THE GROWTH OF E-MOBILITY
We will now examine a number of real estate asset classes that are going to be impacted by the growth of EVs.
PETROL STATIONS
Clearly the role of the petrol/fuelling station is an area of future transition; with services impacted by ‘at home-charging’ and in due course drivers being able to benefit from ‘Vehicle to Grid’ commercial models.
Charging behaviour is likely to replicate how we charge other electronic devices that we use, e.g. phones/tablets/laptops, i.e. intermittently throughout the day and when needed. Intermittent charging alongside more diverse charging infrastructure will help alleviate range-anxiety and drive the uptake of EVs further.
As a result, the need for traditional petrol stations situated close to/within urban conurbations, will be lessened. There will no longer be the need to refuel in traditional forecourts as we currently do. Existing petrol station sites, therefore, present interesting opportunities for future residential and commercial development. This does not necessarily mean the end of forecourts, as Gridserve demonstrates with their Compact Electric Forecourts. Their latest development opened in Norwich in April 2022 and offers chargers from 7kW AC to 350kW DC. This range allows them to cater to drivers who want a quick top up during a journey as well as to EV owners who do not have access to home charging. Some fuel stations have already converted to electric forecourts, such as Shell’s in Fulham which was opened in January 2022 as an EV charging hub with nine 175kW chargers, while service stations alongside motorways are and will continue to undergo alterations to offer electric charging to accommodate longer distance travel. Major oil companies and utilities are already committing to e-mobility and sustainable business models by acquiring EV charging companies. In 2021, Shell completed the acquisition of ubitricity, a leading European provider of on-street charging for electric vehicles (EVs). Similarly, BP have purchased Chargemaster and invested into EV charging manufacturer FreeWire. EDF have acquired Pod Point, in a joint venture with L&G Capital.
In Europe, 79% of the public charging infrastructure is currently being operated by oil and gas companies or utilities.Charging speed is a major barrier to greater EV uptake. BMW and Porsche, alongside a consortium of other companies including Siemens, have created a 450kW prototype charger that can deliver a charge of up to 60 miles in only 3 mins, and it is currently being rolled out in parts of Germany.
The increased dwell-time created by EV charging also opens up new retail opportunities at motorway service stations and other locations.
More common however, are ultra-rapid and rapid chargers; with ultra-rapid charging times reaching less than 20 mins for a close to full charge, depending upon the EV model.
With EV charging technology developing at such a rapid pace it is highly likely that we will see the end of the traditional petrol station operating model in the next ten years and multiple new commercial charging hub models emerging.
THE IMPACT ON MAINSTREAM REAL ESTATE
THE WORKPLACE
Charge-points will become an increasingly important amenity in a landlord’s customer proposition, and will be vital to encouraging tenants to renew leases and attract new occupiers. This is of particular relevance to business parks where commuter accessibility by car is vital to their survival.
From an occupier perspective, workplace charging allows for greater flexibility and convenience for staff and visitors, whilst alleviating range anxiety. Responding to occupiers’ needs demonstrates a receptive and committed landlord; improving tenant-landlord relationships and therefore the customer experience.
Workplace EV charge-points will also increase in popularity as the cost and payback periods reduce. Transport for London (TfL) currently estimate an average payback period of 5-7yrs, dependent upon frequency of use and associated infrastructure costs. Savings can be made on install costs if charge-points are installed during a major refurbishment or new build project, and not retro-fitted later.
RETAIL
For assets such as retail parks and/or shopping centres, EV charge-points are a way to generate greater footfall and extend dwell-time, advantaging retail occupiers and potentially investment returns for landlords. Retail sites can experience an increase in dwell-time of up to 50% for customers charging an electric vehicle at the site. This in turn translates into average increased spending up to £80, from an average of £36 per visit, with 31 tonnes less CO2 from visitor travel, according to research by RetailCo Solutions Inc.
In the USA, ChargePoint has partnered with RetailCo, and after 9 months of the trial project dwell-times had increased to 72 mins on average (50 mins greater than the previous average) and additional retail revenue, at the trial site, amounted to $56k per annum.
RESIDENTIAL
Through an online tool launched by COPI in Sept 2019, air pollution disclosure is having an increasing impact upon residential property desirability, and therefore, in time, will impact value. As buyers are able to see the comparative air quality of the location where they are considering buying a property, this will inform buyer decision-making and drive them away from areas with poor air quality. This behaviour will in turn push residential developers to invest more heavily in EV infrastructure within new developments.
LOGISTICS AND INDUSTRIAL
Companies with large fleets, for example those in e-commerce and distribution, have a significant environmental impact and have a major challenge to reduce their vehicle-based emissions. Low-emission zones in major cities are encouraging sustainable travel, and penalising petrol and diesel vehicles.
Last-mile logistics hubs in particular are highly likely to utilise EVs. Indeed an emerging trend is for real estate developers to purchase assets that may be existing retail parks on the basis that in time these sites will be transformed into last-mile delivery hubs due to their size and location. Crucial for this model to succeed is that sufficient grid capacity is available at the site to charge the large numbers of EVs that will be required for last-mile fleets.
The trend for EVs for delivery vehicles is also being pushed forward by legislation. At the EU level CO2 reduction targets have been set for delivery vehicles.
From an occupier perspective, workplace charging allows for greater flexibility and convenience for staff and visitors, whilst alleviating range anxiety
CONCLUSION
Given the continual changes in technology, subsidies and regulatory environment, it is understandable why there is hesitancy to invest in EVs and the associated charging infrastructure. No one wants to invest at the wrong moment or choose the wrong technology.
However, the advent of the e-mobility era will not just revolutionize transportation; it will also have a major impact upon real estate and associated infrastructure.
Real estate that is not capable of implementing charging facilities at sufficient scale will become less attractive to occupiers. This will apply across multiple real estate sectors – retail, offices/workplaces, industrial and logistics, and of course fuelling stations, amongst others. The growth of e-mobility has many underlying causes - the climate emergency, lethal air pollution, e-commerce growth, technological advancement in batteries, the geo-political impact of our reliance upon oil, and many more.
The time when e-mobility could be ignored as niche and not something for the real estate sector to consider is over. Understanding the impact of e-mobility on real estate and ensuring real estate assets have a strategy that considers this trend is crucial to long-term viability and value protection.