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Seeing Retail’s Transition to LED in a New Light

by | Jul 10, 2019

We operate in times of incredible innovation and technological progression, and the lighting our businesses rely on is no exception. 

Since its commercial introduction in the 2000s, LED has revolutionized commercial lighting, providing cost savings in energy consumption, maintenance and more. The challenge of implementing LED twenty years ago was the cost of the technology. Today, the price has come down so much it rivals that of traditional bulbs. 

And yet, even with competitive pricing, many property owners (shopping center owners in particular) have been slow to transition due to the structure of the costs involved; the landlord pays the cost and the tenants reap the benefits! While this is an understandable barrier, it doesn’t have to stand in the way.

Let’s shed a little light on why you should take another look at LED.

The Bright Side

The transition to LED brings many benefits to a retail or office asset. Here are just a few of the many reasons owners still using dated lighting systems should take another look at LED:

  • Sturdiness – LED is much more difficult to break than traditional bulbs.
  • Security – Better lighting leads to more secure lots and exteriors.
  • Savings – LED uses 75% less energy than incandescent bulbs.
  • Stamina – LED bulbs can last up to 25,000 hours.

With an array of obvious advantages, fiscally and environmentally, every commercial real estate property owner should be implementing LEDs. But while most office and industrial properties have transitioned, many retail properties are still in the dark. Which begs the question:

Why Isn’t Retail Flipping the Switch?

Unlike office and industrial, the terms and agreements in shopping centers often make the LED transition favorable to tenants, but entirely at the owner’s expense.

With parking lots and other common areas, it’s possible to pass incremental repair and upkeep costs onto tenants, but this doesn’t work with LED lighting.

If you replaced LEDs slowly over time you would get an unpleasing aesthetic look due to the different color temperatures of the lights. It would be like painting the exterior of your building one surface at a time over the course of several years. You would also lose the economy of scale by nibbling at the transition since you’d miss out on bulk pricing for the bulbs, as well as having to mobilize crews with each separate changeover.

The clear solution is to replace everything all at once, which has to be treated as a capital expense – doesn’t it?

Finding the route towards LED that avoids this capital expense is how many owners find themselves left in the dark. While there’s no simple solution, an experienced management firm can help you see the transition to LED in a new light.

A Firm at the End of the Tunnel 

The good news is that you can modernize your retail property, reduce its environmental footprint and lower your operating costs with LED – without the traditional financial burden of a capital expense.

Trout Management has the experience and accounting knowledge to help leverage pass-through options, allowing tenants to support some of the expense. We can make the process simple.

Contact us today to shed light on your best option for making the transition to LED.

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