How Real Estate Investment Trusts (REITs) Can Drive Solar Development

REITs in the US control approximately 38.5 billion sq. ft. of solar-appropriate surface area, capable of generating over 25 percent of electricity used in US commercial buildings. While on-site solar is economically viable for 90 percent of the top 50 REITs by 2025, adoption is hindered by tax credit complexities, IRS recapture rules, and risks associated with tenant turnover and low energy intensity in industrial warehouses. Community solar is proposed as a solution to these barriers, offering additional tax credit bonuses of 10–20 percent when serving low- and moderate-income residents. Currently, only nine US states support rooftop community solar, though some leading REITs like Prologis, Lineage Logistics, Blackstone, Brookfield, and Hartz Mountain have already installed significant capacity.

• REITs control roughly 38.5 billion sq. ft. of solar-appropriate surface area, which could generate over 25 percent of all electricity used in US commercial buildings, or about 10 percent of total US electricity sales. This potential capacity is approximately 320 GW, which is 2.5 times the total US solar capacity existing at the end of 2022.
• On-site solar is projected to be cheaper than purchasing electricity from the grid for 90 percent of the top 50 REITs by 2025, potentially resulting in a 3 percent revenue accretion.
• Several barriers hinder large-scale solar deployment by REITs, including the complexity of federal energy tax credits, Internal Revenue Service recapture rules, and the risk of buildings 'going dark' due to short commercial leases (typically three to five years) and tenant turnover.
• Community solar can overcome REIT-specific challenges by serving the broader community rather than just building tenants. Projects selling power at discounted rates to low- and moderate-income residents and businesses can access an investor's tax credit bonus adder of 10–20 percent.
• Rooftop community solar is currently supported in only nine US states: NY, IL, MA, MD, CA, MN, NJ, CT, and VA. In California, Virtual Net Metering provides a specific solution for multifamily housing owners to sell power virtually to tenants.
• Major real estate companies are already leading in on-site solar installation; Prologis is ranked in the top three for total megawatts installed, with Lineage Logistics, Blackstone, Brookfield, and Hartz Mountain also appearing in the top 12.

APA

RMI (2023). How Real Estate Investment Trusts (REITs) Can Drive Solar Development. https://rmi.org/resources/how-real-estate-investment-trusts-reits-can-drive-solar-development/

Chicago

RMI. How Real Estate Investment Trusts (REITs) Can Drive Solar Development. 2023. https://rmi.org/resources/how-real-estate-investment-trusts-reits-can-drive-solar-development/.

Wikipedia

{{cite report |author=RMI |title=How Real Estate Investment Trusts (REITs) Can Drive Solar Development |date=18 July 2023 |url=https://rmi.org/resources/how-real-estate-investment-trusts-reits-can-drive-solar-development/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023how, author = {{RMI}}, title = {{How Real Estate Investment Trusts (REITs) Can Drive Solar Development}}, institution = {RMI}, year = {2023}, month = jul, url = {https://rmi.org/resources/how-real-estate-investment-trusts-reits-can-drive-solar-development/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }