EV Charging At Commercial Properties Gets Federal Jolt
New incentives and rising demand are driving commercial real estate owners to come up with new ways to add electric vehicle (EV) charging stations to their properties faster.
Plug-n-play solutions in particular are in higher demand, according to proptech firms in the field. But it’s still too early to tell how much value EV charging infrastructure actually adds to properties.
The market for electric vehicles has grown rapidly in recent years, and that’s only expected to continue. Electric car sales in the United States increased from a mere 0.2 percent of total car sales in 2011 to 4.6 percent in 2021, according to the U.S. Bureau of Labor Statistics.
Along with increased tax credits for buyers of new and used EVs, the federal Inflation Reduction Act (IRA) passed in 2022 restores expired tax credits for installing EV chargers in homes and businesses, according to EV Connect. The credit is good for up to 30 percent of the costs of EV charging equipment and installation. For businesses in designated rural and low-income areas, the limit is expanded from $30,000 to $100,000 per installation beginning in 2023.
The hoped-for result is that consumers will purchase more EVs, while landlords will be further incentivized to provide EV-owning tenants with the best short- and long-term charging solutions.
California and Washington State have already adopted “charger-ready” building codes, while New York and seven other states are in the process of modifying building codes to support increased electric vehicle adoption, according to the Building Owners and Managers Association (BOMA).
“I’m finding it’s completely based on tenant demand,” said Mike Pestronk, CEO at Post Brothers, a Philadelphia-based Class A multifamily developer, of 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.”
Post Brothers has been developing multifamily properties for the last 15 years, and has included EV charging stations in their facilities since 2012, said Pestronk. The company focused on sustainability from the start, including having built the first LEED-certified high-rise in Philadelphia and adding wind-generated energy to their properties over the last 10 years, he added.
“We’re developing projects in Downtown Philadelphia that are close to halfway complete,” said Pestronk. “It will deliver its first apartments in the first quarter of next year and will have 48 Level 2 charging stations, which is the most that we’ve ever done. It also has the capacity within the electrical gear to go up to one for every [parking] spot if in the future we see that demand increase, which we think we will.”
The cost of EV charging installation and maintenance should come down as a result of greater incentives and competition among providers, but owners and developers aren’t necessarily seeing that yet.
“There’s a ton of new entrants in the market,” Pestronk said of EV charging providers. “There’s been some challenges with compatibility. Tesla’s were very big early on, but Tesla chargers weren’t compatible with others. When we first started offering them we were putting in Tesla and CCS [combined charging system] chargers.”
At the start, so few residents were using the EV charging spots that Post Brothers didn’t bother to charge them for the electricity costs, offering them as a luxury amenity, said Pestronk. Since then, the landlord has been using ChargePoint EV chargers, which are “definitely cheaper than they were several years ago. You definitely see that price going down based on all the competition they now have that they didn’t have just two years ago.”
In fact, a number of proptech startups have entered the commercial real estate EV charging sector, according to Ori Tamuz, co-founder and CEO of property management software company DoorLoop.
Such proptech companies include EverCharge, which focuses on multifamily and commercial properties, including a network of shared charging stations, smart energy management, and mobile app-based user authentication; Enel X, whose EV charging and energy management tools include hardware, software and services for property owners and managers; the aforementioned ChargePoint, which offers networked charging stations, mobile app-based payment and management, and data analytics tools for property owners; and Parkable, a platform for managing parking spaces, including EV charging spots that allow property owners to monetize unused parking spots and track usage data.
One issue with installing EV charging stations is that one size does not fit all, said Samuel Bordenave, head of finance and strategy at Swtch, an e-charging proptech company.
Swtch has seen demand for its services grow at an “exponential pace compared to 2021,” said Bordenave.
“In 2022, we’ve roughly tripled our deployments from just under 2,000 chargers. Now, we’re close to 6,000.”
The challenge is to fit the right level of EV charger to the property type, he said.
“There’s really a need for specific solutions for these buildings to help deploy any charging,” Bordenave said. “It’s relatively easy to install a charger in your home, if you have a single-family home with a garage. It is much more complicated to do so in an apartment building or an office building for a variety of reasons, perhaps the biggest of which is the fact that those buildings are often pretty old.”
The need for various types of EV chargers used in different locations is evident to landlords of more complex properties, said Bordenave.
“There is a need for flexibility in terms of the use case,” he said. “Certain buildings will want to have dedicated chargers for their drivers. For instance, in a condo building, they might want to have one charger for each tenant that has an EV, because they each have their own parking spot. But in an office building, you might be more interested in having a shared charger that different employees can use at different times of the day. So you need to have a software that can handle both.”
As usage varies across different building types, Bordenave explained, chargers range in output from Level 1, the slowest and comparable to an electrical outlet in a home, to Level 2 for overnight charging, and to Level 3, the fastest, for on-the-go charging on the highway or if the EV driver is stopping for less than a few hours.
Jameson Hartman, vice president at RET Ventures, a real estate technology venture capital firm, said that EV charging station models have become a crowded space since he began studying it in 2021.
“We have about 45 institutional owner operators of multifamily and single-family residential real estate,” among RET’s limited partners, said Hartman. “That’s a big consortium of institutional knowledge, and in Q4 2021, EV charging was coming up more and more. The group got together and said, ‘Hey, what should we be doing here? Who should we be partnering with? What solutions exist?’ And so we brought that group together to explore potential partnerships and strategies.”
Having studied from 30 to 50 EV charging companies, the issue with the limited partners was that, although demand for such a service is growing rapidly, it is still too early to determine how much installations increase property values, Hartman said.
“The big pain points that they were feeling were, one, infrastructure capacity,” Hartman said. “A lot of these existing buildings just don’t have the capacities to meet [EV charger] needs. If you have 100 residents and tomorrow they all have electric vehicles, your buildings are not going to be able to serve the power that you know is needed to charge those cars with the high-power chargers that a lot of companies are putting in today. So the strategy we figured out that was the most scalable and affordable was to put in a dedicated low-power charger where residents could charge overnight when there’s less demand on the grid infrastructure.”
In November 2022, RET Ventures invested $2 million in Plugzio, a scalable EV charging platform that provides Level 1 and Level 2 charging capabilities.
Doorloop’s Tamuz does, in fact, see a difference in property values due to EV charging stations. He says that there is evidence that electric vehicles and EV charging stations are significantly impacting real estate in terms of property values, spurring higher rental and resale values. He quoted a U.S. Department of Energy study that found homes with EV charging stations had a 1.5 percent to 3.6 percent higher resale value than comparable homes without EV charging.
“Offering EV charging stations in multifamily and commercial properties can be a competitive advantage in attracting tenants and customers, especially in areas with high EV adoption,” Tamuz added.
Post Brothers’ Pestronk was similarly bullish about the value of EV charging stations for landlords.
“If you look at ancillary revenue, like storage lockers, amenity charges, submetering utilities, absolutely,” said Pestronk. “It’s an opportunity for ancillary revenue.”
Source: Commercial Observer