Sparking Change

The age of the electric vehicle is upon us—and commercial real estate will never be quite the same.

The declaration of EV supremacy might sound like a bold statement, given that EVs represented not quite 6% of new vehicle registrations in 2022. But consider the growth: EV sales were barely 3% the year before.

And that growth stands to be supercharged with a plan, announced in April by the U.S. Environmental Protection Agency, that calls for two-thirds of passenger cars and a quarter of heavy trucks to be all-electric by 2032. Consider, too, that global oil behemoth Shell at the end of March purchased Volta, one of the largest networks of privately operated EV charging stations in North America and Europe, declaring that it sees the coming of a post-carbon fueling future.

It’s the vehicle-charging aspect of the EV revolution that promises to drive the most change for commercial real estate. The transition affects all manner of property types and their clients: office leaseholders looking to provide chargers to employees, industrial operations needing to fuel an electrified delivery fleet, retail centers desiring to attract and hold customers for a charging session, and multifamily properties providing an amenity-turned-necessity for tenants.

Deana Haynes

“Those who are making decisions about leases … are making decisions around access to EV charging,” says Deana Haynes, director of commercial real estate for ChargePoint, a charging infrastructure provider. “It’s sort of like how an elevator is required for an office building: EV charging will just be part of the deal.” Because charging can be integrated into almost any parking spot, it’s sparking a change more fundamental and transformative than merely converting gas stations into electron delivery stations, Haynes notes. “EV drivers don’t drive to a place to get gas; they fuel up where they’re going. The transportation industry and the real estate industry are going through a fundamental shift in how they interact.”

Chicken, Meet Egg

Ambitious goals for the growth of EVs will depend to a large degree on the ubiquity of charging, industry watchers say. People contemplating the purchase of an all-electric car often are dissuaded by “range anxiety.” Even if they have a home with an overnight charging spot— and many people don’t—they worry about where they’ll fuel up when they get low, or how they’ll make long trips that exceed a single battery charge.

In recognition of that last concern, and to ensure that electrified freight trucks can make a cross-country trek, the U.S. Congress and the Biden administration created the National Electric Vehicle Infrastructure Program in the 2021 Infrastructure Investment and Jobs Act. The program provides $5 billion, distributed to states by formula, to develop a network of fast-charging stations along the nation’s highways. Direct-current fast chargers are designed to fill most EV batteries to 80% charge in 20 to 40 minutes, as opposed to the more common Level 2 chargers operating on 240-volt AC power—akin to a clothes dryer plug—which are designed for overnight charging or topping off. (Level 1 is standard household current of 120 volts.)

Typical EV owners, though, rack up most of their miles within urbanized areas. In recognition of the need to promote a consistent network of standardized chargers in cities and towns, Congress also provided $2.5 billion in competitive grants to local governments and public-private partnerships looking to fill charging gaps. Applications for Charging and Fueling Infrastructure grants opened in March, with a requirement that half of the winning proposals have private-sector partners; 50% also goes to projects within rural areas, low- and moderate-income neighborhoods, and communities with a low ratio of private parking spaces.

Standardizing and Universalizing Charging

Today, the lion’s share of EV owners live in stand-alone houses with driveways or garages and do most of their charging at home overnight, says Vanessa Warheit, senior program adviser at Plug In America, a national nonprofit that promotes access to vehicle charging. But not all houses are built with an electric panel that can accommodate charging, and most multifamily and commercial properties lack EV-charging capability. That will have to change if we expect EVs to replace internal combustion engines, Warheit says. And that in turn will require a standardized building code and local or state requirements for charging capability. “Building codes are super, super important for EV charging because the cost of retrofitting is orders of magnitude higher than installation at construction,” she says. Most localities take their guidance from the International Code Council, whose International Energy Conservation Code is being updated to call for EV-ready parking spaces that have chargers and EV-capable spaces with the conduit and power supply to install a charger at a future date.

Code requirements for multifamily construction will be especially critical, Warheit says, because they are the least likely to get the infrastructure otherwise. “For multifamily property owners, EV charging can be a huge pain,” she says. “You either have to charge your tenants more because you have a commercial meter, or you might need a third party to manage the charging infrastructure, and they take a cut.

“This isn’t fair to renters because they end up paying more for lesser service. They spend their time hunting for charging spaces, and they have to worry whether they can get to work in the morning.”

Building codes are super, super important for EV charging because the cost of retrofitting is orders of magnitude higher than installation at construction.

People in the commercial real estate world would do themselves a service by learning some of the ins and outs of charging infrastructure, its requirements and costs, says Tanner Mason, managing broker of Benchmark Commercial Real Estate in Denver. “Most property owners I talk with know that EVs are coming, but they don’t know about things like level 2 or 3 charging, unless they have an EV themselves,” said Mason, who like Bornhoft is playing matchmaker for Bluedot.

Tanner Mason

“If people are in my business and want to go find locations, there a few things to think about,” Mason adds. “What does work is density and the possibility for a quick in and out. What doesn’t work is being tucked back out of sight and away from the beaten path. You also need to have knowledge about the availability of power. Being next to a highway does not mean it’s easy to build it in terms of access to the grid. It’s easiest in an existing parking lot with active use, but it has to be an inviting area with things to do.” And be open to new and creative ideas, he says, citing as example his recent work with a property owner near Denver International Airport who was creating a “privately developed cellphone waiting lot” where those waiting for a charge will be able to take advantage of an airplane viewing deck while enjoying snacks and beverages.

“You might not be in a Denver or a West Coast area with a lot of EVs already, but it’s not too early to get into this,” Mason says. “It’s coming on fast.”