If the future of cars is to be electric, the 2020’s will be the decade that turns the tide.
Last year, demand for electric vehicles (EVs) led to a meteoric rise in Tesla’s stock price, turning the electric vehicle pioneer from a bankruptcy candidate into the most valuable car manufacturer in the world. Domestically, over 18 million electric vehicles are expected to hit the road over the next 10 years, boosted by a notably pro-electric Biden administration.
Some may look at this growth in EV’s as a missed investment opportunity. However for those in commercial real estate, the true opportunity has just begun: the race for charging stations.
Electrifying Commercial Real Estate
While America now has 1.6 million electric vehicles, public charging stations have seriously lagged behind—only 40,000 have been registered with the U.S. Department of Energy.
This is a fraction compared to the roughly 150,000 gas stations in the U.S—and even a steeper fraction compared to the ambitious 500,000 charging station target set by the Biden administration. This has led to pent up demand, and charging infrastructure investments are already expected to exceed $13 billion over the next 5 years.
Why does this matter to commercial real estate managers? Because while charging stations ostensibly deliver power to electric vehicles, they also deliver customers to retail locations.
In other words, drivers waiting to recharge their vehicles are now captive, on-location customers—precisely what physical shopping centers have struggled to attract.
Re-Envisioning The Gas Station
The concept of up-selling drivers during refueling stops has been a tool of the convenience store industry for decades. Currently, 82% of gas stations have on-site convenience stores, generating $250 billion in revenues.
This natural synergy makes gas stations ideally positioned to enter the EV charging market. Love’s Travel Stops, a 520-outlet chain based out of Oklahoma, has already jumped on the trend, partnering with Electrify America to provide charging to several of their locations across six states.
However, others, such as gas and convenience REITs, Getty Realty (NYSE: GTY), and TravelCenters of America (NASDAQ: TA)—have been slower in their adoption. This may be in part due to concern that snacks and drinks don’t quite account for the lost differential in fuel margins. Electricity, sadly, is not as lucrative as gasoline.
However, according to Jacob Schram, a senior McKinsey advisor who witnessed Norway’s recent transition to electric vehicles, this isn’t a problem—but an opportunity.
“There’s no doubt that you will lose a hell of a lot of fuel volume,” he told convenience owners at a 2019 summit. “But what you have to consider is how do you replace that.”
A new VW ID.3 is parked in the Linden district of the city at an EV charging station. (Photo by … [+] Hauke-Christian Dittrich/picture alliance via Getty Images)
dpa/picture alliance via Getty Images
Dwell Time Is Money
One main limitation to the gas-and-convenience store model is that drivers are only refueling their vehicles for 2-3 minutes on average. That doesn’t leave much time to shop.
But for electric vehicles? The charge time is currently around 15-20 minutes, evenon the high powered fast DC Fast chargers. Not only is this an increase in charge time, but it’s also shown to translate to increases in dwell time—AKA time drivers spend doing everything other than refueling, for instance shopping. One study by electric vehicle supplier ChargePoint found that electric vehicle chargers could increase dwell time by as much as 50 minutes.
This increase in dwell time, along with the less hazardous nature of providing electricity instead of highly flammable liquids, means that charging locations can be located virtually anywhere. The Fuels Institute (a think tank funded by the convenience industry) found grocery stores, hotels, and shopping malls to be among the many types of businesses where charging ports are currently located. Of these, grocery stores (66%) and shopping malls (36%) were reported as the most desirable charging locations by potential EV customers—giving credence to the idea that drivers enjoy shopping while they charge.
All this has not been lost on commercial estate leaders. At least seven REITs including Federal Realty Investment Trust (NYSE: FRT), Washington Prime Group (NYSE: WPG), and Fulcrum Property have partnered with Electrify America to provide electric vehicle charging to hundreds of their locations. Simon Property Group, a leader in shopping malls and outlets has expanded charging to 116 of their locations in 20 states. Kroger has even joined the race, as has Walmart, installing charging stations at 120 of their locations.
“There’s definitely the commercial opportunity to capitalize on those who are already coming to your store,” explains John Eichberger, Executive Director for the Fuels Institute. “So there is a definite competitive differentiation tool there that could be leveraged.”
Yet exactly how lucrative charging stations will be for all types commercial real estate remains to be seen. For instance, while lodging is currently the most common location to find public chargers, it ranks near the bottom of the list for places where EV drivers want chargers.
Tariq Morad, General Manager at a Best Western in Northern Alberta—and an early adopter of Tesla’s supercharging initiative—says his Level 2 charger has had “absolutely no significant impact on business.”
“It was part of our green center initiative, and it was a way to support that initiative” he says on why he chose to install the charger. “We’ve had it used a dozen times in the roughly 4-5 years since we installed it.”
A possible explanation is that range anxiety makes drivers reluctant to travel with electric vehicles on lengthy road trips—such as those in remote parts of Canada. Or perhaps many travelers staying at hotels are using rental cars, with primarily gas powered fleets. Or it could be as simple as destination-based traveling will never mirror the same decision making process as a local trip to the grocery store.
Ultimately, only time will tell. However, while the exact “where” of EV charging is still being ironed out, the “if” seems almost certain. With tens of millions of electric vehicles set to hit the road in the next decade, those looking to charge up their investments, would be wise to keep an eye on commercial real estate.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
