As Need For EV Infrastructure Grows, California CRE Companies Shirk State Funds

Electric cars are more popular than ever in California, and with the state's 2035 deadline for all new vehicles sold to be zero-emission, the need for infrastructure to support those cars grows starker every year.

Commercial developers have a part to play, incorporating charging infrastructure into new projects of all kinds. Even though billions of government dollars are available, many are choosing to foot the electrification bill themselves. 

State and federal funds are aimed at offsetting the costs of making a national and statewide switch to electrification. California has pledged $10B toward the transition, $900M of which will go toward expanding infrastructure for zero-emission vehicles in low-income neighborhoods. But because of the state’s shift from a budget surplus to a deficit, that amount is expected to be closer to $9B, one expert told Bisnow. 

Included in that number is the California Energy Commission’s $2.9B plan to kick-start California’s 2025 electric vehicle charging goals. That figure also includes some of the $384M in federal funding California expects to receive from the National Electric Vehicle Infrastructure Program to install charging stations throughout the state. 

The need is growing: In 2022, 345,818 zero-emission "light-duty" vehicles were sold statewide, according to the California Energy Commission. But so far, despite the immense amount of public funding available, many developers aren't interested in trying to qualify for assistance. 

A few sources Bisnow spoke with outlined a system for accessing these funds that isn’t really suited to development projects because they often pose risks — not getting an incentive that was planned on or taking too long to secure — that don’t make them very attractive to someone planning a new development. The time it takes to secure public funding can sometimes seem not worth the wait. 

“Our self-financing gives us the ability to try new things,” Skanska Commercial Development Vice President Megan Moloughney said. “If there's a tax incentive or some sort of rebate that's offered, sometimes there's — for lack of a better word — strings attached.” 

Skanska’s new 9000 Wilshire office building, which achieved LEED Platinum status, will offer future tenants 19 EV chargers with the capacity for up to 31 total in the parking garage. The developer is looking at the chargers as a perk for tenants, one of many sustainability-focused upgrades that could give it a competitive edge in a challenging office leasing environment. 

“For a lot of the tenants that we're talking to, sustainability and ESG are paramount in terms of what they're looking for, for their company,” Moloughney said. “They're going to pick something that has maybe more sustainable features over something that doesn't.” 

Skanska uses Xeal chargers, a wireless model that costs between $2K and $3K, putting the company's investment in chargers for the project between $38K and $57K.

For a smaller property owner, those costs would likely be a heavier burden. It is these owners who have the most to gain from accessing public funds, but they first have to know the money is there for them. The process has been very “applicant-driven,” said Román Partida-López, transportation equity legal counsel at The Greenlining Institute.

His organization, an Oakland-based public policy, research and advocacy nonprofit focused on undoing the long-term impacts of redlining, has been advocating a more community-driven approach that would allow neighborhoods to weigh in on where they want to see chargers and where they are most likely to be useful. In doing so, The Greenlining Institute aims to make sure that lower-income households aren’t missed by the EV funding windfall.

One way that could be addressed is by ensuring that apartment buildings are using the money available to install charging infrastructure.

“Multi-unit dwellings, for many years, we've known that there is a gap [in EV charging infrastructure],” Partida-López said. “The state has a lot more renters than homeowners, so here we have an opportunity to really demonstrate a commitment to equity by focusing on multi-unit dwellings.”

Though the prospect of accessing the funding is attractive, JLL Clean Energy and Infrastructure Advisory Vice President Andrew Linowes said the vast majority of the clients he consults end up either funding the upgrades themselves or working with a third-party company that installs chargers, makes all the necessary upgrades, and then operates and maintains the chargers. 

“I think the challenges that we're seeing in California and also just kind of writ large in the country are, how do I navigate all of this funding?” Linowes said. “They don't necessarily want to be an EV charging business. They just want to be compliant and move on.”

Because there is so much public money available, numerous companies have popped up to help take these duties off the hands of property owners. Linowes said often the impetus for a client reaching out to his team is that the client received an unsolicited proposal from a company offering to do just that. 

The sector that is most actively reaching out to him is logistics, Linowes said, likely because transportation is at the core of its business.

Industrial warehouse landlord Prologis started a business that is focused entirely on shepherding warehouse tenants’ transitions to zero-emission vehicles. Launched less than two years ago, it capitalizes on the complexities of the changes that need to be made in order to prepare a site to receive and refuel a whole new type of vehicle. 

“Designing and building charging projects is not the core business of most logistics providers, but developing and owning and operating real assets is,” Prologis Mobility Global Head Henrik Holland said. “So we're making sure that our facilities are upgraded to the point that our customers can come in with their EVs and charge there on a service basis. We sell that to our customers as a service.”

Prologis makes all the capital investments on-site but declined to share investment figures.

Holland said the costs can vary dramatically based on variables like what kinds of vehicles are being charged, like light-duty delivery vans or 18-wheeler trucks, and what challenges the site poses in terms of connecting the chargers to the electricity source. 

“I can share with you that we're very serious about this program,” Holland said. “As we look to our own zero-emissions commitments, we will make the capital investments required in our facilities to make this transition a reality for our customers.”

Despite the cost, Prologis Mobility didn't apply for any public funding to install EV infrastructure for its first two projects, though Holland said it can help with the right projects. 

“What's really important for us and for this industry to scale up these projects is that they can kind of stand on their own feet,” Holland said. “So we're really looking at this just like we do on the real estate side: These need to be sound investments on their own merit.”

CORRECTION, FEB. 9, 9:40 A.M. PT: A previous version of this story did not properly contextualize Henrik Holland's view on public funding for future EV infrastructure projects. The story has been updated.