What the Shift to the 2024 I-Codes Means for Your Portfolio’s Bottom Line
Information provided by the BOMA International Codes Committee
For commercial real estate professionals, building codes have historically been viewed as a static hurdle—a set of minimum requirements to clear during the construction or renovation phase. However, the release of the 2024 International Codes (I-Codes)—specifically the International Building Code (IBC) and International Energy Conservation Code (IECC)—signals a paradigm shift. These updates are no longer just about safety baselines; they are about performance optimization.
For BOMA members, these updates represent a fundamental evolution in how buildings are valued, insured, and operated. Rather than viewing the 2024 I-Codes as a regulatory burden, forward-thinking asset managers are leveraging them as a roadmap to create "Class A+" institutional-quality assets that command higher rents and operate with significantly lower overhead.
Learn more with the information below, provided by the BOMA International Codes Committee:
- Chair: Patrick Shaw; BOMA/ St. Louis
- Vice Chair: Matt Faupel; BOMA/ St. Louis
- BAE Representative to the Committee: Lori Raphael; BOMA/ New York
- Staff Liaison: Steve Dimino; BOMA International
If you are interested in joining the BOMA International Codes Committee, then please reach out to the Staff Liaison at sdimino@boma.org.
The "Code Official" Power Shift: A Quality Assurance Guarantee that Protects Building Owners
One of the most nuanced yet beneficial changes in the 2024 IBC is the clarification of the code official's duties (Section 104). The new language empowers officials to require technical reports to determine compliance. While this might initially sound like an administrative layer, for the asset owner, this is effectively a state-sanctioned Quality Assurance (QA) program.
In the past, corners might be cut during complex retrofits, leaving owners with "compliant" but underperforming systems. The new provisions incentivize rigorous third-party verification. When a code official requires a technical report, they are essentially compelling your contractors and engineers to prove that the systems installed are performing exactly as designed.
For asset managers, this reduces the risk of inheriting latent defects. If a local jurisdiction adopts the 2024 code, the "soft costs" of these reports should be viewed as an insurance policy. You are no longer relying solely on a contractor’s word; you have data-backed verification. This level of scrutiny during the permit phase prevents costly change orders and performance failures after the walls are closed up. It is vital to have your engineering consultants review these provisions in your local jurisdiction's adoption ordinance, not to fight them, but to integrate them into your commissioning process to ensure you get exactly what you pay for.
Occupancy Sensors: Autonomous Buildings and the Removal of Human Error
The 2024 IECC has aggressively expanded requirements for lighting controls, pushing the industry toward fully autonomous building operations. Occupancy sensors, previously standard in only offices and conference rooms, are now required in data centers, medical supply rooms, and even laundry areas. Furthermore, the threshold for daylight-responsive controls has dropped, meaning more zones will automatically dim when the sun is shining.
This is a massive win for Net Operating Income (NOI). One of the most persistent complaints in property management is the "human factor"—tenants leaving lights on in unoccupied areas or utility bills spiking due to carelessness. The 2024 code effectively legislates the removal of human error from energy consumption.
If you are planning a tenant improvement (TI) allowance for a new lease, the electrical scope may be higher initially, but the payback period is rapid. By automating these systems, you are protecting your net effective rent from utility erosion. Moreover, these smart controls often serve as the backbone for IoT (Internet of Things) integration, allowing for occupancy mapping that helps you advise tenants on space utilization—a high-value consulting service that strengthens tenant relationships.
Submetering: The Data You Need for Cost Recovery
Perhaps the most critical update for property management is the reduction in the submetering threshold. New buildings over 10,000 square feet (down from 25,000) now require submetering. Even more progressively, submetering is now required for non-electrical end-uses in many building types.
While this increases upfront capital expenditures, it aligns with the industry trend toward granular data transparency. In the era of "Green Leases" and ESG reporting, data is currency. Submetering allows you to move away from flat-rate utility billing (where you often lose money) to precise, usage-based billing.
This change turns utility management from a cost center into a pass-through efficiency engine. The silver lining is substantial: this data is what you need to comply with emerging Building Performance Standards (BPS) and to pass through utility costs more accurately to tenants. You can now identify which tenant is driving peak demand charges and bill accordingly, recovering capital expense through tighter OpEx management and improved fairness in cost allocation.
Actionable Advice: Proactive Standardization
Do not wait for an architect to flag these changes during a permit review. Proactively engage your MEP consultants now to update your "Building Standards" documents. By adopting these 2024 standards voluntarily or early, you future-proof your asset against the inevitable adoption of these codes.
If your standard lease work letter references "code compliance," ensure your TI budgets reflect the 2024 reality. Frame this to your tenants not as increased cost, but as increased capability: "We are building your space to 2024 standards to ensure lowest possible operating costs and highest energy efficiency."
What Happens in California Doesn't Stay There: The Strategic Advantage of the 2025 Title 24 Update
California has long been the "R&D Lab" for American energy efficiency targets. The 2025 update to Title 24 (effective January 1, 2026) is the most progressive set of standards yet. For BOMA members across the country, paying attention to California isn't just about compliance for West Coast assets—it’s about previewing the technologies and standards that will define "Institutional Quality" real estate nationwide in the coming decade.
The technologies mandated here today—heat pumps, advanced battery safety, and rooftop activation—will be the amenities tenants in Chicago, Dallas, and Atlanta demand tomorrow. Adopting a "California mindset" now allows you to future-proof your portfolio, regardless of geography.
Occupied Roofs: Monetizing the Skyline Safely
One of the most significant changes in the 2025 code addresses the booming trend of rooftop amenities. The code now treats "occupied roofs" with stricter scrutiny regarding egress and structural integrity.
While this introduces new design parameters, it also legitimizes the rooftop as a primary revenue-generating asset class.
By establishing clear safety guidelines, Title 24 is effectively de-risking the "amenity race." If you are planning to activate a rooftop to attract tenants, these codes ensure that your investment is safe, insurable, and durable. It prevents the construction of "temporary" feeling spaces, pushing owners toward high-quality, permanent additions that genuinely increase the building's value. A Title 24-compliant rooftop is a premium asset that can be marketed as the safest, most accessible outdoor space in the city.
The Lithium-Ion Risk: Proactive Asset Protection
With the proliferation of e-bikes and battery storage systems (BESS), Title 24 is introducing strict new fire codes for battery storage and charging areas. This includes mandatory sprinklers in specific zones and separation requirements.
Smart property managers should view this not as a restriction, but as a critical risk management tool. Lithium-ion fires are a genuine threat to commercial assets. By strictly regulating where and how these devices are charged, the code helps owners enforce safety policies with tenants. It gives you the regulatory backing to say, "For the safety of all tenants, e-scooters must be charged in this specific, fire-rated room." This protects your building from catastrophic loss and positions your asset as a leader in safety protocols, a detail that risk managers at large corporate tenants will appreciate.
Electrification by Default: Hedging Against Volatility
While not a total gas ban, the prescriptive path in the 2025 Title 24 heavily favors heat pumps. This signals a market shift. For building owners, this is an invitation to hedge against utility volatility.
Natural gas prices are historically volatile. Electricity, while subject to rates, is becoming cleaner and more stable as renewables come online. By moving toward electrification—driven by the code—owners are preparing their buildings for a low-carbon future. Furthermore, as the heat pump market matures due to California's scale, the cost of these units will drop nationwide. Installing heat pumps now is an investment in the HVAC technology of the future, ensuring you aren't stuck with "stranded assets" (gas boilers) that become difficult to service or expensive to fuel in ten years.
Decarbonization via Code: Why Your Next Boiler Upgrade is an Opportunity
The media often focuses on "gas bans" as controversial political statements. However, the real story for BOMA members is the subtle, bureaucratic shift in the I-Codes and ASHRAE standards that makes electric systems the "path of least resistance"—and arguably, the path of highest return.
The 2024 updates encourage electrification not by force, but by making it the smarter engineering choice. For asset managers, this is an opportunity to pivot toward systems that are cleaner, require less maintenance, and open up new revenue streams through grid interactivity.
The Prescriptive Tilt: Following the Efficiency Curve
In the 2024 IECC and recent ASHRAE 90.1 updates, the "prescriptive path" is becoming biased toward heat pumps for space and water heating. The codes are essentially signaling that heat pumps are now the mature, preferred technology.
While you can still install gas in many places, the code creates a trade-off: if you choose gas, you must improve the building envelope (windows, insulation) to compensate. This is the code's way of guiding owners toward the better long-term investment. Heat pumps are 200-300% efficient, whereas the best gas boiler is 95% efficient. By following the "electric tilt" of the code, you are installing equipment that inherently uses less energy to do the same work, permanently lowering your exposure to energy commodity costs.
Water Heating: The "Smart" Relocation
The 2024 I-Codes have reorganized service water heating sections, explicitly favoring electric instantaneous heaters and heat pump water heaters. This drives a shift toward "point-of-use" heating.
In a large commercial building, piping hot water from a central boiler to a 4th-floor restroom is incredibly inefficient—you lose a significant amount of heat through the pipes. If you find yourself waiting multiple minutes for your shower to heat up, then you are familiar with this issue. Electric point-of-use heaters eliminate these distribution losses. They free up floor space in mechanical rooms and reduce the risk of large-scale piping leaks. This improves space efficiency, energy efficiency, and maintenance simplicity.
Grid Interactivity: Buildings as Batteries
New codes are beginning to ask for "grid-interactive" appliances. This means your electric water heater or HVAC system needs a port to "talk" to the utility.
Building owners can use this as a potential revenue stream. We are moving toward a future where utilities will pay buildings to reduce demand during peak hours. If your equipment is "grid-ready," you hold a ticket to the demand-response market. You can eventually get paid to turn your water heater down by two degrees for an hour. This turns a sunk cost (equipment) into a dynamic asset that interacts with the energy market.
Actionable Advice: The Feasibility Study
Stop replacing like-for-like. When a gas boiler nears end-of-life, commission a feasibility study for electrification immediately. Do not wait for failure.
View the electrical service upgrade required for a heat pump not as a cost, but as an asset enhancement. Increasing your building's electrical capacity increases its value, making it ready for EV charging and high-density tenant power needs. Plan now so you can make the upgrade on your terms, creating a modern, all-electric asset that appeals to ESG-focused investors.
ASHRAE 90.1-2022: The Benchmark Your Investors Are Watching
Even if your state uses the IECC, ASHRAE 90.1 remains the alternative compliance path of choice for complex commercial buildings and the baseline for LEED certification. The 2022 edition (being referenced in 2024/2025 legislation) introduces a "Total System Performance" approach that BOMA members should embrace enthusiastically.
ASHRAE 90.1 is no longer just a rulebook; it is a design philosophy that offers flexibility. It moves away from rigid checklists and toward holistic modeling. This benefits asset managers by allowing for smart tradeoffs—spending money where it counts to save money where it doesn't.
System vs. Component: The Freedom of Choice
Previous codes looked at components in isolation (e.g., "This chiller must be X% efficient"). ASHRAE 90.1-2022 allows for a more holistic view. It evaluates how the HVAC system performs overall.
This offers immense flexibility for existing buildings. You might have a constraint where you cannot fit a massive new cooling tower on the roof. Under the "Total System" approach, you can keep a slightly less efficient tower if you compensate with superior fan energy recovery or better controls. This flexibility is a lifeline for retrofits. It allows engineers to design solutions that fit the budget and the physical constraints of the building, rather than being forced into a "one size fits all" box.
The Mechanical Curtain Wall: Paying for Comfort
The standard continues to tighten envelope requirements, effectively penalizing all-glass facades unless high-performance triple-glazing or thermal breaks are used.
While this increases the cost of glass, it drastically reduces the cost of HVAC. A better envelope means you can buy smaller chillers and boilers (CapEx savings). More importantly, it increases the "rentable comfort zone." In buildings with cheap glass, the 5 feet next to the window are often too hot or too cold to use. High-performance facades reclaim that square footage. You are paying for the glass, but you are selling the comfort.
Renewable Energy: Energy Independence
The standard now includes more prescriptive requirements for onsite renewable energy. It’s no longer just an "option" for points; in many climate zones, some form of onsite generation (solar PV) is becoming part of the baseline budget.
This shifts the building from a consumer to a producer. Onsite solar hedges against rising utility rates and demand charges. It visualizes the building's commitment to sustainability, which is a powerful branding tool for prospective tenants.
Actionable Advice: Model Early
Ask your energy modeler to run a "90.1-2022 path" analysis for your next major retrofit. You may find that the "Total System Performance" tradeoff allows you to keep some older equipment in place by upgrading controls, saving significant capital compared to a full component swap-out. Use the code's flexibility to your financial advantage.
The Tale of Two Codes: Operating in "Green" vs. "Orange" States
The US regulatory landscape is fracturing into two distinct environments for building codes. "Green" states (CA, NY, WA, MA) are adopting aggressive decarbonization and performance codes. "Orange" states (historically slower adopters) are sticking to older codes or stripping out green provisions.
For BOMA members with national portfolios, this might look like a headache, but it is actually an opportunity for strategic arbitrage. By tailoring your strategy to the region, you can maximize ROI in both environments. One size does not fit all, and that allows for nuanced, high-return management.
The "Green" Strategy: Electrify and Capture Premium
In aggressive states, your capital plan must focus on electrification and demand management. The grid is becoming the constraint. Here, the play is "High Performance."
Your value-add moves are installing batteries, EV charging, and high-efficiency heat pumps. Compliance is the floor; resilience is the ceiling. In these markets, tenants expect green features and are willing to pay a "Green Premium" for them. By leaning into the code, you position your asset as a prime destination for top-tier tenants who have their own Net Zero goals to meet.
The "Orange" Strategy: Efficiency for Profit
In states using older codes (like the 2015 IECC), you aren't forced to be efficient. But you should be. Why? Because many tenants are part of national corporations.
A corporate tenant with a Net Zero goal doesn't care that the local code in their satellite office is lax—they want the same data and performance they get in their HQ.
In these markets, building to the 2024 I-Codes (voluntarily) gives you a massive competitive advantage. You can market "Institutional Quality" infrastructure in a market of "Code Minimum" buildings. You get the operational savings of a high-efficiency building without the regulatory red tape. It is the best of both worlds: low regulation, high performance, and market dominance.
Florida: The Resilience Play
Watch states like Florida. They are adopting the 2024 I-Codes but often amend them to focus on hurricane resilience rather than just energy. Here, the "code play" is about insurance reduction and physical safety.
Investments in impact windows and stronger roofing (driven by code) are direct value-adds. They lower insurance premiums—a massive cost in Florida—and provide the peace of mind that keeps tenants signing leases.
Actionable Advice: Allocate Capital Smartly
Don't standardize your capital plan across all regions. In "Green" states, reserve capital for compliance and complex retrofits to avoid fines and capture premiums. In "Orange" states, use that capital to differentiate your asset with voluntary efficiency upgrades (like LED retrofits or smart metering) that yield high ROI. These upgrades are no longer "low hanging fruit" in stricter states because they are mandated, but in "Orange" states, they remain powerful profit generators.