ETI Blog

What Multifamily and Commercial Owners Need to Know

Chicago's regulatory direction on building energy performance has shifted from voluntary to required. The city's Energy Benchmarking Ordinance has been in place for years, but the next phase is meaningfully different. Building Performance Standards are coming, and multifamily and commercial owners need a plan.

For owners and operators, the question is no longer whether to invest in energy performance. The question is how to sequence those investments in a way that protects asset value, complies with policy, and avoids late-stage capital surprises.

Where Chicago's Regulatory Framework Stands Today

Chicago's energy benchmarking program requires owners of large commercial, residential, and municipal buildings to track and report annual energy use. Public reporting of those scores has created a transparent record of which buildings perform well and which do not.

The next phase, broadly aligned with national Building Performance Standards trends, will move beyond reporting toward enforceable performance targets. Owners of buildings that fall short of those targets will face compliance pathways that include capital upgrades, retrocommissioning, and operational changes.

Which Buildings Are Affected

The current ordinance applies to commercial, residential, and institutional buildings of certain sizes, generally those above 50,000 square feet. As Building Performance Standards take shape, expect the affected universe to expand to smaller buildings over time.

For multifamily owners, even buildings under current thresholds are worth treating as if they will eventually be in scope. Designing for performance now is cheaper than retrofitting later.

What Compliance Will Actually Require

While final rules continue to evolve, the practical implications of decarbonization compliance typically include:

• Building envelope improvements such as roof insulation and air sealing
• Heating and cooling system upgrades, with movement away from fossil fuel equipment
• Domestic hot water electrification or heat pump conversion
• Lighting upgrades to LED with controls
• Submetering to identify high-consumption units or tenants
• Solar PV evaluation where roof and grid conditions allow

Cost Realities Owners Should Plan For

Smart owners build a multi-year energy capital plan that aligns equipment replacement cycles with performance targets. Replacing a boiler with a heat pump system at end of life is dramatically cheaper than replacing a working boiler ahead of schedule.

Available Incentives and Financing Pathways

Federal, state, and utility incentives can meaningfully change the economics of decarbonization upgrades. Programs available to Chicago owners may include utility rebates from ComEd and Peoples Gas, federal tax credits and deductions under the Inflation Reduction Act framework, and Property Assessed Clean Energy financing in certain cases.

Stacking these incentives requires planning. Owners who engage early with energy consultants and contractors familiar with the available programs typically capture far more value than those who wait.

What Property Managers Should Be Doing Now 

Property management teams have a meaningful role to play in decarbonization compliance. Practical steps include:

• Confirming benchmarking data is accurate and submitted on time
• Reviewing the building's energy performance score against peers
• Identifying low-cost operational improvements such as setpoint optimization and lighting controls
• Building a multi-year capital improvement plan that integrates energy upgrades
• Educating tenants and residents on consumption practices that affect the building's score

Why Decarbonization Is an Asset Value Issue

Energy performance is increasingly becoming a leasing and valuation factor. Lenders are paying attention. Major tenants ask about ESG metrics. Buyers underwrite future capital needs.

A building with strong energy performance and a credible plan for compliance carries less risk than a building with poor performance and no roadmap. That risk gap shows up in cap rates, financing terms, and eventual exit pricing.

Final Thought

Chicago's move toward Building Performance Standards is not a future possibility. It is a current trajectory, and owners who prepare now will be in dramatically stronger positions than those who wait.

Building Your Energy Compliance Plan?

ETI Construction supports multifamily and commercial owners in evaluating energy upgrades, sequencing capital improvements, and executing the construction work that turns a compliance plan into reality.

If you are working through your building's path to performance compliance, our team can help you plan and price the work.