By Shaun Keegan, Solar Landscape
With data centers and manufacturing facilities on the rise in the commercial real estate sector, the need for shovel-ready energy solutions is more pressing than ever.
Experts project that electricity needs from these facilities could double by 2035, underscoring the urgency for new approaches to energy sourcing.
Rooftop solar not only generates onsite energy but also offers significant revenue opportunities for commercial property owners.
Rooftop Solar is Good Business
Leasing rooftop space to a reputable solar developer presents a unique opportunity for property owners. Large commercial buildings—especially those with over 30,000 s/f of available roof space—are prime candidates for solar.
Commercial real estate owners can consider solar leases as a strategic response to market volatility. In a market characterized by softening rental prices and high vacancy rates, many owners are turning their rooftops into a source of steady income.
By leasing rooftop space, owners can generate consistent revenue regardless of tenant occupancy or onsite energy needs. Unlike traditional models that required buildings to consume all generated energy, advancements like community solar allow the energy generated to be fed back into the grid. The result? Property owners can earn lease payments without needing to utilize the energy produced.
Zero Upfront Investment
One misconception about rooftop solar is that it requires substantial upfront investment. In reality, the opposite is true. Property owners can host solar arrays with zero investment – and zero hassle.
In a third-party ownership model, solar developers finance, build, and maintain the installations. The developer pays the property owner lease payments, enhancing the property’s net operating income (NOI) without any capital outlay.
The developer also handles maintenance of these systems, removing the burden from property owners. Solar Landscape provides 24/7 monitoring and regular inspections to ensure optimal performance, allowing property owners to focus on their core businesses.
Ideal Locations
Commercial rooftops are some of the best locations for solar energy generation. They are typically not used for other purposes and are often located near urban centers where energy is most needed. This proximity streamlines energy distribution, mitigates strain on the electrical grid, and reduces the potential for construction delays associated with large-scale solar farms.
Now is the Time for Rooftop Solar
The commercial rooftop solar market is at an inflection point for building owners. Current solar programs offer lucrative incentives for early adopters, and those who delay might miss substantial financial opportunities.
Many states are also implementing building performance standards (BPS), mandating energy upgrades and potentially imposing fines for non-compliance.
As these trends gain momentum, the demand for rooftop solar installations is expected to surge, which could lower lease rates as the market becomes saturated. Industry leaders, including PGIM and Heitman, are already capitalizing on this opportunity, recognizing the profitability of leveraging solar now.
CRE’s Sustainable Future
Embracing rooftop solar is a win-win for commercial real estate owners. It not only enhances revenue through lease payments but also demonstrates a commitment to sustainability.
With the current favorable conditions for solar leasing, there has never been a better time for property owners to embrace this opportunity.
By joining the ranks of industry leaders like Principal, owners can unlock new revenue streams while contributing to a cleaner, more sustainable energy future.
Shaun Keegan is CEO and co-founder of Solar Landscape.
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