Building a Smarter Future: Why 30% Energy Waste Is No Longer Acceptable in Commercial Real Estate

Written by:

Steve Marcinuk

Date:

14 Oct 2025

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The commercial real estate industry faces a stark reality: roughly 30% of energy consumed in buildings is wasted. For an industry grappling with rising utility costs, grid stress, and increasing sustainability mandates, this represents both a significant challenge and an unprecedented opportunity.

“Nowhere else in our life are we okay with wasting 30% of something,” says Scott Tew, Global Head and VP, Sustainability Strategy, Trane Technologies. “We’re not okay with wasting 30% of food that we purchase. We’re not okay wasting 30% of our paychecks. But for some reason, we seem to be okay with this 30% energy waste.”

That tolerance is rapidly changing as building owners discover that addressing energy waste isn’t just an environmental imperative, it’s a compelling business case with paybacks as short as three to four years.

Rethinking Building Systems from the Ground Up

Traditional approaches to heating and cooling commercial buildings have created inherent inefficiencies. Buildings typically operate separate heating and cooling systems that often run simultaneously, consuming far more energy than necessary. Most buildings still rely on fossil fuel combustion for heating, essentially the same approach humans have used for millennia.

Trane Technologies has responded by developing what they call Advanced Thermal Management Systems, which can achieve up to 300% greater efficiency than the systems they replace in retrofit applications. These all-electric systems handle both heating and cooling through a single integrated approach, eliminating the waste inherent in dual-system operations.

The company has coupled this technology with thermal energy storage solutions. Using CalMac ice storage systems, buildings can create large ice banks during off-peak hours when electricity costs are lowest. During peak demand periods, the melting ice provides cooling while reducing strain on the grid.

“The building owners get this nice delta between high peak pricing and lower peak pricing when the ice is made,” Tew explains. “Plus there’s an interoperability with the grid that really is like the cherry on top.”

AI-Powered Building Optimization

Artificial intelligence is becoming a key factor for building efficiency. Trane Technologies’ acquisition of BrainBox AI has enabled the company to deploy AI solutions that deliver immediate efficiency gains without requiring major building upgrades.

A case study at the Cammeby building in Manhattan demonstrates the technology’s potential. By overlaying BrainBox AI with the building’s existing Building Management System (BMS), the property achieved a 15% efficiency gain with no other modifications. The AI analyzes building parameters and makes automated adjustments to optimize performance.

“All it’s doing is making a host of changes to the building systems, automated in a very smart way, and tweaking based on a host of parameters and algorithms,” Tew notes. Over an 11-month period, the system delivered substantial electricity, emissions and cost savings.

Beyond optimization, AI is improving maintenance. BrainBox AI is loaded with system manuals and building data, enabling it to diagnose maintenance needs, automatically order parts, and provide both pre- and post-diagnosis support. This eliminates the inefficiencies of multiple service visits and ensures peak performance.

Market Momentum and Business Case Drivers

Interest in advanced building technologies has intensified, driven by converging factors: rising electricity costs, grid stress, and regulatory pressure.

“The interest is high everywhere, especially around new approaches,” Tew observes. “What does it come with? First, there’s a business case. These things pay for themselves.”

The systems-level approach to efficiency is proving crucial for ROI. While individual component upgrades may struggle to justify costs, integrated systems deliver gains that create clear financial returns.

Building owners are also recognizing the strategic value of grid interoperability. As utility companies implement time-of-use pricing and demand response programs, buildings equipped with thermal storage and intelligent controls can generate revenue while reducing operating costs.

Flexible Solutions for a Transitioning Market

Trane Technologies offers flexible solutions that accommodate different comfort levels with new technology. Their dual fuel systems allow buildings to operate with traditional fossil fuel backup while transitioning to electric systems over time. This is valuable in markets with evolving regulations around fossil fuel use.

“We don’t want to lock ourselves out of anywhere,” Tew explains. “The best thing to do is to offer options for customers and dealers nationwide.”

The Circular Economy Opportunity

Looking ahead, Trane Technologies is exploring circularity initiatives that could reshape how the industry thinks about equipment lifecycle management. The company is investigating opportunities to use recycled metals and developing take-back programs for equipment at the end of its life.

“Our products last a long time, but I would be excited if we had a model where we could actually, at the end of a 15-year life, take that product back, fully recycle it, refurbish it, maybe sell a refurbished product back to the market,” Tew says.

This circular approach could create new revenue streams while reducing waste. For an industry that has traditionally operated on a linear take-make-dispose model, circularity represents a fundamental shift toward sustainability.

Grid Integration as Competitive Advantage

The integration of building systems with grid operations is creating new value for real estate owners. Buildings equipped with thermal storage and intelligent controls can participate in demand response programs, providing grid services while reducing energy costs.

This capability becomes increasingly valuable as utilities face growing demand from electrification. Buildings that can shift their energy consumption and provide grid stability services position themselves as valuable partners in the energy transition.

Implementation Strategies for Building Owners

For commercial real estate professionals, the systems-level approach offers the most compelling business case. Rather than focusing on individual component upgrades, building owners should evaluate comprehensive solutions that address heating, cooling, and energy management holistically.

The AI overlay approach provides significant efficiency gains without major capital investments. Buildings with existing BMS systems can implement AI optimization quickly, generating immediate returns that can fund more comprehensive upgrades.

Thermal storage systems work particularly well in markets with time-of-use pricing or demand response programs. The combination of operational savings and potential grid service revenues can significantly improve project economics.

Looking Forward

The convergence of advanced thermal management, AI optimization, and grid integration is creating unprecedented opportunities for real estate efficiency improvements. With payback periods of three to four years and efficiency gains of 15-300%, these solutions address the industry’s 30% energy waste problem while creating new revenue opportunities.

As the grid faces increasing stress from electrification, buildings that operate as flexible grid assets will enjoy competitive advantages. The technology exists today to capture these benefits—the question is which building owners will move first to secure their advantage in an increasingly competitive market.

For commercial real estate professionals, the message is clear: the 30% energy waste that has been tolerated for decades is no longer acceptable, and the solutions to address it are both available and profitable.