Commercial Real Estate Has Been Deferring the Hard Decisions. That Window Is Closing.

Written by:

Heather Hook

Date:

22 Apr 2026

KeyCrew Studio

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The acronym ESG was everywhere in commercial real estate just a few years ago. Sustainability reports, carbon targets, and green building certifications dominated boardroom agendas and investor conversations alike. Today, that language has largely disappeared from the same rooms. Not because the underlying pressures have gone away, but because the framing was never quite right to begin with.

“ESG was mostly a reporting exercise,” says Don Kasper, co-founder of Sisu Insights, a commercial real estate decision platform. “A lot of people were doing a really good job on reporting, but the reality is most weren’t actually acting on it. They were producing reports, they had all this great information, but no decisions were being made and no capital was being deployed.”

That gap, between knowing and doing, is at the heart of a broader shift now underway in how commercial real estate operators think about their buildings, their budgets, and their futures.

The Numbers Don’t Lie

Whatever the political climate does to the language around sustainability, the financial pressures on building owners have not eased. If anything, they have intensified.

Utility costs across the US commercial real estate sector are increasing by approximately 22% year over year, a stark departure from the flat inflationary assumptions that underpinned financial models for decades. Insurance premiums are climbing by around 40% upon renewal in many markets, driven by climate risk exposure, rising replacement costs, and tightening underwriting standards. And with just under a trillion dollars of commercial real estate debt coming due in 2026 alone, the window for deferred decisions is closing fast.

“What we’re seeing is that the things that used to be steady assumptions, utility costs, insurance, the cost of materials, are now wild variables,” Kasper explains. “When you get hit with a 22% increase in utilities or a 40% jump in insurance at renewal, that throws off your entire budget and your projections.”

Tariffs on imported goods are adding further complexity, pushing up the cost of mechanical systems and building materials, along with the lead times to procure them. In some cases, a chiller ordered today may not arrive for six months, and when it does, it could cost 20% more than quoted.

From Reporting to Decision-Making

The shift happening in commercial real estate is not really about ESG fading out. It is about the conversation finally moving from compliance to consequence.

Kasper points to what he calls the translation problem at the heart of most commercial real estate portfolios. The people who know what is wrong with a building, its operators and facilities managers, are not the same people who control the capital to fix it. Asset managers and investors hold the budget, but they are often working from annual reports, aging spreadsheets, and incomplete data. The result is a cycle of deferred maintenance, missed opportunities, and decisions made too late.

“The worst decision that can happen right now is no decision,” he says. “Building operators know the roof needs replacing in two years. They might have a decarbonization report sitting on their desk. But when they go to justify that spend to an asset manager, there is not enough there. It gets deferred. And deferral is always more expensive in the long run.”

Sisu Insights was built specifically to close that gap. The platform takes external data on climate risk, local utility trends, regulatory exposure, and insurance factors, and combines it with building-specific information to produce what the company calls IRR-ranked capital decisions: a prioritised plan for when to spend, what to spend on, and in what order, modelled against multiple financial scenarios. The operators get visibility. The asset managers get justification. The decision gets made.

What It Looks Like in Practice

A recent example involved a 127,000 square foot mid-Atlantic commercial building facing a 40% insurance cost increase compared to similar properties, energy consumption running 41% less efficient than market benchmarks, and $1.1 million in compliance exposure. The building’s team knew things needed to change. What they lacked was a clear, financially justified path forward.

By mapping those factors together and ranking the available capital interventions, Sisu’s analysis produced a path to 11.5 percentage points of IRR improvement, elimination of the compliance liability, and a $3.6 million NPV swing, with approximately $335,000 in annual savings projected by 2029. Mechanical system replacement, building envelope insulation, and LED lighting controls, sequenced and financially modelled, turned paralysis into a plan.

“Everyone cares about the financial aspect. That is where decisions get held up,” Kasper says. “If we speak the language of currency, the rest of the conversation follows.”

Climate Risk Is Not Political

One area where the post-ESG framing gets complicated is climate risk, which, regardless of political context, continues to drive tangible costs for building owners.

“Climate risk is real. Regardless of your view on sustainability, if there is a flood, a wildfire, or extreme temperatures your building has not been exposed to before, that ultimately drives a capital decision,” Kasper says. “Do we need to act now to prevent a premium increase? Do we need to revisit our mechanical systems because we are experiencing conditions this building was not designed for?”

Sisu builds this uncertainty directly into its modelling, running scenarios across energy price fluctuations, insurance renewals, tariff impacts, and regulatory changes, so that when conditions shift, building owners already have a framework for responding rather than scrambling to catch up.

“We don’t have a crystal ball,” Kasper acknowledges. “But we can show customers the range of what is possible, and the likelihood that something will occur given the current state. Our platform updates continuously, even when the customer is not actively engaged. The work does not stop when someone walks away from the screen.”

The Real Conversation Has Always Been Financial

For the commercial real estate industry, the ESG era may have been a detour as much as a destination. The reporting requirements created awareness, but they did not always create action. What is replacing it is a more direct conversation about asset performance, capital efficiency, and returns.

The pressures driving that conversation are the same ones sustainability advocates have been pointing to for years: energy costs, extreme weather events, regulatory compliance, and the rising cost of doing nothing. The difference is that they are now showing up as budget line items, not corporate responsibility reports.

“The language we speak now is currency,” Kasper says. “If we are talking about dollars and good business decisions, the ESG conversation kind of dies away. That does not mean the good work behind it died. It means the industry is finally being forced to act on it.”

Don Kasper is CEO & Co-founder of Sisu Insights, a commercial real estate decision platform that helps building owners, operators, and asset managers model financial risk, prioritise capital decisions, and navigate a rapidly changing cost environment. With over 20 years of experience in commercial real estate technology, Kasper was CEO of Ecorithm and held leadership roles at Liminal Data and other building technology companies before founding Sisu. Connect with Don on LinkedIn.