3 Ways Solar Energy Can Boost Your Commercial Real Estate Cash Flow

solar energy real estate

The most obvious benefit of installing solar energy on commercial real estate are the environmental impacts. By dramatically reducing a property’s carbon footprint using solar, owners get to do their part to help preserve our fragile environment.

Fortunately, there are real fiscal benefits as well. In fact, investing in solar can help boost your own commercial real estate cash flow in a wide range of different ways, all of which are worth a closer look. 

1. Full Service Leases Become More Viable

Solar energy can boost your commercial real estate cash flow in a big way if you participate in full service leases – or pay utilities on behalf of your tenants.This is a common situation in certain types of commercial environments.

With solar, this means that all energy savings from the panels themselves go directly to the owner – meaning you. It then becomes more enticing for tenants to rent the property in the first place, thus helping to fill vacancies as quickly as possible. 

2. Net Leases Become More Attractive to Tenants

On the other hand, if you choose to have tenants pay utility bills, solar panels can still help improve your real estate cash flow. The panels naturally help the tenant save money every month, making the property more affordable despite the overall amount you’re charging for rent.

“High energy costs are a key consideration for everyone. People are trying to address inflation-driven high energy costs, and solar offers a solution.” says James Rector,  Director of Solar Lending at Sunwest Bank. 

This again makes someone more likely to rent your property as opposed to someone else’s, which helps to fill vacancies and keep money coming into your portfolio as often as possible. It also helps to further separate your commercial real estate from every other unit on the market that doesn’t offer such savings.

3. Solar Panels Increase the Value of a Property

Finally, solar energy can boost your commercial real estate cash flow by significantly increasing the overall value of the property in question.

This, coupled with the obvious environmental benefits, create a perfect storm in the best possible way. 

In the end, solar panels are absolutely the way of the future; in fact, some states, such as California, have implemented policies that require solar for all new construction.  But even for those who aren’t required to make the shift, investing in solar can be a smart financial decision. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.