If you are a commercial or industrial property owner, maybe you have considered installing a solar energy system to reduce energy costs for you or your tenant. Or, maybe your tenant has approached you about investing in solar energy themselves at your facility. Whatever the case may be, Commercial property owners benefit in a unique way from solar energy installed on their facilities.
While most of our customers enjoy energy savings from solar energy, solar is not directly tied to their operation or purpose. However, for commercial property owners, solar energy directly and positively affects their mission of providing valuable space for their tenants. Property owners benefit from solar energy because it reduces property operating costs and increases rent revenues.
Improve Cash Flow from Leasing Operations
Figuring out how to make solar work with leased property may sound complicated, but it can be very straight forward. There are two methods for capturing energy savings from solar on leased property depending on who pays the utility bill:
1. Property Owner Pays Utility Bill (Full-Service Lease):
In a full-service lease where the tenant pays an all-inclusive rent payment that includes the cost of utilities, paid for by the owner, the energy savings from solar go directly to the owner. This is the simplest way install a solar energy system and can easily be done when the property is vacant, or during an active lease. Depending on the tenant and market conditions, the space may be more valuable even if no savings pass to the tenant simply because the space is powered by renewable energy, meaning potential for a more profitable lease.
2. Tenant Pays Utility Bill (any variation of a Net Lease):
If the tenant pays the utility bills, all savings from the solar energy system will flow directly to the tenant. However, this additional value afforded to the tenant should be offset by a premium lease. The additional revenue from the premium lease after solar would recover the property owner’s investment. There are different variations of this method for installing solar in leased property that involve tenant investment.
To see how you can generate more cash flow from leasing operations at your properties, please contact us at email@example.com.