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.
“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.