Electric vehicles (EV) have been around for decades, but the industry reached a critical point in 2022. Headlines proliferated last year about EV’s moment “finally arriving” as they seemed to finally enter the mainstream in a real way. Perhaps one of the industries watching this shift from gas-powered vehicles to all-electric ones right now is commercial real estate. With sales of electric vehicles hitting a record high last year, making up 10 percent of all new cars sold, the demand for electric charging stations has soared. There’s no getting around it: electric vehicles need to be charged to work, which means buildings will need to start installing them to meet that need.
Finding the right formula
As the demand continues to grow, many owners of multifamily properties are exploring their options for installing charging stations, especially in high EV usage and demand. David Friedman is the president of Friedman Realty Group. This New Jersey-based commercial real estate firm owns and operates 27 mostly suburban, garden-style multifamily properties in the Greater Philadelphia area and parts of New Jersey. Friedman began to look into testing out charging stations at some of his properties after hearing a lot of feedback from residents and prospective residents about EVs. He and his team are exploring their options in terms of service providers and have even picked a couple of properties in locations where they believe the demand is highest to serve as a case study going forward before eventually rolling them out to the rest of their portfolio.
Friedman has done his own market research looking at competing properties and what some of the top owners and operators are doing while also getting recommendations from friends and colleagues on who they’ve used. At the moment, some of the properties they are considering for charging stations have limited parking spaces, so they are taking care to find the right balance. “We tried to find the right blend of what would be right for the ratio of apartments while not taking up too many valuable spots from people who don’t need it,” Friedman told me. “There’s no magic formula for us.” After exploring options and doing their due diligence, Friedman pulled the trigger on a provider whose company purchased everything outright and has a revenue-sharing agreement for the charging usage. “We’re not looking to make much money on this, so mostly we’re setting it to pay back the actual cost of utility plus a small increase over that charge,” he said.
Studying market demand now while also planning for what demand will be like in the future is an important balance to consider when thinking about EV accommodations. That’s been a key consideration for Chris Gray, CTO at RENU Communities, a subsidiary company of Taurus Investment Holdings. Gray’s firm focuses on sustainable retrofits at buildings across the country, including installing EV charging stations at multifamily properties. At the moment, Gray’s company is heavily focused on the Phoenix, South Florida, and New England areas in terms of EV projects and is in the planning stage for each asset type. “We go into the mindset of ‘how do we prepare for the coming wave of electric vehicles?’” Gray told me. Over the next several years, Gray and his firm expect tenant need for EV charging in multifamily properties to grow significantly. Over the next ten years, he foresees a buildup of EVs in the market that will require building owners to devise a strategy to address that expected wave of cars. One consultancy firm that works in the auto industry predicted that electric vehicles could represent one-third of the North American auto market by 2029.
Right now, Gray is planning how to install chargers in the most logical manner across the company’s properties. With properties in several markets around the country, Gray’s strategy is different based on what market demand is like and what local incentives are offered to offset the cost of infrastructure. Boston, for example, has significant incentives from local utilities that can cover more than 50 percent of the buildout cost for EV charging. While the same level of incentives may not be available in other markets, that’s beginning to change as more states start to become EV-friendly and build out charging infrastructure.
Ready, set, charge
As the number of Americans purchasing EVs has grown, so too has the number of players installing and operating EV charging stations in buildings. “There’s a tremendous number of vendors in the space,” Gray said. “It’s actually overwhelming.” There are not only tons of companies to choose from. Each company does things a little differently, so owners can decide what kind of business model they want to have and choose a vendor that fits the bill. There are options where owners can own the infrastructure and manage it themselves, others that offer hands-off approaches where the stations are owned and managed by a third party, and hybrid options that offer something in-between. “Choosing one helps narrow down the vendor software,” Gray said. “It’s very typical where we first have hardware development and very fast innovation, then the differentiator on the software side. We see it in a lot of different industries.”
One platform, for example, uses a system that cuts out the need for the Internet during charging, which would be ideal for underground parking garages that lack reliable internet connectivity. Another company sells the infrastructure, software, and connectivity protocol for the chargers, which have a useful life of between five and seven years, with a five-year warranty. The cost to install charging stations can vary widely from one area to another. In the New York City area, a typical installation could run anywhere from $2,000 to $10,000 per port, while according to NYSERDA, that range narrows to $2,000 to $5,000 elsewhere in the state. When it comes to the actual installation process, depending on what all needs to be done, it can take quite an amount of time to reach completion. If a property needs a service upgrade and a transformer, it could take more than a year, while if an owner uses the existing infrastructure, it can be deployed pretty quickly.
Whether or not your multifamily property needs extensive electrical work to accommodate EV charging, it’s a good idea to consult an electrical engineer when embarking on a strategy. You’ll need to know where the power will be drawn from to charge vehicles and understanding what the current setup is will tell you what you can do with what you currently have and what you may need to change. Choosing just how many spots to convert to a charging station is a complicated decision with split opinions. Recommended percentages range anywhere from 5 to 20 percent of all parking spaces, while some would say it’s entirely a case-by-case basis with no set-in-stone figure (given the number of factors to consider in making the decision). It’s also possible to have a few chargers installed now but have the wiring work done to add several more in the future if and when needed.
There are potential problems multifamily owners and operators can run into with charging stations. One of the biggest is the possibility of resident parking in an EV charging space and just staying there for an extended period of time. To avoid a space hog, owners should plan ahead for how to handle this kind of situation when it comes up. Solutions could entail dedicating a charger to particular parking spots and designated tenants or setting up a system to pay by each hour a car is parked so built-in penalties will naturally open up more space to other users.
For buildings that may need more infrastructure layout needed to support several pedestals, there are now software options that give operators control over how much power is spread between charging stations. If a building has four chargers, the charging energy can be balanced across all four at the same time with the equivalent energy of one charger. While it will take longer to charge each car, it will still allow more people to be charging at one time without having to pay for a costly infrastructure upgrade. “It really comes down to working on what the standard practice is for the network and how to make the best use of the infrastructure that you have,” Gray said. “It doesn’t always mean building out brand-new infrastructure.”
Fuel of the future
It’s not just residential buildings where electric charging stations are in demand. Around the country, states are investing in EV infrastructure, and cities are adding electric vehicles to their city-owned fleets. The state of Ohio announced $100 million for EV charging infrastructure across the state last fall, and New York City was recently awarded $10.1 million in federal grants to replace nearly 1,000 gas-fueled city vehicles with electric models. The grants will also go to installing 315 new EV chargers across the city. In Washington, D.C., a city lawmaker just proposed a bill that calls for adding an astounding number of new EV charging stations to commercial parking garages over the next four years. The amendment calls for upping the city’s EV charging stations from the current stock of 250 to 7,500 by 2027, a 2,900 percent increase. One startup in Houston is even looking to convert vacant buildings into luxury EV charging hubs.
The federal government has made big strides in helping further the EV movement through incentives that were included in last summer’s Inflation Reduction Act. Property owners can benefit from a federal tax credit of 30 percent of the installation cost for qualifying EV charging station installation. Looking even further ahead to the future of EVs, cars are expected to account for a much larger share of the auto market and could someday help power renewable-based electric grids. A recent study estimated that large-scale EV battery storage could help stabilize a solar- and wind-based power grid within the next 25 years or so.
It’s clear that electric vehicles have hit a turning point in the U.S. On a federal level, there has never been more investment and support for EVs and EV charging infrastructure. States are building out more EV infrastructure and offering more incentives. In California, which has 15,182 charging stations—nearly a third of all stations in the U.S.—sales of new gas-powered vehicles will be banned altogether by 2035. As more vendors continue to enter the space, owners of multifamily properties must look closely at all options available and familiarize themselves with the basics of EV charging and infrastructure. But it is especially important to gather feedback from building residents and prospective renters and to make a plan for the future because while electric vehicles may still represent a small percentage of car sales, they will continue to rise.