The mounting requirement for electricity in Texas is being driven by population growth, industrial expansion, and the continued adoption of electric vehicles (EVs). Peak consumer demand for electricity on the Texas grid set a record in the summer of 2023 at 85.5 gigawatts according to the Electric Reliability Council of Texas (ERCOT), the entity that manages the flow of electric power to more than 27 million Texas customers. However, ERCOT CEO Pablo Vegas recently stated that by 2030 peak demand could nearly double to 150 GW.
Such enormous growth could have significant implications for the state’s commercial real estate (CRE) markets. The trend creates both challenges and opportunities. As electricity costs rise, building owners and developers may choose to prioritize energy-efficient upgrades, such as advanced HVAC systems, LED lighting, and smart building technologies, to lessen operational expenses. Properties equipped with on-site renewable energy sources such as solar panels and microgrids may gain a competitive advantage, commanding higher rents and sale prices.
Increasing utility costs and concerns about grid reliability pose particularly high risks for energy-intensive industrial and data center sectors. The Texas Solar Energy Society reports that, as of 2024, data centers are already consuming a minimum of 8.8 percent of the state’s power. ERCOT estimates that data centers and crypto mines could represent half the growth in power demand from 2024 to 2030. Maintaining their growth in Texas will depend on the availability and stability of energy supplies.
Similarly, the increasing popularity of EVs highlights the need for properties with integrated EV charging stations, making these features a desirable amenity for attracting tenants and investors. This will be especially true in office and retail spaces.
Sustainability can also be a key differentiator in the market, with tenants favoring buildings that offer environmental and health-related certifications such as LEED or WELL. Companies emphasizing Environmental, Social, and Governance (ESG) goals are increasingly drawn to such properties, escalating demand for energy-efficient and sustainable real estate. This shift is also evident in industrial and logistics markets, where warehouses and cold storage facilities are facing higher energy demands and rising operational costs. This will drive the need for more efficient designs in the future.
Policy changes and local building code updates may also play a critical role as governments continue to promote renewable energy installations and energy-saving technologies. Such measures could push CRE owners to invest in advanced energy systems while encouraging more innovation in property development. Areas with reliable grid infrastructure and lower electricity costs should see increased demand, while regions with less dependable energy supplies could become less attractive.
Despite these opportunities, a number of challenges remain. Retrofitting older properties with energy-efficient technologies requires significant upfront investment. Such investments will likely not be feasible for every owner. The result could be a growing gap between highly efficient Class A properties and less modern Class B and C properties. Resilience planning will also become increasingly important due to extreme weather events and grid vulnerabilities that will continue to test the state’s energy infrastructure.
CRE professionals have an opportunity to differentiate themselves by investing in energy-efficient technologies, integrating sustainable features, and addressing tenant concerns about energy costs and reliability. Those who adapt to these changes are likely to gain a competitive edge, while those lagging behind may struggle to attract tenants and investors in a market that continues to put more emphasis on sustainability and efficiency.
