Stranded assets risk grows as MEES compliance falters

27 Apr 2026News

The commercial real estate sector faces increased stranded asset risk as MEES compliance continues to slow

Recent analysis has raised alarms about the declining energy compliance in the commercial real estate sector, which could lead to a surge in stranded assets and a wave of sell-offs among property owners. A drop in the number of Energy Performance Certificates (EPC) rated A, A+, and B has been noted, with registrations plummeting by 22% in 2025 from a record high in 2023. This stagnation in compliance could spur property lawyers to witness a rise in commercial transactions as owners seek to cut their losses.

The latest data from legal technology company Search Acumen reveals that A, A+, and B EPC registrations, which signify less energy-intensive buildings, had been on the rise annually until 2024, only to see growth slow in 2025 to just 20%. Andrew Lloyd, Managing Director of Search Acumen, stated that "the flight to quality has stalled due to pressured financial markets," highlighting the financial challenges that many property owners now face.

With rising energy costs, especially as oil and gas prices soar, operational expenses for inefficient buildings are escalating, putting them at risk of becoming unlettable. In the first two months of 2026 alone, 200 commercial buildings registered an EPC rated F or G, marking them as "illegal" under the government's Minimum Energy Efficiency Standards (MEES). Lloyd added, “the slowdown in the race to retrofit reflects a cooler financial climate overall… the goal of achieving an EPC rating of B or higher in all commercial buildings under MEES by 2030 feels worlds away from our current reality."

The analysis further broke down the sectors contributing to the deteriorating EPC ratings and found that the office sector accounted for nearly half of the F and G ratings submitted in 2025. Existing buildings that cannot meet EPC requirements risk becoming increasingly unviable, further exacerbating financial burdens for owners. The costs associated with retrofitting offices can be formidable, often reaching £100–£200+ per square foot, making the situation untenable for many.

As the impact of geopolitical tensions continues to ripple through energy markets, the outlook for compliance appears grim. The data demonstrates a concerning trend for commercial real estate as stakeholders brace for an uncertain future. Lloyd underscored the heightened risk of transactional complications as many buildings face the prospect of obsolescence and voided tenancies.

Legal News desk contact: editorial@solicitorsjournal.com|

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