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Energy In The Economy: Energy Is The Economy

Perspectives on Germany’s nuclear backout and its effects in real estate + larger implications  

Energy policy in Germany may be providing insight into the importance of nuclear power, and energy’s effect in real estate in general. New Green Street data delivers insights on Germany’s 2002 commitment to move away from nuclear power and the quick – and lasting – effects it has in the market. Further explanation of the reasons for (and issues with) these policies that are considered in Green Street’s forecasts will help illuminate the deeper implications of energy’s effects in real estate. 

As of April 15, 2023 Germany has decommissioned all their nuclear reactors. However, the so-called “green” initiative has not only had questionable effects on their energy production but actual green output as well. Beyond this, it will likely lead to serious market fluctuations in traditional German real estate sectors.  

Even though Europe is generally ahead of the U.S. by a decade when it comes to green energy initiatives, Germany is seeing carbon levels equal to that of 2015 (despite its push towards renewable energy sources). One major contributor to this is while other nations have pushed forward into nuclear energy, like France, Germany has essentially pulled out entirely. Instead, it has heavily invested in renewables such as solar, wind, hydro, and biomass. This, however, seems to have its own set of other challenges.  

According to the World Economic Forum, Germany averaged approximately 40% of its energy coming from renewable resources in 2023 (aside from nuclear power) and has now committed to a goal of 80% by 2030. What isn’t being accounted for in these new energy policies, however, is the residual load leftover after renewable sources and the unreliable fluctuations in energy production from renewable energy.  

Another factor that has been overlooked is the effect these energy sources have in real estate, not only the market but in natural land as well. For example, to match France’s current nuclear energy output in TWh output alone, Germany would need 40-120X the land area. This seems to be a bit of a step backwards in terms of the EU’s public stance on returning land to the environment. This new anti-nuclear energy policy places Germany at a serious handicap for industrial production, but also places them at a serious deficit of space and resources, often-unconsidered factors in energy’s effect in real estate. 


In contrast to Germany, France has continued to increase its investment in nuclear energy and has seen continued returns as it optimizes its power grid and maximizes energy production with minimal space. Germany’s backout will likely have compounded effects in real estate not only in the industrial sector, but the computing, residential, and raw land sectors as well. In general, the secondary effects of Germany’s policies have questionable ESG implications that seem to have been overlooked. ESG is a term used as an alternative for sustainability and socially responsible investing – aka: the consideration of environmental, social, and governance factors. Many brands even have a unique position on how to consider ESG factors in investment decisions. 

What seems to be missed here in both Germany’s energy policies and economists’ forecasts is that even though Germany has made a grand gesture in terms of nuclear safety, it hamstrings the country by creating a coal dependency to make up for the deficit while severely limiting their ability to expand industrially. Especially in the AI era where computing is expected to see massive growth, the need for nuclear-powered data centres is responding in suit - and the nation has made it very difficult to keep up. Coal and most other energy sources lose to nuclear in energy production as well as spatial density and cost-effectiveness. These factors contribute to Green Street’s forecasts for Germany’s traditional real estate in the near future. Given the spatial limitations and hampered industrial capabilities, Green Street’s already conservative stance on German real estate sectors will take a definitive shift if energy policies are not changed quickly. But it is safe to assume adjustments in rent forecasts from further exclusive insights. After all:  

“Energy is not an input into the economy, IT IS THE ECONOMY. Humanity organizes its economic activities to ensure a steady growth in the extraction and exploitation of primary energy because energy is life, standards of living are defined by how much energy is available to be exploited, and all humans everywhere are perpetually seeking a higher standard of living.” – Doomberg 

So then, what is likely to come of living standards, availability, and real estate valuation given the above energy policies? Click below for a sample report of Green Street’s deeper insights on the implications of each country’s commitment. You can also sign up for the upcoming ESG Webinar on “Recalibrating and Quantifying the “E” Impact on CRE” to learn more about the different factors considered in Green Street forecasting. It's time we all start to consider shifting nuclear policies on a deeper level and what serious effects energy has in real estate.

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