As autumn gets underway, commercial real estate owners have a prime opportunity to install solar energy systems. Doing so can notably increase the value of your property asset, leading to higher rents, improved marketability, and greater investment returns when you decide to sell.
According to a detailed study by the Lawrence Berkeley National Laboratory, properties with solar PV installations sell for around 4.1% more than comparable non-solar properties. Although the data is more limited, similar premium valuations have been shown for commercial properties as well.
In fact, installing solar can boost commercial building value in multiple ways:
Lower Operating Expenses
One of the biggest benefits of commercial solar is the dramatic reduction in your monthly electricity bills. In many cases, going solar enables businesses to reach near-zero net energy usage. By generating your own clean power, you'll slash operating expenses and improve property income. These savings also make commercial spaces more appealing to tenants.
Higher rental income With solar lowering utility costs, building owners can charge higher rents since tenants are willing to pay more for spaces with minimal electricity expenses. By passing along a portion of your energy savings as higher rents, solar directly translates to improved NOI and cash flow. This extra income can help offset the upfront costs of installation.
Increased Appraised Value
Commercial property appraisers account for the income potential and future cost savings provided by solar. For income-generating commercial real estate, this directly raises the appraised valuation. Upon installation, you may see your property value boosted by $2 to $3 per watt of solar capacity added.
Investor Appeal
In today's market, commercial buildings with solar systems in place are far more attractive to investors and buyers. The lower overhead, renewable energy generation, and future utility cost offsets give solared properties an edge. Solar is increasingly seen as a marker of higher property quality and management.
Decades of Future Savings
Not only do solar panels reduce electric bills from day one, they can keep producing renewable energy for 25 years or longer. This future income potential is quantified in appraisals. So the value added is not just short-term but persists over decades.
Added Revenue from Leasing
Building owners can bring in added income by leasing out unused roof or ground space to solar developers. Entering a power purchase agreement or solar lease provides regular payments over a 20+ year contract.
Enhanced Sustainability
Commercial solar supports ESG goals by reducing your property's carbon footprint. For today's environmentally conscious tenants and investors, sustainability improvements make your asset more desirable. This 'green premium' can translate directly to higher market valuations.
Depreciation Tax Benefits
The federal tax code allows commercial solar owners to depreciate their systems over a 5-year timeframe. This accelerated depreciation generates substantial tax deductions that can enhance property investment returns.
Capitalize on Tax Credits Now
The current 26% federal solar investment tax credit is scheduled to phase down after 2023. To maximize your tax credit savings, install your commercial system before the credit drops to 22% in 2024.
Fall Prime Season for Installation
The milder weather and shorter days of fall make for ideal solar installation conditions. Complete your project now to start benefiting as the winter heating season ramps up.
Solar panels can keep producing emissions-free power for 30 years or more while enhancing value the entire time. Contact our solar experts to assess options for your commercial buildings. With the right system design, you can start reaping the property value benefits immediately.
Conclusion
The financial and sustainability benefits of installing commercial solar are clear. With federal tax credits still at 26% for systems placed in service this year, now is the time to go solar and boost your property value. Contact us at tad@GAINrenewables.com today to get started with commercial solar. Our team will review your commercial building's solar potential and provide a customized plan to maximize your return on investment. Go solar this season and start reaping rewards like increased property value, lower expenses, added revenue, and enhanced sustainability.
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