I.CON West 2025, an annual gathering for industrial real estate professionals, revealed a stark reality: energy strategy is now a central concern for commercial property success. This year’s conference in LA focused heavily on power supply constraints, regulatory changes, and the increasing importance of distributed energy solutions.
The King Energy team attended the event to gain insights into the evolving needs of property owners and better understand the energy challenges they face. The underlying pressure came across clearly: intensifying power shortages, infrastructure limitations, and tenant demands for sustainability all require some kind of distributed energy solution.
Commercial property owners can no longer treat energy as an afterthought. The path forward requires a strategic approach that balances operational needs, regulatory compliance, and financial performance, making commercial solar the practical answer to these converging challenges.
Power Demand Is Outpacing Supply
A consistent message echoed across multiple sessions: the United States faces a growing power shortage that threatens to constrain commercial development. Manufacturing is ramping up nationwide, driven by reshoring initiatives and supply chain restructuring, yet energy infrastructure cannot keep pace with demand.
This age-old challenge is further intensified by the rise of new technology, namely artificial intelligence and its supporting infrastructure. Data centers require extreme amounts of power, with a single, one-gigawatt peak demand data center campus consuming electricity equivalent to the annual energy needs of 1.8 million people.Â
With U.S. data center energy use set to quadruple by 2030 and warehouse construction surging due to new legislation, the US faces development disruption. Utilities in many regions are already struggling to meet these escalating energy demands, creating potential bottlenecks for new commercial projects.
In this constrained environment, onsite generation through commercial solar has become a critical solution for owners and developers. By generating power directly at commercial properties, these systems reduce grid dependency, unlock new energy storage solutions, and generate revenue for owners under the right financial model.
Many REITs are turning to roof rent agreements to meet this power demand, generating solar and revenue for their property. These solutions provide solar at no cost, transforming unused space into an income-generating asset without capital investment. Unlike other arrangements like PPAs or bank financing, roof rent models increase Net Operating Income and property value while supporting broader energy resilience to meet the national power demand.
California Remains a Hub for Industrial Growth
A central theme was that Southern California, despite market challenges, continues to serve as the primary hub for industrial space and a critical corridor for imports. The region’s strategic location, extensive rail and trucking infrastructure, and cold storage solutions ensure its ongoing importance to national supply chains.
However, California’s energy regulatory landscape creates complexity for the region’s property owners. Assembly Bill 98 and local mandates are accelerating solar adoption through both incentives and requirements. Title 24 regulations now mandate solar installations on new commercial construction above certain square footages, making early planning essential for compliance.
These dual pressures, high demand for space and difficult environmental requirements, create real challenges for commercial property owners operating in California. Rising energy costs further complicate the equation, squeezing margins and making operational efficiency more critical than ever.
Commercial solar offers a practical solution to these pressures in Southern California and beyond. By generating onsite power, these systems reduce operating expenses for tenants while empowering new developments to meet regulatory requirements. For property owners developing new projects, incorporating solar early in the planning process ensures Title 24 compliance while creating additional value through roof rent income.
Infrastructure Challenges Require Distributed Solutions
Conference discussions repeatedly highlighted the fragility of America’s aging power grid. Utility-scale transmission projects face years-long delays, making reliable energy access increasingly uncertain for commercial properties. In fact, NERC forecasts energy shortfalls in more than 50% of U.S. regions by 2034 due to retiring generation capacity and peak demand growth.
This infrastructure reality creates particular challenges for energy-intensive facilities like data centers, cold storage facilities, and manufacturing operations. Multiple sessions focused on how power availability has become a determining factor in site selection, sometimes overriding traditional considerations like transportation access or labor costs.
On-site generation through commercial solar addresses these challenges by providing stable, predictable power without relying on grid upgrades. When combined with battery storage, these systems deliver energy resilience that protects operations from increasingly common outages and price spikes.
Distributed energy solutions prove especially valuable in high-demand facilities. Data centers can supplement their primary power with solar to reduce overall costs, while cold storage facilities benefit from the reliability of onsite generation and storage during critical periods. For commercial property owners, these capabilities translate into enhanced tenant satisfaction and reduced turnover.
Where We Go From Here
The overarching message from I.CON West was clear: commercial real estate professionals can no longer afford to treat energy as a secondary consideration. The industry faces unprecedented pressure from multiple directions, and tenant demands, grid constraints, and regulatory requirements all require proactive energy strategies.
Forward-thinking property owners are responding by integrating rooftop solar as a standard feature across their portfolios. This approach delivers multiple benefits: increased NOI through roof rent, enhanced tenant satisfaction through energy savings, and simplified compliance with evolving regulations.
When operated under a roof rent model at an existing property, commercial solar makes more financial sense for property owners. They receive monthly revenue from unused roof space without capital investment or hassle, unlocking the benefits of distributed energy without added management burden or liability.Â
The advantages extend beyond direct income. Since the solar systems are owned by the provider rather than the property owner, they typically don’t trigger a reassessment for property tax purposes. This provides owners with a unique opportunity to increase property value without corresponding tax increases—a significant advantage in high-tax jurisdictions like California.
It also makes sense for new developments, and incorporating solar leases early in the planning process offers particular advantages. By addressing Title 24 requirements without capital investment, developers can improve project economics while creating long-term value for the property.
Taking Action on Energy Strategy
I.CON West 2025 demonstrated that commercial property success increasingly depends on proactive energy approaches. With power constraints tightening, regulatory requirements expanding, and tenant expectations evolving, solar has emerged as a practical solution that addresses multiple challenges simultaneously.
King Energy’s commercial solar model aligns perfectly with these industry trends. By installing systems at no cost to property owners, generating monthly roof rent, and providing discounted power to tenants, this approach addresses global energy concerns while delivering immediate financial benefits for all.
For property owners, developers, and asset managers looking to navigate today’s complex energy landscape, commercial solar offers a proven path forward that balances financial performance with sustainability goals.
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