The reporting landscape in the U.S. has become increasingly complex, with owners having to contend with constantly evolving regulations and standards. For years, building regulations largely centered on disclosure—owners benchmarked energy use, filed annual reports, and focused primarily on meeting reporting requirements. But that landscape is changing rapidly.

Increasingly, jurisdictions are moving beyond benchmarking toward Building Performance Standards (BPS) that require measurable emissions and energy performance improvements for most buildings, with financial penalties assessed when target performance levels aren’t met.

BPS are designed to reduce energy use and/or emissions in existing buildings by establishing performance targets tied to metrics such as energy use intensity or greenhouse gas emissions.

This marks a fundamental shift for real estate owners and operators. The question is no longer simply, “What do we need to file?” It’s now, “Where are the biggest performance gaps across our portfolio, and how do they expose us to operational and financial risk?”

As BPS policy implementation accelerates across the country, compliance is evolving from a once-a-year reporting exercise into an ongoing effort requiring coordination between operations, asset management, and investment functions.

The Regulatory Shift is Bigger Than Many Realize

Across the U.S., more than 15 cities and states already have Building Performance Standards in place, and more than 30 additional jurisdictions have committed to adopting these policies in the coming years. Unlike the benchmarking and disclosure ordinances that came before, these standards carry enforceable targets and financial penalties—and they are spreading well beyond the coastal markets where they began.

That shift is landing on a large and growing footprint.

Across buildings tracked on our platform, more than 42,000 are already subject to benchmarking and disclosure ordinances today—the very reporting regimes now being layered with, or converted into, performance standards. New York City's Local Law 97 alone already covers nearly 4,000 of them.

As these requirements expand, portfolios are facing growing operational complexity, with buildings across these portfolios exposed to multi-jurisdictional compliance challenges. Differences in BPS coverage, deadlines, and targets create a tracking and planning challenge for portfolio owners with buildings located in different regions. And in some cases, a single building may need to comply with both local and state BPS requirements, which usually differ from each other.

As a result, annual disclosure data alone is not enough. Owners need complete, accurate, and traceable data that can support both regulatory submissions and investment decisions.

Many organizations are still managing performance and compliance data across disconnected systems, spreadsheets, consultants, and local operating teams. But as BPS requirements expand, fragmented data infrastructure creates operational blind spots that make it harder to identify risk across the portfolio and act proactively.

Standards are becoming more stringent, coverage is expanding, and accountability expectations are rising faster than many organizations are operationally prepared for, or even aware of.

The Hidden Complexity of BPS Compliance Risk

Exposure is not evenly distributed across portfolios. Geography and jurisdictional overlap play a significant role in determining risk.

By establishing a financial cost for non-compliance through penalties, BPS policies effectively create an energy-efficiency or carbon price for buildings. This introduces a growing form of climate transition risk for owners and investors. But while that risk can now be calculated fairly easily (i.e. based on the building’s performance today, what penalty would be owed), managing it is complex because buildings vary significantly in how difficult or expensive it will be to bring them into compliance.

Exposure is driven primarily by location, not asset type. In a small but growing number of markets, buildings must now answer to overlapping city and state performance standards at once.

Colorado is the clearest example: buildings above 50,000 square feet in Denver fall under both the city's Energize Denver ordinance and the statewide Building Performance Colorado program. Even where the two are designed to align, owners must still benchmark and report to each, track separate deadlines, and manage the compliance pathways of both—for the same building. Every covered building in Denver (as well as several other Colorado local jurisdictions) carries the burden, regardless of whether it's an office, a hotel, or any other asset type.

Missed deadlines or severely underperforming assets can result in recurring penalties that accumulate year after year until compliance is achieved, resulting in ongoing liabilities that create long-term financial drag and erode asset performance. This is why portfolio-wide visibility has become increasingly important.

Owners can no longer afford to manage compliance building-by-building or market-by-market in isolation. They need a forward-looking understanding of where risk sits across the portfolio, which assets are most exposed, and where operational or capital interventions can deliver the greatest impact.

The Opportunity That Exists

It is easy to view BPS purely as a problem to be solved, but this challenge also creates an opportunity.

That shift in mindset is already happening on the ground. At the Montgomery County Energy Summit in Maryland—a county that has its own Building Performance Standard and puts on the annual Summit to provide support to owners—I spoke with the owner of a small portfolio who put it plainly: “At first we thought BEPS was bad, but in the end we realized it was helpful, because it forced us to look at how we could invest in our buildings in a strategic way.”

That reframing, from compliance burden to investment discipline, is what separates owners who get ahead of BPS from those who absorb penalties year after year.

Leading owners have already begun changing their approach as BPS deadlines draw closer. Rather than reacting to regulations individually, they are mapping regulatory exposure across their entire portfolios in order to identify concentrations of risk. They are using data to prioritize which assets require immediate action and which can be improved more efficiently over time. They are also aligning compliance planning with broader capital expenditure and operational decision-making, planning investments to coincide with milestones such as equipment end of useful life, building renovation, or building repositioning whenever possible.

Increasingly, that requires consolidating operational, utility, emissions, and compliance data into a single system of record that can support both reporting and ongoing performance management, and then using that data to evaluate scenarios far in advance of deadlines.

Many organizations are adopting centralized approaches to compliance management that allow owners to see, at a glance, which benchmarking and performance regulations apply to each asset across a portfolio—turning a fragmented compliance picture into a single, comparable view of where exposure sits and where action is most urgent.

But this only becomes actionable when the underlying data is complete, traceable, and reliable enough to support operational and investment decisions.

An asset’s performance relative to near- and long-term BPS targets is increasingly tied to long-term asset resilience and value protection. Owners need to determine which assets can be improved cost-effectively, which may require significant retrofit investment, and which may be candidates for divestiture under tightening performance standards.

Conclusion

The next phase of building regulation will ultimately be defined by performance. For owners and investors, the challenge is no longer simply understanding the rules. It is deciding where to act first, how to prioritize investment, and how to reduce portfolio-wide exposure before compliance deadlines arrive.

Those who gain visibility into their exposure early and integrate performance readiness into broader portfolio strategy will be better positioned to reduce risk, manage costs, and protect long-term value.

In that sense, BPS are becoming far more than a sustainability reporting issue. They are emerging as a core portfolio management discipline for the future of real estate.