Oct 06 2 min read

How REITs are Making Properties More Attractive and Profitable with LED Lighting

REITs using lighting to increase lease renewals

Extended leases, increased lease dollars, and increased lease renewals. With a capital-free LED upgrade, real estate investment trusts, or REITs, can get all three. For example, REITs could provide tenants with a new LED lighting system that helps relieve operational issues and costs while modernizing their facilities. One effective strategy REITs are utilizing is to offer an upgrade to LED lighting at no upfront cost to the tenant. Then, the REIT provides a monthly payment plan equivalent to the estimated electrical savings. Once it’s paid for, tenants continue to enjoy the savings benefits of the new lighting and benefit from a more productive environment. Alternatively, REITs could use the upgraded lighting as an incentive to attract new tenants and generate even more revenue long-term. 

Let’s dive deeper into what makes LED technology unique, and the benefits REITs can take advantage of when using LED lighting.

Increased Energy Savings

LED lighting is the most efficient technology used today for commercial and industrial applications. For REITs needing to light warehouses and distribution centers for their tenants, LED lights provide significant performance and use very little energy compared to legacy technology. Consider this: LED lighting systems use up to 75 percent less electricity than incandescent and fluorescent options. Furthermore, the latest generation of LEDs has higher efficacies than first-generation LED installations in the early 2010s. Now facilities can benefit from US LED's ultra-long life LED lighting that approaches or exceeds 200,000 hours of operation, often backed by a Ten-Year Warranty. This maturing technology means substantial financial savings, making it the ideal choice for retrofitting existing properties and new properties that are acquired.

Reduced Maintenance Costs

Another less obvious way LEDs benefit REITs is by reducing maintenance costs for tenants. For example, a tenant’s maintenance team could spend considerable time replacing burned-out tubes, defective ballasts, and other components. Similarly, they must do it again the next month or as often as a preventative replacement program dictates. Since LEDs last longer, tenants can save on annual maintenance and repairs associated with legacy lighting systems. Instead of being preoccupied with purchasing replacement parts and installation, maintenance staff can work on high-priority items for their organization. Quantifying maintenance and energy savings for tenants can play a significant role in lease negotiations and generating long-term revenue. 

REITs using lighting to extend leases

Giving the Green Light to ESG Value

Commercial buildings consume 35 percent of all electricity in the U.S. and generate 16 percent of all U.S. carbon dioxide emissions.1 LED lighting is not only a proven way to reduce energy use, but it also supports environmental goals and achievable ESG goals while making properties attractive to existing and future clients. Unlike legacy technologies that contain toxic materials like mercury, LED lighting is considered a green technology. It is non-toxic and recyclable, so its components can be recovered and used in a new product. Moreover, LEDs reduce greenhouse gas emissions by saving significant kWh annually that’s quantified into CO2 equivalent.

Benefit from LED Lighting Upgrades

Smart REITs routinely examine areas of their operations to see where they can save money, operate more efficiently, and improve the customer experience. Upgrading lighting systems to LED technology does that and more. LED lights deliver financial, environmental, and aesthetic advantages for real estate organizations as a long-lasting, energy-efficient alternative to traditional lighting. Additionally, REITs looking to capitalize on these benefits further can take advantage of the 179D Energy Efficient Tax Deduction now that the Inflation Reduction Act has extended eligibility to include REITs and allows them to apply it against earnings and profits.

REITs using lighting to make properties more attractive to their tenants

Choose Your Provider Wisely

Regarding lighting, every customer is different, and so are each project’s requirements. That’s why it’s crucial to choose a trusted national provider that is customer-focused, offers a dedicated project management team that delivers turnkey installation, and will be an effective strategic partner for your organization.

From increased energy savings to even greater revenue and environmental benefits, implementing LED lighting upgrades benefits REITs in many illuminating ways. So, it’s no surprise that US LED is Always the Right Choice for enlightened REITs looking to capitalize immediately.

Get-pricing-led

 

Sources

Learning LED Office & Corporate Campus Retail ESG

Learning LED Office & Corporate Campus Retail ESG

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