"Power" Brokers: Accommodating Demand for EV Manufacturing
As demand for electric vehicles (EVs) rises in response to governmental legislation and incentives, many brokers are seeing profound changes and rapidly emerging opportunities in their markets.
For example, Bryan Gardner, SIOR, executive vice president of McIntyre Real Estate in Reno, Nev., reports that Nevada has attracted attention from Tesla, General Motors, and Ford because the state boasts vast lithium deposits. The establishment of Tesla’s 5.4-million-square-foot “Gigafactory Nevada,” where manufacturing of battery cells and ancillary products takes place, has increased the momentum.
Norm Khoury, SIOR, brokerage senior vice president at Colliers Cincinnati Industrial Services Group, finds that a surge in EV manufacturing is prompting both ground-up developments and retrofits of industrial properties along the I-75 corridor in Kentucky and Ohio. He believes that the entire Midwest may see a rebirth thanks to its burgeoning reputation as the “Battery Belt.”
Many other hotspots, such as North Texas and California’s Bay Area, are emerging. “From all our indications the EV industry is ‘ramping up,’ setting the stage for steady growth as consumer awareness and local demand sets the pace,” says David Glasscock, SIOR, senior vice president at CBRE in Dallas.
All of this is good news for industrial real estate, but some brokers temper their optimism with caution:
Chargers, Chickens, and Eggs
A dearth of charging stations represents one giant fly in the EV ointment. Consumers hesitate to purchase EVs because they lack confidence that charging will be available when they need it. At the same time, low demand discourages production of chargers and the establishment of charging stations. Ted Konigsberg, SIOR, president of Infinity Real Estate in Miami describes the situation as a chicken-and-egg scenario: “From an adoption standpoint, it really comes down to the charging stations,” he says.
Larger vehicles create even more challenges. “Companies are not purchasing electric tractor-trailers because they can’t use them for long-haul trips. That would only be possible if drivers were traversing routes with high-speed charging stations every 200 miles or so," Konigsberg points out. "The charging stations don't exist. And the time to charge one of these monsters extends far beyond a bathroom break and a snack."
Technological innovation is yielding better batteries and battery alternatives, but it is not clear how long rollouts will take. Meanwhile, complicating matters on the charging front are two different standards: Tesla uses the North American Charging Standard, but most EVs in the U.S. use the Combined Charging System, which is also the European standard. The U.S. ratios may change now that Ford and General Motors have announced that their new EVs will be compatible with the Tesla system. But for now, the dueling standards are causing hesitancy among providers and potential purchasers.
It is far better and less expensive to run conduit and allocate power supply to eventual EV charging stations during the design and construction phase versus retrofitting existing buildings.
Power and Infrastructure
Industrial sites require infrastructure to not only support the charging requirements as fleets transition from internal combustion engines to EVs, but also to accommodate both on-road (trucks, etc.) and off-road vehicles (e.g., forklifts), says Jim Hurless, managing director of electric vehicle infrastructure at CBRE in Dallas. His colleague Tim Raber, SIOR, vice president of CBRE in Charleston, S.C., adds that the facilities to build EVs require a significant amount of power — typically in the form of substations.
Power requirements have obstructed progress in EV manufacturing in the U.K., according to Andrew Smith, SIOR, partner at Carter Jonas in London. He observes: “There was not enough power even before the EV revolution started, so therefore, needing supplemental power is going to be challenging, as is the time it takes to get there.”
On-site charging for employees adds to the power requirements, especially in places like California, which is at the forefront of the movement toward electrification. “Accommodation for EV charging infrastructure will be particularly important to industrial real estate sites with a fleet of vehicles in addition to a substantial labor force,” says Gamaliel Anguiano, transit manager for the City of Santa Maria in California. (His views do not reflect positions of local elected officials.)
Steve Kapp, SIOR, executive managing director at Newmark in Oakland, Calif., advises brokers to keep these needs in mind. “When you start throwing in 30, 50, 100 electric vehicle chargers out in the parking lot, you’re going to need far more power,” he cautions. “When the truck fleet becomes electrified, that puts a much higher demand on the building’s electrical system. At least with a car you can charge it at home or perhaps at the grocery store. But the truck will likely be charged only at the industrial building where it starts and ends its day.”
Sufficiency of power solves some problems and generates new ones. For instance, Smith points out that the high amount of voltage must be managed safely.
Preparing for the Future
How can brokers prepare themselves and their clients for the expected surge in EV manufacturing when the timing of advances and adoption is so uncertain?
One logical approach is to advocate for future-proofed facilities. Tom Ross, SIOR, president of Ross Realty Commercial in Arroyo Grande, Calif., suggests designing and building for not only what’s needed today, but also for an ever-changing competitor environment. Geoffrey Kasselman, SIOR, CEO of Op2mize Energy, LLC in Chicago concurs: “It is far better and less expensive to run conduit and allocate power supply to eventual EV charging stations during the design and construction phase versus retrofitting existing buildings.”
Brokers should also make concerted efforts to stay on top of new developments in the market, difficult though this may be. “Changes are happening monthly in the EV arena,” Glasscock remarks. Kasselman encourages brokers to familiarize themselves with the various EV charging station models for both cars and trucks and know who the vetted players are and their respective value propositions.
Ross and Konigsberg keep a close eye on competitive technologies, like hydrogen and biofuel, which could create disruption. There are trade-offs among various technologies, Ross stresses, recommending that “all information, good or bad, should be shared, discussed and considered.”
In conclusion, flexibility and awareness of evolving technologies are especially critical for brokers navigating the EV landscape. “It’s just completely transformative to the way we do business,” Kapp states. “And everything needs to be rethought; everything.”
This article was sponsored by the SIOR Foundation - Promoting and sponsoring initiatives that educate, enhance, and expand the commercial real estate community. The SIOR Foundation is a 501(c)(3) not-forprofit organization. All contributions are tax deductible to the extent of the law.
- Bryan Gardner, SIOR
- David Glasscock, SIOR
- Steve Kapp, SIOR
- Geoffrey Kasselman, SIOR,
- Norm Khoury, SIOR
- Ted Konigsberg, SIOR
- Tim Raber, SIOR
- Tom Ross, SIOR
- Andrew Smith, SIOR