By Tal Diamant and Gisselle Guadalupe, BCLP,
In 1998, the United States Green Building Council (USBGC) released the Leadership in Energy and Environmental Design (LEED) rating system; a voluntary initiative addressing environmental quality through a point system awarding differing levels of LEED certification to a building depending on such building’s compliance with sustainability initiatives in a variety of categories. Colorado has one of the highest numbers of LEED-certified gross square footage per capita.
On the other hand, building performance standards (BPS) establish a mandatory standard of performance based on energy and/or carbon intensity, typically determined by property type, with target compliance dates. BPS also provides for reporting, compliance and penalties. BPS has recently become more prevalent, with Denver establishing its standards in 2021 and the State of Colorado following suit in 2023.
Although the recent introduction of BPS is a shift from the previously voluntary standards of LEED, the two platforms try to achieve similar goals—more sustainable buildings for a more sustainable future. While BPS focuses solely on quantifiable reduction in energy and carbon, LEED’s standards can help achieve those reductions as well as provide qualitative benefits like increased habitat and water quality, and healthier environments for a building’s occupants. This complementary nature may incentivize building owners to go beyond mandatory compliance with BPS and achieve a LEED certification to reap the qualitative benefits that come with compliance and an industry-recognized rating.
BPS in Denver and Colorado
The Energize Denver Building Performance Policy was adopted by the city in November of 2021 and applies strict energy performance requirements to buildings 25,000 square feet and larger. The overall goal of this policy is for buildings to reach roughly a 30% reduction in energy usage by 2032 (originally 2030), with net-zero emissions by 2040. Being the first BPS of its kind in Denver, the rules and regulations were subjected to multiple rounds of public comment and are still changing, with the latest update occurring on April 1, 2025. This most recent change cut penalty rates by half; increased avenues for buildings to make adjustments to their plans or appeal decisions, and even added incentives for building owners to create adaptive reuse projects to adjust energy efficiency targets and expanded credit options for off-site renewable energy sources.
In 2023, the Energize Denver team contributed to the rulemaking process at the Air Quality Control Commission to help the state’s BPS (Building Performance Colorado (BPC) better align with Denver’s standards. BPC applies to commercial, multifamily, and public buildings 50,000 square feet and larger, aiming to meet sector-wide greenhouse gas emissions reduction targets of 7% by 2026 and 20% by 2030 as compared to 2021 levels. These do not preempt nor are they preempted by Denver; both must be met. However, as of February 11, 2026, Denver announced that for buildings subject to both programs, Energize Denver compliance will count as compliance with BPC. Furthermore, Denver buildings that received an approved timeline extension that extended the final target to 2032 will be afforded such extension in lieu of BPC performance target deadlines in 2030 and 2031.
Why BPS Matters
Due to their mandatory nature, BPS present a non-compliance risk and more importantly, a business risk. Staying in compliance can protect value, avoid penalties, and even reduce operating expenses. If a building owner is not in compliance, then they may additionally face reputational risks that can cause asset devaluation. As demand for “brown” properties (i.e. noncompliant and non-energy efficient) decreases and BPS requirements increase, failing to comply may lead to increased scrutiny from investors and lenders as compliance is mandated in debt covenants and acquisition due diligence. Recurring fines present a significant financial dilemma, and owners may fall victim to reactive spending with decreased return on investment due to their failure to proactively meet the deadlines.
It is essential for a building owner to not only properly comply with BPS but also recognize its impact on building economics. A study from the International Energy Agency shows that green, energy-efficient buildings can command sale price premiums ranging from 13% to 20% and that businesses are willing to pay a higher rent or sales price for property with improved energy performance, evidenced through voluntary energy performance certificates such as LEED.
The complimentary framework of LEED and BPS can push new and existing buildings toward increased efficiency and investor returns while providing occupant-focused benefits. As both voluntary and mandatory programs continue to evolve in Colorado, building owners should engage proactively to protect asset value, reduce risk, and uphold the goal of a more sustainable future.
About the authors: Tal Diamant is a partner in BCLP’s real estate practice group who focuses on leasing, acquisition/disposition, development, real estate partnership formation, and financing for a wide variety of assets. A leader in his industry, Tal frequently leads seminars and panels in connection with the International Council of Shopping Centers, Bisnow and NAIOP. Gisselle Guadalupe is a law clerk at BCLP in the Commercial Real Estate group. She works closely with attorneys assisting with leasing matters and acquisitions.
