The combination of financial incentives and increased tenant demand has encouraged commercial real estate owners to find new ways to add electric vehicle (EV) charging stations to their properties as quickly as possible, Commercial Observer reports.
While plug-and-play solutions are at the top of the wish list, per property technology (proptech) firms, it’s still too early to tell how much value an EV charging infrastructure can add to CRE properties.
The recent increase in the EV market is one reason CRE owners are strongly considering adding stations. EV sales were 0.2 percent of total car sales in 2011. Ten years later, EVs made up 4.6 percent of total car sales, according to the U.S. Bureau of Labor Statistics.
Potential financial gain has also factored into CRE owners’ desire to install EV infrastructure on their properties, Commercial Observer reports. The recently passed federal Inflation Reduction Act (IRA) restored expired tax credits for putting EV chargers in homes and businesses, according to EV Connect. The credit covers up to 30 percent of EV charging equipment and installation costs. The limit is increased from $30,000 to $100,000 for businesses in designated rural and low-income areas beginning this year.
The hope is customers will buy more EVs and landlords will be motivated to offer tenants who drive an EV the best short and long-term charging station option.
California and Washington State have both adopted charger-ready building codes. Meanwhile, New York and seven other states are modifying their building codes to support the surge in EV adoption, according to the Building Owners and Managers Association (BOMA).
“I’m finding it’s completely based on tenant demand,” Mike Pestronk, CEO at Post Brothers, a Philadelphia-based Class A multifamily developer, told Commercial Observer regarding the push for landlords to add EV charging stations to their properties. “We’re in the consumer product business. We want to give people what they want. The IRA has lots of good stuff in it, but lots of it isn’t totally defined and rolled out yet.”
Between increased incentives and a competitive EV charging market, it’s expected that EV charging installation and maintenance will begin to be less expensive. CRE owners and developers have not seen this decrease yet, however.
Competition within the EV charging industry could deepen as proptech startup companies are moving into the space, Ori Tamuz, co-founder and CEO of property management software company DoorLoop, told Commercial Observer.
Mmong the proptech companies that are moving into the EV charging arena are EverCharge, which focuses on multi-family and CRE properties including a network of shared charging stations; Enel X, which has EV charging and energy management tools that include hardware, software and services for property owners and managers; and Parkable, a platform for managing marketing spaces that includes EV charging spots so CRE owners can generate revenue from unused parking spots.
While demand for EV charging stations is up, CRE owners run into the issue that installation is not one size fits all, Samuel Bordenave, head of finance and strategy of e-charging proptech company Switch, told Commercial Observer. Different properties often required a certain type of EV charger.
Landlords are also aware of the need for a diverse set of EV charger offerings, especially those with more complex buildings, according to Bordenave. For example, an office CRE owner may want to have a shared charger that employees can use throughout the day. Meanwhile, a condo building owner might need to install a charger for each tenant if they have a designated parking spot.
While CRE owners may be incentivized to install EV chargers on their properties, capacity remains a potential roadblock, Commercial Observer reports.
Jameson Hartman, vice president of proptech venture capital firm RET Ventures, noted that many CRE buildings cannot meet EV charger needs. For example, if 100 tenants in one building had an electric vehicle, that property likely would not have the power needed to charge all of those cars. RET Ventures’ strategy is to install a dedicated low-power charger that tenants could use to charge their car overnight when there is less demand on the grid structure.
Installing EV chargers could be a considerable cost for CRE owners initially, but once complete it could prove to be a profitable measure as more prospective tenants may be more attracted to a building where they can charge their EV.
“If you look at ancillary revenue, like storage lockers, amenity charges, submetering utilities, absolutely,” said Pestronk. Installing an EV charger is “an opportunity for ancillary revenue.”