Article is courtesy of Hughes Commercial
Energy upgrades like EV charging stations and rooftop solar panels are having a moment in commercial real estate. But for owners and investors, the key question isn’t what’s trending—it’s what pencils.
In this issue, we break down the real ROI, tenant demand, and incentive landscape behind EV chargers and solar installations. Here’s what you need to know:
⚡ EV Chargers: Amenity or Asset?
Tenant Demand: EV adoption is growing fast—especially among national retailers, healthcare operators, and Class A office users looking to future-proof their locations. Many see EV chargers as a sign of modernity and ESG alignment.
ROI Reality: Without subsidies or high utilization, EV chargers alone rarely drive meaningful cash flow. Level 2 chargers may cost $3,000–$7,000 per port installed; DC fast chargers can hit $50,000+. ROI depends heavily on tenant agreements and usage levels.
Best Use Case: Treat chargers as an amenity that attracts quality tenants, not as a standalone profit center—unless you’re in high-traffic retail or hospitality where you can capture dwell time.
☀️ Solar Panels: Lower Bills, Higher Complexity
Tenant Benefit: Solar can reduce operating expenses, which boosts NOI in NNN deals where landlords control the roof. But split incentives (who pays the bill vs. who gets the savings) often complicate adoption.
ROI Factors:
Federal Investment Tax Credit (ITC): 30% credit through 2032
Accelerated Depreciation (MACRS): Accelerate cost recovery
Utility Incentives: Vary widely by state and utility
Best Use Case: Owner-occupied or gross-leased industrial/retail buildings in high-sun states like California, Texas, or Arizona. Bonus points if paired with a long-term PPA (power purchase agreement) or community solar program.
Watch the Hype
Not every energy upgrade makes financial sense. Here are a few pitfalls to avoid:
Overbuilding chargers without demand forecasting
Assuming solar adds value in leaseback deals (it depends on lease terms)
Neglecting maintenance, utility interconnection delays, and system degradation
Bottom Line
Energy upgrades can add value—but only when aligned with tenant needs, incentives, and long-term asset plans.
If you’re underwriting a deal or exploring ways to boost NOI, these upgrades deserve a second look—but don’t get swept up in the ESG buzz without doing the math.
Need help evaluating an energy upgrade in your CRE portfolio?
Let’s connect—energy is just another lever in smart real estate strategy.
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Hughes Commercial | Real Estate & Business Advisory
