Power Up Your Parking Bays

Commercial developers across the UK are switching on to the benefits of leasing EV charging spaces to third party operators, as Commercial Property Senior Associate, Pav Lalria explains...

Our commercial property team has advised on dozens of retail schemes in the past year, from large chain supermarkets to mixed-use retail parks for commercial developers.

Naturally, on projects of this nature you find yourself working on the basics such as condition acquisition documents for the development site, agreements for lease with the retails occupiers of that development and the construction documentation for such development works to be carried out, but there's one emerging trend we're encountering ever more frequently. The leasing of electric vehicle (EV) charging bays to third parties.

What do you mean by leasing EV bays?

Traditionally, car parking was a generic provision, with parking spaces (and trolley bays) which the retailers required to service their stores.

The rise of EV has seen developers rethink car parks, creating a new and potential income generating opportunity from parts of a development scheme, which previously added little in terms of revenue.

More developers are designing schemes so as to specifically provide for parking spaces incorporating EV charging units, often in the best position on the development (taking in to account layout, power provision and how they interact with the rest of the scheme).

Currently, the main challenge is securing grid connection, particularly for high power chargers, which are in greater demand. The second hurdle is installing the cabling required to charge an EV and then ultimately organising the lease and agreeing the level of rent.

Plugging into the grid isn't as easy as flicking a switch and can be a frustrating process but it is certainly not insurmountable. Once the offer from the grid to install electricity supply is secured, developers must then gain permission to install the cables and enter any agreements required for the installation of necessary infrastructure (such as electricity substations). Depending on location, this can throw up issues with cables often running across and through third party lines – problematic as these parties can often hold developers and EV operators to ransom during negotiations.

It isn't a straightforward process, but as it becomes more commonplace, legal and practical processes will become slicker with pinch-points and snags ironed out.

So, is it worth it?

It should be! Charging points can bring in a significant additional income, which can be vital in generating investment value for a scheme. They also aid compliance with Environmental, Social, and Governance (ESG) regulation (particularly handy when obtaining planning permission) and allow retailers to attract a broader customer base.

Square One Law is working on several deals with a variety of clients to create and lease new EV charging points, and each has its own challenges and nuance.

What sectors are "plugging in"?

Currently, it's mainly retail, specifically supermarkets and drive-thru outlets. However, that will change with increasing numbers of EV users, and of landlords – individuals and businesses – recognising the potential in that part of land where people are currently parking their vehicles.

There is also evolution into stand-alone EV charging hubs, where the provision of EV charging points is in fact the main income generator – but perhaps supported by food and drink outlets or convenience stores. EV charging points then actually become the anchor for new retail development.

It's a fantastic opportunity to open up new income streams for businesses and organisations, which is why we're seeing a rapidly increasing number of charging point planning applications and leasing deals across England.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.