Boosting Your Rent Roll with Commercial Solar

by | Apr 26, 2023

Calculator on solar panel

You treat your commercial property as an investment, and you want to get the most out of your money by staying up to date. If you’ve recently looked to revamp your amenities, the idea of solar has probably come across your path once or twice.

But, one of the cardinal sins of investment property ownership is spending money that doesn’t create financial gains. It has always been difficult for landlords to justify solar for multi-tenant buildings. Commercial property owners bear all the risk while tenants reap all the rewards.

Luckily, there’s a different way to bring solar to your building while creating a return that benefits everyone: renting your roof. Renting your roof for solar has a positive impact on your rent roll, offering perks for property owners and tenants alike.

How roof rentals work for solar

Although it’s not typically viewed as a rentable unit, your roof space is the perfect leasing opportunity for a solar company. It doesn’t need much to be rentable. If it’s in good shape, they’re ready to sign. Their 5-page lease agreement even looks similar to the standard tenant contract that most landlords use.

When a solar company rents your roof, they plan to create a solar system and supply power to your tenants for less than the utility. They’ll pay for everything, installing the panels, ensuring productivity, and repairing issues for the life of the system. Once it’s live, they’ll even handle enrolling tenants and billing them for their energy usage.

solar system on flat commercial roofBallasted King Energy solar system on a flat commercial roof

You can think of a solar company like any other tenant in your commercial building. Just as a cafe would sign a lease and bring in refrigerators and other appliances to run their business, a solar tenant brings in and sets up solar panels. These are tenant assets, and you’re not responsible for any part of their daily operation. While you don’t see any direct profit from the energy generated, it does have another positive impact for your bottom line.

Increased income for your building

Once signed, your monthly cash flow directly increases and your rent roll grows. Rental amounts depend on the size of the building, the energy usage of tenants, and a number of other factors. But, leases for solar companies are also usually long-term and increase with inflation, so you can always count on stable revenue for the future.

It’s like adding a new unit to your building at no extra cost. If you track your rent roll through a spreadsheet, add your roof as a line item along with details like tenant name, start and end date, and square footage. Then, your added solar revenue counts as income and factors towards the value of your building.

Plus, solar panels truly are model tenants for your property. They’re clean, quiet, and simple, and they make other tenants happy by saving them money on power bills.

More stability for your rent roll

Solar also creates a more predictable cash flow by reducing turnover and increasing satisfaction. While this doesn’t put money back into your pocket, it minimizes vacancy periods and creates more stability in your building. This leads to a more accurate rent roll over time.

With solar panels on your roof, tenants see reduced energy costs and can invest that money back into their business. These lower bills will leave them with more at the end of every month. They’ll also be more resistant to California’s price hikes, keeping them in your building longer.

Tenant handing order to customer in bakeryEnrolled tenants receive solar power for 10% less than the utility.

This lower turnover rate and increased satisfaction create more seasoned tenants. As a group, these tenants are less likely to cause issues than new ones and more likely to renew expiring leases. The more seasoned tenants that you have on your rent roll, the healthier your property looks on paper.

Plus, in the unfortunate event that a tenant leaves, a solar system can also help fill empty units faster. With a solar tenant on your roof, you can market that your building offers discounted, sustainable solar energy to eco-conscious tenants looking to save on expenses.

The impact on your investment

This information on your rent roll paints a picture of your commercial property as a high-yield investment.

From increased income to tenant stability, your building gains more financial value and freedom in the eyes of creditors and partners. These entities use your rent roll documentation to estimate the property’s performance and determine its risk level.

From there, they can put together a holistic analysis of your performance. A positive valuation of your investment’s success offers plenty of rewards. You might receive more favorable terms if you decide to refinance your building. You may also find it easier to receive an additional loan if you need to create new improvements. These items give you more working capital and greater leverage to expand your operations.

Finding a solar partner

If you don’t have a solar partner, King Energy makes the process simple and beneficial for your investment. King Energy handles the solar system end to end, paying all installation and operating costs for the program. You’ll receive consistent monthly rent for your roof space, and your tenants get access to discounted solar energy.

King Energy has built solar systems and created value at locations all over California. There’s no extra cost or complex contract required to participate, only long-term income towards your rent roll.

Contact us today to receive a proposal and rent estimate for your property.