Rethinking public sector real estate: the new era of operational efficiency

April 18, 2025

Across the globe, public sector leaders are under pressure to do more with less — to operate leaner, cleaner, and smarter. Amidst post-pandemic shifts, aging infrastructure, and intensifying climate mandates, government-owned and leased buildings have become a focal point of transformation. The public real asset (or public-leased real asset) is no longer a passive backdrop to service delivery. It is an active driver of economic, social, and environmental outcomes.

Yet for many governments, buildings remain inefficient, fragmented, and data-poor. Change is no longer optional but strategic.

“We see real property as a key enabler of wider government policy. It’s not just about reducing costs — it’s about unlocking long-term value, improving employee experience, and delivering on ESG targets.” — EY

Why operational efficiency is a public sector imperative

Public sector real estate portfolios are vast but too often misaligned with modern needs. In the United States, the federal government holds more than 350,000 buildings, many of which are either underused or non-compliant with new efficiency standards (Department of Energy). In Canada, deferred maintenance costs are mounting, particularly in older government-owned buildings, some of which are nearly a century old (Canada Federal Real Property Portfolio).

Australia faces similar challenges. According to the 2023 Australian Government Office Occupancy Report, the Commonwealth leases nearly 3 million sqm of office space across 649 tenancies. Yet:

85% of tenancies in major cities fail to meet the NABERS Energy target of 5.5 stars.
92% of tenancies in regional areas fall short of even the 4.5-star standard.
72% of leases will need to meet higher standards within the next five years.

This inefficiency carries significant cost. And not just in dollars — in carbon emissions, policy alignment, and employee satisfaction.

Australia’s leasing standards: a model for change

Australia’s Net Zero in Government Operations Strategy is among the most ambitious globally. Effective July 2025, federal agencies can only lease offices (1,000+ sqm for 4+ years) that meet or exceed a 5.5-star NABERS Energy rating. Key requirements also include:

All-electric buildings preferred from July 2024, and mandatory by 2040.
EV charging infrastructure required for applicable leases by January 2025.
Green Lease Schedules mandated to formalize sustainability performance.
Digital energy metering for new and refurbished offices to enable real-time insights.

“This is a pivotal moment for the property sector. Government policy is shifting from ambition to enforcement. The message is clear: adapt or be left behind.” - Howie Mann, VP of Product, CIM from recent webinar

Already, the market is bifurcating. Properties that meet or exceed these standards are attracting premium government tenants, while underperforming assets face vacancy, obsolescence, or costly retrofits.

A two-step path to efficiency

As detailed in EY’s framework, the path to real property transformation begins with two key actions:

1. Assess maturity across the portfolio and real property function

Organizations must objectively evaluate their portfolio’s current performance, as well as the capability of their property management functions. This includes:

Alignment of asset usage with business needs.
Availability and quality of building performance data.
Benchmarking against ESG and operational KPIs.

EY emphasizes the need for cross-functional collaboration:

“This is not a task for property managers alone. It requires input from HR, finance, technology, and sustainability teams to define the desired future state.”

2. Use emerging technologies to optimize assets at scale

Once the footprint is aligned, building-level optimization becomes the focus. The use of analytics platforms, smart building technologies, and real-time monitoring tools allows government agencies to:

Reduce energy consumption by 15–20%.
Identify and fix maintenance issues before they escalate.
Improve occupant comfort and productivity.
Meet increasingly strict ESG disclosure and compliance requirements.

Global case studies: what good looks like

Leading public sector agencies worldwide are making headway:

Canada’s federal government is conducting comprehensive portfolio reviews to identify surplus assets for repurposing — including into affordable housing.
New York City is enforcing Local Law 97, imposing fines of up to $268 per ton of CO₂ emissions over baseline thresholds, pushing public buildings to rapidly decarbonize.
European cities, from Amsterdam to Copenhagen, are integrating building upgrades into their net zero plans through the Renovation Wave Initiative, backed by EU investment.

“Technology, strategy, and collaboration are key. When aligned, they unlock long-term value, reduce environmental impact, and deliver better services to citizens.” — EY, Real Estate Insights

How the PEAK Platform accelerates performance

CIM’s PEAK Platform is uniquely positioned to support public sector landlords and operators striving for compliance under new leasing standards. With powerful fault detection and diagnosis, real-time monitoring, and data normalization, PEAK empowers operations teams to:

Maintain compliance in already high-performing buildings by preventing energy drift and identifying inefficiencies.
Optimize assets near the threshold with targeted, low-cost upgrades.
Benchmark performance portfolio-wide by allowing for a newfound level of visibility.

“The platform goes one step further than simply delivering data and analytics; it supplies the insights and central intelligence required to manage our portfolio sustainably and efficiently. This elevates the resilience and long-term viability of our assets, accelerating our approach to addressing climate change and unlocking environmental value.” — Andrew Cole, Group Head ESG at Charter Hall. See case study

Final thoughts: real estate as a lever for government transformation

Public sector real estate is no longer a passive cost center. It’s a dynamic lever to reduce emissions, save money, and improve outcomes for people and planet alike. With clarity of policy, emerging technologies, and the right analytics tools, governments can take control of their portfolios — and lead by example.

At CIM, we are proud to help our partners in the public and private sectors navigate this shift. Because optimizing buildings isn’t just good for performance. It’s essential for progress.