How smart charging drivers commercial real estate portfolio values
Over the past few years, commercial real estate investors and tenants have increasingly focused on meeting goals surrounding environmental social governance (ESG). A 2017 CFA Institute survey found that 65% of investors considered ESG metrics to discover risks when making investment decisions. From 2019 to 2020, mutual fund and ETF investments in sustainable assets increased by 96%. With so much interest in ESG, 60% of commercial property owners were already publicly disclosing their ESG goals when Nareit last surveyed them in 2020. Given the SEC’s most recent proposal to have all publicly-traded REITs disclose GHG emissions in their annual filings, it is likely to climb again.
Beyond disclosure, commercial real estate investors and owners have been working to drive their carbon emissions down, lowering energy use intensity, adopting smart building technology, and installing smart EV charging to their commercial property.
Smart charging’s value to a commercial property
Commercial real estate companies are benefiting from installing smart chargers across their multifamily, hotel and office properties in four key ways:
Tenant and guest attraction
As electric vehicles become the norm, access to commercial EV charging stations will go from amenity to expectation. In that transitional period, forward-thinking companies have the opportunity to provide a competitive service to EV drivers choosing between properties that offer varying degrees of charging access. A competitive edge will be granted to those that provide faster charging, easier and more consistent access, and a better user experience on charging apps.
- Multifamily units are perhaps the lowest hanging fruit for real estate owners looking to build portfolio value. EV drivers prefer to charge at home, but those living in multifamily units currently have less access to EV chargers.
- Offices and commercial buildings, especially those in urban environments, are installing commercial charging stations. Employees are less likely to have access to home charging, so installing EV chargers gives prospects an incentive and attracts talent, which owners can use to command higher rents.
- Hotels with smart EV charging are well-positioned to draw guests with higher purchasing power. Especially for hotels in more remote locations like resort towns, access to a smart EV charging station may become the deciding factor for potential guests weighing comparably priced hotels.
Accelerated ESG goals
Smart EV charging is a simple, powerful way to speed up progress toward decarbonization goals. LEED awards one point towards certification to any new buildings that implement commercial EV charging stations in 5% of its parking spaces, or makes 10% of its parking spaces electric vehicle-ready. Existing buildings can improve the Transportation Performance portion of their LEED score by enabling tenants to use alternative fuel vehicles.
Many commercial properties with public ESG goals have already included adopting EV charging infrastructure in those goals. Even for those that don’t, EV charging stations can help meet carbon emissions goals by serving as a demand-side resource for local utilities.
Real estate owners that don’t adopt smart EV charging put their portfolios at risk in several ways:
- Falling behind their competitors;
- Missing out on favorable government and utility incentives;
- Most prominently, facing fines.
Over the past several years, EV charging infrastructure has been folded into updated municipal and state building codes, with more local governments adopting them all the time. While many of these requirements only apply to new builds, some are beginning to stretch to existing commercial buildings as well.
When installing EV charging infrastructure becomes a requirement, the terms of installation are less favorable: fines loom, timelines become enforced by the city or state, and competition for incentives and rebates increases. That can all be avoided by future-proofing your portfolio today with smart EV chargers.
Increased portfolio value
Attracting better tenants, boosting ESG performance, and mitigating portfolio risk all contribute to higher net asset value. JLL found that commercial buildings with LEED and BREAM certifications commanded a 6% rent premium and an 8% sales premium. While these certifications boost asset value, avoiding compliance fines keeps operating expenses down.
The smart EV charging advantage for commercial properties
To capitalize on the value of EV charging, commercial real estate companies need flexible, controllable charging systems. Only “smart” charging systems offer property managers IoT charging platforms like JuiceNet, which give them access to how their chargers are working in real-time, data on their performance over time, and the ability to throttle pump speeds and constrict overall energy consumption.
Not only does this simplify emissions reporting, but a smart charger like Enel X Way’s JuiceBox Pro also allows buildings to participate in demand response (DR) events, or build their chargers into pre-existing DR participation, opening up or expanding a revenue stream for the portfolio.
Retrofits vs. new builds
The vast majority of smart EV chargers will be retrofitted into pre-existing buildings, where plenty of opportunities to do so at low costs still exist. Properties that can build EV supply equipment (EVSE) into their new construction will maximize the benefits at the lowest costs.
The buildout costs will be substantially lower—San Francisco found they were 75% lower on average—during a new build. In a retrofit, finished sidewalks, roofs and walls may need to be taken down or cut and patched; panel and transformer upgrades are often required to boost electrical capacity; and the parking lot may need to be added. These challenges can be avoided if EVSE is built into the initial architecture.
The incentive landscape—How Killiam REIT installed 438 smart chargers across 50 commercial properties
Myriad government and utility incentives exist today for commercial EV infrastructure, with more under consideration. Especially in disadvantaged communities, these incentives can lower planning, design and infrastructure costs considerably, in some cases allowing commercial properties to get smart EV chargers up and running at little to no cost.
One of Canada’s largest residential landlords—Killiam Apartment REIT—tapped Natural Resources Canada's Zero Emission Vehicle Infrastructure Program (ZEVIP) for over $730,000 to help install 438 chargers across 50 properties. Their long-time focus on sustainability guided Killiam’s decision to deploy EV charging, offering excellent incentives from ZEVIP, and a full-service EV charging partner that could bundle commercial hardware, software, installation services, and energy services together.
“We are able to offer our residents easy access to cutting-edge EV charging technology while also helping to fulfill the demand for cleaner modes of transportation across the region,” said Andrew Kent, Developments Director, Killam Apartment REIT. “As part of our ESG commitments, we invest in technology that will lower our carbon footprint while also providing value across our portfolio. By optimizing energy costs and bringing value to our residents, this is exactly what these Enel X Way smart chargers allow us to do.”
With such clear value, commercial property managers that find the right EV charging partner will raise asset value and revenue while minimizing operating expenses.