Solar Energy & Commercial Real Estate 

There is a growing intersection between solar energy and commercial real estate. For landlords, the use of a solar photovoltaic array (PV) is an excellent solution for bolstering cash flow. Commercial buildings that may have substantial energy consumption costs may benefit significantly from the installation of a PV system. Consider that when a solar PV system is used, utility costs can decrease, and to have the system installed an increase in rent can also follow. It may also be feasible for the common areas’ maintenance fees to be increased as well. This is especially true when tenants value sustainability and incorporate that as a part of their business ethos. To learn more about solar energy and commercial real estate please consider connecting with the attorneys at Sunridge Legal at [email protected]

What Commercial Real Estate Owners Should Know about Solar Energy 

When a commercial real estate owner is considering the option of using solar energy to power their properties, there are many things to take into consideration. Determining how to get from point A to point B by changing from electricity to solar consumption is not the most straightforward task. This can be a very complicated process which is why commercial real estate owners should consider consulting with a commercial real estate attorney at Sunridge Legal to help them understand and protect their investments. If solar is the way a commercial property owner is leaning, then it could be worthwhile to think about the following facts related to solar energy and commercial real estate. 

Increase Income

It is important to understand that not only can the addition of solar energy boost revenue, but at the same time, it can also lower the costs of operations. Simply reducing a commercial real estate property’s energy bill by a considerable amount automatically adds to cash flow. The use of solar energy can save a commercial real estate owner as high as 40% of the costs put towards electricity.

Because each state’s costs are different, properties that exist in those with expensive energy costs may have a large annual bill. However, when one of these states also has an incentive program to switch to solar, as many do, it can make a tremendous amount of fiscal sense. According to the United States Department of Energy (DOE), using solar attracts a large market of potential tenants that accomplishes critical objectives for property owners. Essentially, the addition of solar energy can keep low vacancy rates and bring in tenants that are willing to pay more for the benefit of solar.

Longer Leases

By offering some of those energy cost savings to the tenants in return for signing longer leases, commercial property owners can keep paying leaseholders in their buildings for an extended duration. This reduces the need and challenge of having to constantly have to bring in new residents.

Tenant Benefits

States like Washington, Pennsylvania, and California have metered aggregation policies. These guidelines allow for jurisdictions to give commercial real estate owners the right to offer some of the benefits of the costs savings solar offers to each tenant in the building even when they are not directly affiliated with the solar system of the building.

Reduced Carbon Footprint

A common pledge that is made by more and more companies in the United States and across the globe is to adjust operations to reduce the carbon footprint. Solar energy is directly in the center and at the heart of accomplishing this objective. By switching to solar energy, a property can use this feature as an effective marketing strategy that may bring in and keep businesses and non-profits that are lured by clean energy initiatives.

Technology Advancement Decrease Costs

Technology continues to rapidly expand in every sector including the energy industry. The capability that various energy storage systems have these days is much improved and advanced from those of the past. Businesses living in states that have supportive policies for solar and energy storage can reap tremendous economic advantages.

Financial Incentives from the Government

The initial thought of the cost to go solar may feel overwhelming, however, if a commercial real estate business takes advantage of government incentives to do so, that jump may be financially lucrative. Through both state and federal programs, as high as 80% of those costs can be offset. Federally, the Internal Revenue Service (IRS) offers information on the Investment Tax Credit which is the primary benefit offered to commercial real estate owners to make the switch.

Determining if a Building Should Use Solar Energy

Commercial building owners may not be sure if the move to solar is right for them, and as a result, may be hesitant to make any adjustments. Pondering the following questions may help make that decision a little clearer:

  • What rebates and credits are available?
  • Is the building efficient in terms of operating costs?
  • Are established emission reduction goals currently being met?
  • Are sustainability and clean energy attractive and in demand in the property’s prime market?
  • Can the property support a solar energy system?

When a commercial building owner or manager wants to move to solar energy, they will have to consider many different factors that will affect the feasibility of the system. Some of these include:

  • Space requirements
  • Orientation of the building’s roof
  • Carports
  • Utility interconnections
  • Shading 
  • Structural issues

Speak to an Experienced Commercial Real Estate Attorney Today

Solar energy and commercial real estate can make for a very productive and financially robust partnership. However, there is much to think about and a process to go through before an overhaul in energy use can be made. The attorneys at Sunridge Legal can be reached at [email protected] for a free, no-obligation consultation.

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