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Multifamily developers in California are now required to incorporate design plans to meet the future demands of a 100% electric vehicle adoption rate. Recent updates to the CALGreen Building Standards Code are now in effect for 2023 and have increased mandatory electric vehicle charging requirements for new construction. Under the code, any newly proposed multifamily project must meet the state minimums requiring 10% of the total number of parking spaces to be 'EV Capable' and 25% of the spaces to be 'EV Ready.’
As more people continue to purchase electric vehicles, these mandatory building codes will continue to change. ‘EV Capable’ requires a project to develop infrastructure capable of supporting EV charging equipment. Likewise, 'EV Ready' requires the project must have an energized electrical distribution system installed at the time of construction that can support installing future EV charging stations. Unlike most items typically required by building codes, installing EV charging stations allow property owners to develop a new revenue stream and provide a positive return on the investment if done correctly. Deploying charging stations is also less expensive if the property is newly developed and the infrastructure is properly planned early in the design phase. However, the real problem is what to do with the millions of existing multifamily properties.
According to NMHC, California had over 3 million apartment units in 2021. Based on the average number of parking spaces per unit and occupancy rate, more than 4.2 million vehicles are currently parked on multifamily properties in California. Traditionally, multifamily properties were developed without taking EV charging stations into consideration. Plenty of existing properties capable of hosting a few charging stations, but not enough to meet the future demand. Additionally, a vast majority of older properties cannot install a single charging station with their current electrical infrastructure. Older properties can cost hundreds of thousands of dollars to upgrade their infrastructure because they often have limited to no additional electrical capacity to supply electricity for EV charging stations.
Until adopted building codes require all new developments to satisfy the future EV charging infrastructure demand, developers will continue to build projects with functional obsolescence costing future owners and investors millions of dollars to cure. The biggest impediment to widespread charging infrastructure availability on multifamily is cost. The costs associated with EV charging infrastructure include the charging equipment itself, operation and maintenance, and installation costs to get adequate power to the charging station sites. However, the benefits of installing charging stations on your property outweigh the initial costs. Attracting or retaining just one resident justifies having charging stations available for your residents to use. Renters have also demonstrated a willingness to pay a premium over the cost of electricity generating additional income for the property owner. Although the initial costs may seem intimidating, the inability to match the growth in charging infrastructure with the number of residents interested in owning an EV will negatively impact investor returns.
As the industry is still in its infancy, most architectural and consulting engineering firms that developers traditionally look to for support do not possess the knowledge and experience to help address these issues. It’s advised to partner with an outside firm with background knowledge in EV charging and commercial real estate. One common mistake is relying on a manufacturer’s knowledge because they generally lack a background in the multifamily industry and their main objective is to sell as many stations as possible. Refuel EV Solutions combines EV charging with real estate expertise. REVS works with commercial real estate owners, developers, and managers to provide EV charging solutions for their properties and residents. REVS offers pre-development consulting, management, installation, and ownership services tailored to a single multifamily property or a portfolio-level need.
Fortunately, multifamily property owners are beginning to receive more assistance in grants and rebates for EV charging. There are various financial incentives that early adopters can apply for through Federal, State, Local funding programs as well as utility providers. You can apply to see if your property is eligible for these incentives to help alleviate the cost of installation. Consumer preferences and major automobile manufacturers are also working in favor of EV adoption. For example, General Motors aims to have an all-electric model lineup by 2035. Additionally, according to Multifamily Executive Magazine, more than 58% of renters are willing to pay more to live in a community that has EV charging stations. Soon, EV charging will provide an accretive new revenue stream that can be underwritten into the property level pro forma returns, offsetting the cost of the up-front infrastructure.