The pressure to reduce emissions and eliminate the environmental impact of business operations continues to grow. One of the tools companies are turning to in their efforts to achieve more sustainable and eco-friendly operations is the use of electric vehicles. While it may not seem obvious at first glance, this trend has a significant impact on commercial real estate, particularly in the industrial and retail sectors.

Today, electric vehicle production is often situated in integrated manufacturing centers that focus on individual phases of production - from batteries to assembly. Because these are quite different phases requiring different technologies, and thus different parameters for production, assembly, or logistics halls, this centralization increases the demands on industrial properties.

"Electric vehicle production is moving full steam ahead, including in the Czech Republic, where the automotive industry generates 10% of GDP, 25% of exports, and employs 180,000 people. We see this boom through the demand for real estate. Manufacturers are seeking spaces for so-called gigafactories, facilities for battery production, as well as research and development centers or logistics centers designed for efficient distribution of individual components for electric vehicles and the vehicles themselves," says Miroslav Kotek, head of the industrial real estate department at Colliers. He adds that unfortunately, the Czech Republic currently faces a shortage of suitable land for the construction of such complexes and risks losing out on interesting investments.

In the past two years, there has been talk in the Czech Republic about building a gigafactory for Volkswagen at the airport in Líně near Pilsen. This year, information emerged about South Korean LG's interest in building a gigafactory in northern Moravia in the Dolní Lutyně locality. While the Czech Republic is treading water, projects are in full swing in surrounding countries. For example, in Slovakia, a gigafactory of Slovak InoBat and Chinese Gotion High-Tech is set to be built in Šurany in southern Slovakia with an investment of 1.23 billion euros and 1,500 jobs, with full operation in 2027. And two projects are also being prepared in Hungary, where the first European factory of Chinese automaker BYD is to be built, and SK Innovation plans to invest 655 million euros in the construction of a factory for electric vehicle battery production.

Challenges for Retail

The rise of electromobility affects not only the demand and form of industrial properties but also retail properties. For consumers to fully utilize the potential of switching to electric vehicles, the supply of public charging stations must adapt, and retail parks can play a significant role in this.

"Retail chains equipped with charging stations can significantly benefit from the expansion of electric vehicles among consumers. It can be assumed that electric vehicle drivers will prefer them. For retailers and shopping center operators, this is a significant opportunity to attract and retain wealthy and environmentally-minded customers," says Miroslav Kotek, director of the industrial real estate department at Colliers. He adds: "Developers of shopping centers should also be thinking today about the transition to autonomous vehicles and how they could change parking norms and traffic patterns around retail complexes."

The growing number of electric vehicle users is a good motivation. Last March, nearly 16,000 personal battery electric vehicles (BEVs) were registered in the Czech Republic, and the number of public charging points exceeded 4,600, about a quarter of which offer fast charging. While home charging through a regular socket usually takes 8-15 hours, fast-charging stations can fill 80% of battery capacity in less than 30 minutes.

Challenges for Energy Sector

However, simply incorporating electric vehicles into the company fleet or building charging stations does not yet mean a sustainable solution. Building owners and operators where charging stations are located should consider acquiring renewable energy to supply these chargers in parallel. If the building's technical parameters do not allow for the construction of photovoltaics on a sufficient scale, then the purchase of electricity with a guarantee of origin or long-term PPA contracts is appropriate.

At the same time, it is necessary to actively address the building of charging infrastructure with the distribution network operator, who must adapt its capacities to new sources of electricity consumption and, in the future, also its supply (EV batteries as an energy source). Last but not least, it is necessary to efficiently manage the operation of charging stations using so-called smart charging to prevent network overload and simultaneously allow for the collection of energy consumption data, for example, for the reporting needs of individual tenants.