The Hidden Cost of Compliance: Why Maryland’s BEPS May Be a Looming Shock to the System

On paper, the objectives of Maryland’s Building Energy Performance Standards (BEPS) appear entirely noble: slashing greenhouse gas emissions by 20% by 2030 and paving a runway toward a net-zero future by 2040.

As these dates approach and the program moves buildings toward electrification, many in Maryland’s commercial real estate industry are asking a more fundamental question:

Can Maryland’s electrical grid support the level of electrification these regulations require?

Before building owners can even begin calculating compliance costs, many are questioning whether the infrastructure necessary to support a large-scale transition from fossil fuels to electric systems exists today.

While Maryland’s environmental goals may be well-intentioned, property owners, investors, landlords, and tenants are increasingly concerned that the state is moving faster than the infrastructure needed to support the transition can keep pace.

The Real Challenge: Can Maryland’s Grid Handle Electrification?

While property owners are understandably fixated on the staggering upfront capital expenditures required to overhaul their HVAC systems, a far more insidious financial threat is lurking within the regional utility grid.

Forcing thousands of commercial facilities to simultaneously abandon fossil fuels triggers a massive structural collision in energy demand. Historically, our regional grid has weathered its peak vulnerability during summer cooling surges. However, Maryland’s BEPS mandates completely flip this dynamic, creating aggressive, high-stakes winter heating peaks that our current infrastructure was never designed to handle.

When temperatures plummet, the collective draw from commercial heat pumps will place a crushing strain on local substations. To prevent catastrophic grid failure, utility providers will be forced into multi-billion-dollar infrastructure modernizations—costs that will inevitably be passed on to consumers through structurally higher delivery charges.

The financial hammer is already swinging. Property owners who hesitate to transition may face steep MDE non-compliance penalties, scaling up to $200 per ton for excess emissions, in addition to annual reporting fees.

Consequently, landlords may find themselves trapped in a lose-lose scenario: absorb significant capital upgrade costs, pay emissions penalties, or face increasing utility expenses that ultimately impact tenants, operating budgets, and property performance.

If Maryland intends to mandate a green future, many property owners believe the state must first address whether the electrical infrastructure can support it.

What Is Maryland BEPS?

Under the Climate Solutions Now Act, many commercial and multifamily buildings larger than 35,000 square feet must benchmark and report their energy usage to the Maryland Department of the Environment (MDE).

The state’s long-term goal is ambitious: reduce greenhouse gas emissions by 20% by 2030 and reach net-zero emissions by 2040.

The law generally applies to:

  • Commercial buildings 35,000 square feet or larger
  • Multifamily buildings 35,000 square feet or larger
  • Some groups of connected, smaller buildings functioning as one property

The state has extended the compliance timeline. Benchmarking reports and exemption requests submitted by June 30, 2026, will still be considered on time.

For many owners, the first challenge is simply figuring out whether their property qualifies and what needs to happen next.

That confusion is exactly why having a local resource matters.

The First Deadline Is Here- And More Are Coming

For many commercial property owners, investors, landlords, and tenants, BEPS is no longer a future conversation—it is here.

This is far more than a simple matter of upgrading lighting. It is a sweeping mandate affecting thousands of commercial and multifamily buildings across Maryland that are 35,000 square feet and larger.

The clock is already ticking.

Following the initial benchmarking phase, covered building owners must now navigate reporting requirements, exemption requests, and third-party verification requirements, creating an immediate compliance hurdle.

For Maryland’s commercial real estate community, the conversation has quickly shifted from why the program exists to how it will be implemented, what it will ultimately cost, and whether the state’s electrical infrastructure is prepared for the transition being required.

What We’re Hearing From Property Owners

As property owners and business operators already dealing with rising electric rates, inflation, labor shortages, rising insurance costs, financing challenges, and changing market conditions, BEPS feels like one more regulatory hurdle in an already difficult environment.

At Verita Commercial Real Estate (VCRE), we work with investors, business owners, municipalities, landlords, and tenants across Frederick, Washington, and Carroll counties every day.

What we are hearing is consistent:

    • Does my building even qualify?
    • How much will compliance cost?
    • What happens if my building relies on oil or natural gas?
    • How realistic is it to transition older buildings to all-electric systems over the next decade?
  • What if there is no way we will be able to comply and/or afford to convert from oil or gas to all electric by 2030?
  • What happens if the electrical infrastructure is not ready to support these changes?

These are fair questions, and many property owners are still looking for answers.

While most support practical energy-efficiency improvements, they also want realistic timelines, clear guidance, and policies that recognize the operational and financial realities facing Maryland businesses.

They simply need realistic timelines and policies that work in the real world.

The Risk to Maryland’s Commercial Real Estate Market

Commercial real estate markets depend on predictability.

Investors need confidence before committing capital. Developers need certainty before starting projects. Business owners need stable operating costs before expanding.

Frequent regulatory changes create hesitation.

That hesitation affects:

  • Property values
  • Leasing activity
  • Redevelopment projects
  • Lending decisions
  • Tenant growth
  • Business expansion

At a time when Maryland is competing regionally for employers and investment, overly aggressive or constantly changing regulations can create unintended consequences.

This is especially important in areas like Frederick County, where smart growth depends on balancing economic development with responsible planning.

The goal should be progress without paralysis.

Eco-Friendly Growth Needs Practical Policies

There is a path forward that both environmental advocates and the business community can support.

Most commercial property owners are willing to improve efficiency when:

  • Costs are predictable
  • Timelines are realistic
  • Incentives exist
  • Requirements are clear
  • Regulations remain stable

What frustrates many owners is the uncertainty.

Today, owners are trying to make long-term investment decisions while regulations continue evolving in real time.

That creates hesitation instead of momentum.

Any successful transition must account not only for building compliance, but also for the capacity and reliability of the electrical infrastructure required to support it.

Practical policy solutions could include:

  • Longer compliance timelines
  • Expanded grant programs
  • More financing incentives
  • Flexible compliance pathways
  • Additional exemptions for older properties
  • Recognition of market realities in secondary regions

Those approaches encourage progress instead of punishing ownership.

Why VCRE Cares About This

We work with property owners across Frederick, Washington, and Carroll counties every day. Many of those owners are already balancing:

  • Rising operating costs
  • Tenant retention concerns
  • Deferred maintenance
  • Capital planning
  • Financing challenges
  • Uncertainty around future regulations

Adding another state requirement can feel like one more burden.

But ignoring BEPS could create larger problems later, especially during refinancing, tenant negotiations, property sales, or future energy compliance requirements.

We believe owners should approach this early, strategically, and with the right team around them.

In markets like Frederick County, where many commercial buildings are older, independently owned, or locally operated, these compliance questions can have a significant impact on investment decisions and operating costs.

VCRE is not an engineering firm or compliance auditor. But we are experienced connectors. We know how to help owners organize the process, identify next steps, and connect with qualified professionals who can help complete the work correctly.

The Industry Is Still Asking Important Questions

While the law has been passed and compliance is now required for many property owners, broader greenhouse gas performance standards will continue phasing in through 2030 and beyond.

That uncertainty is creating real concern across Maryland’s commercial real estate industry.

Property owners, developers, landlords, and business groups are still trying to understand the long-term impacts of these regulations, especially for older commercial properties and operating businesses already facing rising costs.

Questions the industry continues to ask include:

  • How much will compliance and future building upgrades cost?
  • Will tenants ultimately absorb some of those expenses through rents or CAM charges?
  • How will lenders and appraisers evaluate buildings requiring major capital improvements?
  • Will some older buildings become financially difficult to reposition or operate?
  • How often will compliance standards and reporting requirements change?

These are not minor concerns, and many organizations across Maryland are actively advocating for additional clarity, flexibility, and practical implementation guidance.

Groups such as the Frederick County Building Industry Association (FCBIA), Maryland Building Industry Association (MBIA), property owners, and commercial real estate professionals continue working with policymakers to better understand how these regulations will affect housing, development, investment, and long-term economic growth across the state.

What Building Owners Should Do Next

Building owners who may be affected by Maryland’s BEPS requirements should begin evaluating how the regulations could impact their properties, operating costs, and long-term capital planning.

Understanding whether a building qualifies, identifying potential compliance challenges, and assessing future equipment needs can help owners avoid last-minute decisions as deadlines continue to approach.

For the most current information on reporting requirements, exemptions, compliance timelines, and technical guidance, property owners should review the Maryland Department of the Environment’s official BEPS resources:

Maryland Department of the Environment – Building Energy Performance Standards (BEPS)
 https://mde.maryland.gov/programs/air/ClimateChange/Clean-Buildings/Pages/BEPS.aspx

This resource includes program updates, reporting guidance, compliance requirements, and answers to frequently asked questions.

Final Thoughts: Maryland’s Energy Transition Needs a Practical Path Forward

Maryland’s commercial real estate industry is not questioning the importance of energy efficiency or environmental stewardship.

The question many owners continue to ask is whether the pace of electrification being mandated through BEPS aligns with the realities of the state’s existing electrical infrastructure.

The reporting requirements are here. Compliance deadlines are underway. Property owners need to understand their obligations and begin planning now.

At the same time, concerns about grid capacity, future utility costs, and long-term implementation remain legitimate topics of discussion throughout the industry.

At VCRE, we believe the commercial real estate industry works best when business owners, property owners, and communities can grow together through practical, balanced solutions. We support smart growth, energy efficiency, and responsible planning, but we also understand the frustration many owners feel as they navigate evolving regulations and rising operational pressures.

Our goal is simple: help property owners stay informed, stay connected to trusted local resources, and make smart long-term decisions for their properties and businesses.

If you have questions about how BEPS may impact your building, investment strategy, lease negotiations, or future property planning, the VCRE team is here to help connect you with the right people and resources.