The economics of better buildings and the 2026 infrastructure policy landscape
Across the U.S., new building standards and resilience requirements are reshaping the design, operation, and value of our built environment. In 2026, economic and regulatory changes will make action on better buildings unavoidable. Compliant buildings will gain value, while noncompliant ones will face higher costs and risks. Regardless of shifting incentives, the main drivers, such as energy costs, insurance, tenant demands, and grid instability, are accelerating.
The 2026 Policy Landscape
The policy landscape is shifting from voluntary programs to enforceable standards at state and federal levels. While regulations rise, financial incentives decline. Many federal clean energy subsidies are set to expire, but the private sector investment continues as building owners invest in efficiency due to clear economic benefits.
Section 179D Energy Deduction Sunset: The 179D deduction, which has incentivized energy-efficient systems in commercial buildings, will be repealed for projects beginning after June 30, 2026, due to recent legislation. This deadline is accelerating project starts, as owners seek to qualify under the current rules. Additional executive orders may also further narrow eligibility.
Federal Clean Energy Rule (Subpart B): A federal rule requiring a 90% reduction in on-site fossil fuel use for new federal buildings is currently suspended for review until at least May 2026. This suspension has created uncertainty for developers pursuing all-electric standards to attract federal tenants.
State and local mandates require urgent action as federal incentives disappear.
California Title 24 (2025 Energy Code): Effective January 1, 2026, California’s updated code requires electric-ready designs and sets heat pumps as the default for most commercial projects. This raises initial HVAC permit costs but future-proofs properties and avoids costly retrofits. Title 24 is unaffected by federal changes and often sets trends nationally.
New York City Local Law 97: Starting January 2026, large buildings must report 2025 emissions data and face significant fines for exceeding carbon caps. Owners are increasingly using “Green Lease” clauses to share compliance costs. The law is not affected by federal actions.
Washington State Clean Buildings Standard: By June 1, 2026, large buildings must meet energy targets or face penalties, fueling demand for auditors and consultants.
Delaware Net-Zero Capable Law: By 2026, all new residential and small commercial buildings must be “zero-net energy capable,” pushing the supply chain toward high-performance envelopes. The loss of 179D increases compliance costs for some builders.
Economics: The Driving Force
Long-term improvements in building performance are driven primarily by economics, rather than policy alone.
The “brown discount” is real: Buildings that miss 2026 performance benchmarks face lower resale values and higher insurance costs. Investors prioritize properties meeting energy and resilience standards, while high-performing buildings attract premium rents and tenants.
Energy costs are structural: Grid instability, extreme weather, and rising utility rates make resilient infrastructure, such as on-site solar and battery storage, highly valuable. These buildings offer stable operations, lower costs, and predictable returns.
Insurance acts as a major enforcer: Providers are recalculating risk and premiums. In high-risk locations, properties without upgrades may face sharply increased premiums or become uninsurable.
Tenant expectations have permanently shifted: Major tenants now require high-performance properties to meet sustainability targets. Landlords who don’t adapt risk losing revenue. Tenants face higher common-area costs for compliance but benefit from lower utility costs and better work environments.
Improving infrastructure is essential for quality of life, especially since buildings account for 40% of U.S. energy use. While policy debates continue, the built environment is already being transformed by market forces: data, insurance requirements, and investment pressure. This shift is driven by a simple economic reality: high-performance buildings cost less to operate, hold higher value, and remain resilient during grid failures. Ultimately, the case for future-ready infrastructure now transcends regulation. Decisions are driven by value and risk, making superior building performance a top priority for owners and occupants alike.
