Charge Up Your Commercial Real Estate Site for the Coming EV Revolution

Jose Correa thinks that you, a commercial real estate professional, should prepare for the electric vehicle revolution now. As in today. Correa is not a politician, and he’s not an EV salesperson. He’s an engineer who works on land development.

“I won’t tell you that if you spend X amount of money on new charging infrastructure today, you’re going to make your money back five years from now,” Correa, a civil engineer at Kimley-Horn, told an audience of industry professionals at NAIOP CRE Converge in Miami last month. “What I can say is that there are a number of heavy-hitters who are investing millions of dollars into the electric vehicle market right now. We’ve been seeing a large increase in that trend in the last three to five years … and we’re definitely going to see more of it.”

It may be difficult to see what's accelerating demand though, Correa conceded. “It’s kind of a chicken or egg dilemma.” The biggest limitation to people owning and operating electric vehicles is “range anxiety” — or concern about the potential distance between charging stations and whether the vehicle will run out of juice in between them. “So do we first need the charging network to be established enough so that there’s no anxiety for [drivers], or do we need the number of electric vehicle owners on the streets to be large enough to justify the investment in infrastructure to get us there?”

The answer doesn’t really matter, he continued, because both of those forces are inching closer to each other at a rapid pace. On one end, just about every major automobile brand in the world has an EV on the market or under development. “It’s not just Tesla anymore," he said. "It seems like every week a manufacturer announces that they too will have a new electric model in the next two or three years.” Rolls-Royce, for example, announced that same week that every vehicle it produces will be electric by the end of the decade.

Meanwhile, “e-commerce companies have pretty lofty carbon emissions goals and the vast majority of them are looking into fleet electrification across the board,” Correa added. “That equates to thousands and thousands of chargers across the country. And that's not even mentioning EV charger providers that are expanding their networks to support people who want to be able to travel from city to city or from state to state.”

In between the two extremes of a rarely driven luxury car and a fleet of high-traffic delivery vehicles, he said, is where the biggest implications for commercial real estate industry come into play.

"An EV driver choosing between two shopping malls or grocery stores will almost always go to the location that provides EV chargers.

Jose Correa, Kimley-Horn

In sum, there are three significant tiers of EV charging scenarios, he noted.

Household. Think a charger in the driveway of a "single-family residence that owns an electric vehicle and wants to plug it in, go to sleep and wake up with it fully charged,” Correa said. “It involves a pretty inexpensive, pretty simple installation with very low demand [from] the grid.”

Heavy­-duty. To handle a large number of electric vehicles coming and going, such as with a distribution fleet, “you're looking at stations with a high-speed charge time of, depending on the manufacturer, around an hour or less,” he explained. “You're also looking at 10 times the cost, and a lot of that stems from coordinating with the utility provider to get the additional infrastructure needed, along with additional pieces of equipment, and a sacrifice of some space on your site plan.”

Handy. To support the burgeoning first category of household use, landlords of business properties are increasingly providing charging stations for their end-users. Offices, parking garage operations or retail locations will install stations as a practical amenity so that their employees or customers can charge their vehicles while parked on-site for a few hours of the day.

“A pretty good argument that I hear often is that, if you're an electric vehicle owner on a road trip and you're looking for a hotel, you're almost forced to go to one with an electric vehicle charger because you want to be able to get there, stay the night and get going in the morning without having to make another stop somewhere to charge up.”

The same argument can be made for a shopping center, Correa continued. An EV driver choosing between two shopping malls or grocery stores, for example, will almost always go to the location that provides EV chargers. “Drivers want to be able to go about their day and charge their vehicle while they're shopping or while eating at a restaurant with their families.”

There’s also wide array of businesses charging drivers to use the stall or leveraging the stations to generate revenue through advertising, he said.

“That’s typically where that value is added from a tenant perspective,” he continued. So much so that some retail operators — big box locations, for example — will even install a few of the heavy-duty, high-speed chargers. The business operators are supporting customers who are demanding this convenience, and they are getting something out of it, too.

But in places like offices, where people often spend more than a few hours a day, the heavy-duty charging stations aren’t necessary; any charging capacity becomes just another incentive and differentiator to get employees to the workplace.

But either way, “it's not as simple as taking an electric vehicle charging station from the shop and putting it in the ground and hoping it all works,” Correa cautioned. “There's quite a bit of coordination of time and money spent … and there’s a lot of ambiguity in cost and schedule.”

The best way to mitigate this, he said, is to tackle it early.

Correa, who specializes in planning, designing and getting permits for EV infrastructure such as charging stations for both speculative and build-to-suit commercial and industrial development projects across the country, stressed that the time to have that conversation is now.

“If you can let your utility provider know five to 10 years in advance that you want to build 50 charging stations over the course of the next five years and then an additional 50 per year — that conversation is much easier than one where you show up and say, ‘I need 500 charging stations tomorrow.’”

That’s partly because retrofits are a lot more expensive and time-intensive the further along you are in a development cycle. “You’re looking at a pavement rehab alone, for example, that could take months for larger projects.”

Then you have the question of whether the local grid even has capacity for the electrical demand that you want to implement, he noted.

"And this is true for office, retail, commercial and industrial properties across the board; if you have a tenant that wants electric vehicle chargers, whether it’s five or 500, you're able to mitigate a lot of the back-end cost if you address it early.”

The EV world calls this “EV readiness,” he said, which could mean preparing and sometimes paying for the infrastructure before you even need it. Correa, who is based in Dallas, said that while it’s more common now to see EV charging stations added retroactively based on current tenant demand, he’s seeing it more in speculative development projects as well. “It requires a bit of trust in the numbers,” he said. But it’s worth asking whether if, by providing electric vehicle charging at a development without a specific tenant in mind, you could differentiate yourself over a competitor who didn’t spend that extra money.

In some cases it’s not even a question, but a requirement. “Municipalities across the country are now requiring a certain percentage of parking to be provided with electric vehicle chargers and another percentage to be ready,” he said. “It’s starting in some of the more progressive cities throughout the country, but it’s spreading. Even in Texas — especially in North Texas — we are having a bunch of conversations with the local council governments about what it would look like to have electric vehicle code implemented on a large scale.”

It’s going to take some trial and error to see what sticks, Correa said. “You could try it first in Miami or in Denver, or [some other particular market] and see how it goes. But nobody wants to be the last one,” he concluded. “At some point, as a company you have to pull the trigger and say, ‘we’re going to trust the trend and invest in the infrastructure.'”