10/27/2026
Walk through New York City, and you've probably noticed letter grades displayed outside restaurants. But have you ever spotted a similar-looking grade posted near the entrance of an apartment building or commercial property?
That letter might be telling you something important about the building's energy efficiency.
Across NYC, certain large buildings are required to publicly display an energy-efficiency rating. These grades are designed to give residents, buyers, and property owners a better understanding of how efficiently buildings use energy compared with similar properties.
And in a city where housing expenses, building maintenance, and environmental regulations are major considerations, these grades are becoming another piece of information worth understanding.
New York City has some of the most recognizable real estate in the world, from historic apartment buildings in Brooklyn to high-rise condominiums in Manhattan.
But maintaining these properties requires energy for heating, cooling, lighting, ventilation, and other essential systems.
According to the New York City Department of Buildings, buildings account for a substantial majority of the city's greenhouse gas emissions.
To encourage greater transparency about energy consumption, NYC introduced building energy-efficiency grading requirements through Local Law 33 of 2018, later amended by Local Law 95 of 2019.
Under these requirements, certain buildings must display a label showing their energy-efficiency score and corresponding letter grade.
The idea is simple: make information about building performance more visible to the public.
Instead of keeping energy data primarily within government databases, the city requires covered properties to display their ratings where people can see them.
The grades are based on an ENERGY STAR score that compares a building's energy performance with similar buildings.
However, the grade does not measure every aspect of a building's condition.
A property with a lower grade isn't necessarily poorly maintained, and a building with an A grade isn't automatically free of maintenance issues.
The rating focuses on energy performance, not the overall quality of the real estate.
When purchasing an apartment in New York City, buyers often focus on location, square footage, building amenities, and monthly maintenance or common charges.
But a building's operating efficiency can also be relevant.
In a condominium or cooperative building, shared expenses may include heating, cooling, electricity for common areas, and maintenance of mechanical systems.
Inefficient equipment or aging infrastructure may contribute to higher operating costs.
That doesn't mean a building with a lower energy grade will necessarily have higher monthly charges. Building budgets depend on many factors, including staffing, insurance, taxes, debt, repairs, and reserves.
Still, an energy grade can provide another starting point for questions during the purchasing process.
For example, buyers may want to understand whether a building has recently upgraded its heating system, improved insulation, or planned future energy-efficiency projects.
The Urban Green Council's research on NYC building energy grades examines how different building types perform and how energy grades relate to broader building-efficiency trends.
For buyers, the important lesson is that a property's physical appearance doesn't tell the entire story of how it operates.
New York City is known for its architectural variety.
Some buildings date back more than a century, while others feature modern construction and advanced mechanical systems.
It's tempting to assume that a newer building will always be more energy-efficient than an older one.
But actual performance can depend on insulation, equipment, maintenance practices, building operations, and the way occupants use the space.
An older building with upgraded systems may perform better than expected.
Meanwhile, a newer property with inefficient operations may consume more energy than comparable buildings.
The U.S. Environmental Protection Agency's ENERGY STAR program explains that benchmarking helps property owners compare energy performance and identify opportunities for improvement.
This is why measured performance can provide useful information beyond a building's construction year or appearance.
Energy grades are part of NYC's broader effort to improve building performance, but they should not be confused with another important regulation: Local Law 97.
Local Law 97 establishes greenhouse gas emissions limits for many larger NYC buildings.
According to the NYC Department of Buildings, most covered buildings exceeding 25,000 square feet became subject to emissions limits beginning in 2024, with stricter limits scheduled for 2030.
The law also includes specific rules and compliance pathways for certain properties, including some affordable housing buildings.
While energy grades evaluate relative energy performance, Local Law 97 focuses on greenhouse gas emissions.
The two measures are related, but they are not interchangeable.
A building with a strong energy grade is not automatically compliant with Local Law 97.
Similarly, a building's Local Law 97 obligations cannot be determined from its energy grade alone.
For property owners and prospective buyers, understanding the distinction matters because compliance requirements and future improvement projects can affect building finances.
As NYC continues implementing building-efficiency requirements, energy performance may become a more important consideration in certain real estate transactions.
For buyers evaluating apartments in larger buildings, future capital improvements may be relevant to the property's overall financial picture.
A cooperative or condominium board might need to consider investments in heating equipment, ventilation systems, insulation, or other building infrastructure.
Depending on the property and its finances, those projects could involve reserve funds, financing, or assessments.
However, not every building faces the same requirements or expenses.
The city's regulations vary based on factors such as building size, use, and applicable compliance provisions.
For sellers, providing accurate information about a building's condition and planned improvements can help buyers evaluate the property.
For investors, understanding operating expenses and regulatory obligations can support more informed financial analysis.
The goal isn't to assume that energy regulations will make a particular property more or less valuable.
It's to recognize that building performance and long-term maintenance planning are relevant parts of ownership.
Energy-efficiency grades aren't only relevant to buyers and investors.
Renters can also benefit from understanding how buildings use energy.
Depending on the lease and utility arrangements, tenants may pay directly for certain heating, cooling, or electricity expenses.
An energy-efficient building may offer potential advantages related to comfort and consumption, although individual utility bills depend on apartment characteristics, usage, equipment, and billing arrangements.
A building's overall grade doesn't predict exactly how much a particular tenant will pay.
However, it may encourage useful questions about heating systems, insulation, temperature control, and which utilities are included in the rent.
For renters comparing properties, these considerations can provide additional context beyond the advertised monthly price.
NYC's energy-grading requirements continue to operate on an annual reporting and disclosure cycle.
In a February 2026 service notice, the Department of Buildings reminded covered property owners of sustainability-law deadlines.
For buildings subject to the energy-grading requirements, the city directed owners to display their 2026 Building Energy Efficiency Rating Labels beginning October 1 and no later than October 31, 2026.
These labels provide updated information based on the applicable reporting process.
The city's sustainability regulations also include separate benchmarking and emissions requirements, with deadlines that vary by program.
For owners and property managers, keeping up with the applicable requirements is part of responsible building administration.
For buyers and residents, the public labels make at least one aspect of building performance easier to observe.
When evaluating real estate in New York City, it's easy to focus on what you can see during a showing.
A renovated kitchen, beautiful lobby, spacious living room, or rooftop terrace can leave a lasting impression.
But the systems behind the scenes matter too.
Heating equipment, energy consumption, building maintenance, and long-term capital planning can all influence the ownership experience.
Energy-efficiency grades don't replace inspections, financial reviews, or professional advice.
Instead, they provide another piece of information that can help buyers, renters, and owners ask more informed questions.
As NYC continues to address the environmental and operational performance of its buildings, understanding these ratings can help residents see their properties from a different perspective.
New York City real estate has always been about location, lifestyle, and opportunity.
But understanding a property also means paying attention to how the building operates.
Energy-efficiency grades offer a window into one part of that picture, helping residents and property owners better understand relative building performance.
Whether you're considering a condominium in Queens, a cooperative in Manhattan, or an investment property in Brooklyn, looking beyond the finishes and amenities can help you make more informed decisions.
At ClosedByMo, we believe that the more you understand about a property, the better prepared you are to navigate the real estate market.
Thinking about buying, selling, or investing in NYC real estate? Connect with ClosedByMo to discuss your goals and explore your options.
Because the Mo you know, the better.
Disclaimer: This content is intended for informational and educational purposes only and is not intended to be construed as legal, tax, financial, or insurance advice. Every property and tax situation is unique. Please consult a licensed attorney, CPA, or tax professional regarding your specific circumstances before making any decisions related to property improvements, tax assessments, or real estate transactions. Mohammed M. Rahman is a licensed real estate broker in New York. Contact: Mo@ClosedByMo.com.
