energy costs due to electricity price volatility have underscored the need for energy efficiency. According to JLL, energy costs have surged 30% and 44% in Singapore and Japan respectively since 2020, contributing substantially to building operating expenses. To that extent, 87% of commercial real estate occupiers in Apac cite energy savings as a top priority, while two-thirds of investors expect lower energy costs from assets equipped to mitigate climate risk.

Meanwhile, rising occurrences of extreme weather events, such as floods and cyclones, have pushed the need for better climate adaptation. In Apac, while 18 of the region’s 22 largest cities have published climate adaptation plans, translating these strategies to practical property operations remains a significant challenge, says JLL.

Amid the evolving sustainability landscape, owners are feeling the pressure to modernise ageing commercial building stock. Across Apac, 62% of the region’s premium office stock is over 10 years old, pointing to a risk of obsolescence. In markets such as Singapore, Hong Kong, Perth and Canberra, the proportion exceeds 80%.

As a result, retrofitting is emerging as a critical tool, with 61% of Apac investors surveyed by JLL citing retrofits as their main strategy to manage obsolescence risk. Within the region, mature markets are leading the charge: 81% of corporate real estate (CRE) leaders in Singapore surveyed indicated a preference for asset renewal over new build, while 73% of CRE leaders in Sydney indicated the same.

But while retrofitting is gaining momentum, the current pace at which buildings are being modernised is falling short of the region's sustainability targets. According to JLL, retrofit rates have to increase nearly fivefold in order to meet Apac’s net zero ambitions by 2050.

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For Foo Yu Lin, manager for Apac sustainability research at JLL, the conversation around sustainability within the commercial real estate space 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,” she adds