Commercial leases, especially in suburban shopping centers or office complexes, can be complex. A key element that tenants often find challenging is Common Area Maintenance (CAM) charges. These charges frequently appear as a line item in leases. However, their structure and application can significantly impact a tenant’s total occupancy costs. For tenants who grasp the basics of CAM charges—understanding they cover shared space expenses—it’s crucial to dig deeper. Knowing how these charges work can protect them from unpredictable financial burdens. What Are CAM Charges? At its core, CAM charges cover the costs associated with maintaining shared spaces. However, this simple definition masks a complicated cost structure that necessitates careful examination. CAM typically includes expenses such as landscaping, lighting, parking lot maintenance, property management fees, snow removal, and even capital expenditures. One thing tenants often overlook is that there is no universal standard for what should be included in CAM charges. Each lease defines these terms differently, frequently favoring the landlord. Therefore, it is vital to dissect lease language thoroughly. Broad definitions can allow landlords to shift unexpected costs onto tenants. Phrases like "all reasonable costs" or "expenses related to maintaining the property" may sound standard, but they can be exploited to pass on non-routine expenses. Understanding the Anatomy of CAM Charges Understanding the CAM cost structure is essential. Here’s what to look for: Key Components of CAM Landscaping : This includes upkeep of gardens and green spaces. Lighting : Regular maintenance of exterior lighting to ensure safety. Parking Maintenance : Keeping parking areas in good condition is crucial for customer satisfaction. Property Management Fees : Costs associated with overseeing and managing the property. Snow Removal : Important for ensuring access during winter months. Importance of Clear Language Clarity in the lease terms concerning CAM charges is vital. Ambiguous language can become a source of disputes. It’s important for tenants to negotiate well-defined terms regarding the inclusion of expenses. Gross-Up Clauses and Their Impact An often-misunderstood aspect of CAM clauses is the gross-up provision. Landlords implement this to normalize operating expenses in partially occupied buildings. For example, if a property is only 70% leased, but HVAC, janitorial, or security costs remain constant, landlords may gross these expenses up to what they would be at 95% or 100% occupancy. While this clause is not inherently unjust—it ensures current tenants are not subsidizing unleased space—it does require careful structuring. Concerns arise when the methodology used for grossing up expenses is not clearly defined. Lacking clarity can result in inflated CAM charges disguised as normalization. Tenants should not only negotiate the inclusion of a gross-up clause but also demand a specific, auditable method of calculation. Moreover, capping the gross-up at a reasonable occupancy threshold can protect tenants from excessive fees. Capital Expenditures: Maintenance or Upgrade? A contentious point in CAM charges arises with capital improvements. Landlords may aim to recover costs for new roofing, HVAC systems, or energy-efficient upgrades through CAM, arguing long-term savings as justification. Tenants need to distinguish between maintenance and upgrades. For example, replacing a broken pump is a repair, while installing a more efficient HVAC system represents a capital upgrade. Lease language should clarify that only necessary capital expenditures or those that significantly reduce operating costs may be passed through. Important Negotiation Points Pre-Approval : Improvements should require landlord approval beforehand. Cost-Sharing Mechanisms : These should be established to share expenses fairly. Without these safeguards, tenants risk bearing the costs of unnecessary upgrades. Management Fees: A Close Look at Double Dipping Management fees pose another challenge in CAM charges. Typical property management fees range from 3% to 5% of gross rents. The issue arises with how these fees are layered. Tenants should negotiate caps on these fees. They should ensure management fees are not calculated on top of other reimbursed expenses, such as taxes or insurance. In some cases, landlords may attempt to double-dip by charging management fees on CAM itself, which can distort financial accountability. In competitive markets, tenants should push to negotiate these fees downward or demand a flat monthly fee that is clearly defined. Audits and Escalation Clauses: Leverage for the Informed Tenant CAM audits represent a powerful yet underused tool for tenants. Many leases allow tenants to audit CAM charges, but they often come with restrictive conditions. These may involve how often audits can occur, who can perform them, or requiring tenants to use a landlord-approved CPA. Tenants should strive for unrestricted audit rights. Any overcharges discovered should lead to refunds, with interest, and landlords should cover audit costs if discrepancies exceed a certain threshold—typically 3% to 5%. Careful scrutiny of escalation clauses tied to CPI or fixed annual increases is also essential to prevent disproportionate cost growth. Base Year CAM in Modified Gross Leases For tenants in modified gross leases, vigilance surrounding base year calculations is crucial. This chosen base year determines future CAM increases, and it ought to reflect normal operating costs. Unfortunately, landlords have sometimes set a depressed base year with artificially low costs, allowing for steeper future increases. In newer properties, it’s particularly risky to agree to a base year during the lease-up phase. Tenants should insist on detailed CAM records from preceding years or delay establishing the base year until the property achieves expected occupancy and operates normally. Negotiation Tactics That Shift Leverage To manage exposure to CAM charges, experienced tenants don’t just focus on what’s included—they proactively shape what’s excluded. Exclusion lists are a critical part of this strategy. They should eliminate charges resulting from landlord overhead, marketing costs, legal fees unrelated to tenant defaults, reserve funds, and costs related to fixing code violations. Another effective technique involves securing a CAM cap with a defined percentage increase permitted each year. This strategy turns an open-ended liability into a predictable expense. While it may still allow for pass-throughs related to unavoidable costs like snow removal or insurance premiums, it sets boundaries on discretionary spending. CAM charges can quickly shift lease economics. Proper structuring, detailed audits, and clear-defined limits can make these charges manageable components of shared occupancy. Final Thoughts CAM charges are not merely footnotes in a lease; they can account for a sizable portion of a tenant’s ongoing financial responsibility. In suburban retail centers and office parks, where operating expenses fluctuate widely due to various factors, tenants who approach CAM charges with strategic insight are best positioned to protect their financial margins. It’s essential to recognize that tenants hold more leverage than they often assume during lease negotiations or renewals. CAM should be treated as a predictable budget item, not a wildcard. Adopting a proactive approach ensures it can be successfully integrated into a well-structured lease agreement, leading to enhanced financial clarity. For more information on commercial leasing, check out our resources here .

Commercial leases are not one-size-fits-all. Landlords and tenants operating in suburban real estate markets, especially those managing or occupying retail centers, office parks, or industrial complexes, must understand how the lease structure impacts cash flow, operational control, and long-term stability. Gross, Net, and Modified Gross leases are the three primary formats used, but these categories are often misunderstood or oversimplified. Getting beyond the surface-level definitions and into the mechanics is essential to avoid leaving money on the table—or unknowingly taking on liabilities. Gross Leases: Simplicity That Can Carry a Premium A gross lease, often referred to as a full-service lease in office environments, bundles most building operating expenses into one flat rental rate. Tenants appreciate the predictability—one monthly number covering rent, property taxes, insurance, and maintenance. However, this simplicity can come at a cost, especially in suburban submarkets where building operating costs can fluctuate based on weather, property size, or how well the landlord manages expenses. From a landlord's perspective, gross leases carry more risk. If utility rates spike or a major capital item, like a boiler, needs replacement, those costs eat directly into net operating income. For that reason, landlords who offer gross leases typically inflate the rent to cover potential variances, assuming a buffer that protects their margin. More sophisticated tenants with multiple locations often prefer to avoid gross leases in older buildings because there's no transparency in how operating costs are calculated. In multi-tenant suburban strip centers or aging office parks, this can become a source of friction. If a landlord isn't efficient or proactive in maintaining the building, the tenant is essentially paying for inefficiencies without any say. Savvy tenants negotiating gross leases often push for an "expense stop" provision. This sets a cap on how much of the building's operating expenses the landlord will absorb before passing overage costs to the tenant. If the expenses remain under the cap, the landlord absorbs the cost. If they exceed it, the tenant covers the difference. It’s a hybrid mechanism within a traditionally simple lease, and it’s becoming more common in suburban commercial leases where operating cost volatility is harder to ignore. Net Leases: Shifting the Burden—But Adding Control Net leases, in their various forms—Single Net (N), Double Net (NN), and Triple Net (NNN)—transfer varying degrees of operational responsibility to the tenant. The most common in suburban markets is the Triple Net lease. Here, the tenant pays base rent plus property taxes, insurance, and maintenance costs directly or through landlord-managed pass-throughs. For suburban strip centers and retail plazas, NNN leases are the norm, and with good reason: they create cleaner financials for the landlord and more cost accountability for the tenant. For tenants, the benefit is that base rent is typically lower than a comparable gross lease. But with that savings comes responsibility. Tenants need to budget for fluctuating expenses and understand how common area maintenance (CAM) fees are calculated. It’s not just about the line items—what’s included in “maintenance” can vary widely. Some landlords include management fees, admin costs, and even capital improvements in CAM pools, while others restrict it to routine maintenance and landscaping. It’s also critical to look at how square footage is calculated for CAM allocations. Landlords often divide costs by either rentable or usable square footage, and that difference can be material. In suburban multi-tenant properties, this becomes especially important where anchor tenants may have negotiated exclusions that shift extra CAM burden onto smaller tenants. Landlords benefit from the NNN structure by stabilizing net operating income and transferring expense volatility away from their side of the ledger. But it's not without work. Transparent accounting and clear lease language are non-negotiables. Experienced landlords usually hire third-party property managers or CAM reconciliation consultants to maintain credibility with tenants and avoid disputes during year-end audits. Modified Gross Leases: A Customized Middle Ground Modified gross leases sit between gross and net leases. They usually start with a base rent that includes some operating expenses, but others are passed through. The flexibility of modified gross leases makes them especially common in suburban office buildings and flex spaces where landlord-tenant negotiations need to reflect shared systems or uneven usage patterns. A typical modified gross lease might include property taxes and insurance in the rent, but push utilities and janitorial costs to the tenant. Or it might cover everything in the first year, with escalation clauses that shift annual increases to the tenant after an agreed-upon base year. The key feature is negotiability—both parties have room to shape the lease around the operational realities of the property. Base year provisions can be advantageous in stabilized suburban assets with predictable expenses. However, they require careful scrutiny. If the base year is artificially low—due to unusually low utility bills or minimal repairs—the tenant may face sharp increases in subsequent years. Tenants should review expense histories going back 2–3 years, not just the base year, to get an accurate sense of potential escalations. For landlords, modified gross leases require a more active approach to lease administration. Tracking which expenses are included, calculating escalations, and ensuring fair allocation can’t be managed casually. Many landlords rely on lease management software to handle modified gross agreements, especially in office portfolios with staggered lease terms and varied structures. Lease Type Should Match Property Strategy There’s no universally superior lease structure. The optimal lease type depends on the property’s age, tenant mix, market expectations, and investment goals. A suburban retail center anchored by a national tenant will likely lean toward NNN leases across the board to keep ownership hands-off and financials consistent. An older suburban office park undergoing repositioning might use modified gross leases as a transitional structure to attract tenants while slowly rebalancing operational responsibilities. Tenants with multiple locations often push for lease uniformity to simplify back-office functions, especially when managing dozens of properties across metro suburbs. However, they should stay flexible. A modified gross lease with a cooperative landlord can sometimes be more favorable than a rigid NNN lease with a landlord who takes a broad interpretation of CAM charges. CAM Charges and Reconciliation: The Real Test of Lease Clarity Where lease structures often break down is not in the base terms but in how operating costs are tracked and passed through. CAM charges can vary widely depending on who’s managing the property, what’s included, and how disputes are handled. Sophisticated landlords in suburban real estate markets are tightening up their lease templates to reflect industry-standard CAM language, but some still rely on outdated or overly broad provisions. Tenants should always request a detailed CAM breakdown from the prior year before signing and should ask how reconciliations are prepared. Are they done in-house or by a third party? Are there caps on management fees or admin markups? Capping CAM increases annually—often referred to as a “CAM cap”—can provide a layer of predictability, especially for retail tenants with tight margins. But not all caps are created equal. Is the cap on a per-line-item basis or on total CAM? Is it cumulative or compounded? These distinctions matter when budgeting for future years. Landlords can benefit from offering CAM clarity too. A tenant that understands what they’re paying for and trusts the numbers is less likely to negotiate aggressively at renewal or bring in outside auditors. That creates better long-term relationships and reduces leasing friction. Negotiating the Right Lease for Suburban Assets Whether you're managing a portfolio of medical offices in the outer-ring suburbs or leasing a standalone retail pad near a high-traffic corridor, your lease structure needs to fit the property’s purpose. Standard templates don’t always reflect operational realities. For instance, multi-tenant retail with shared parking and landscaping might need tighter language around maintenance scope and cost-sharing. Flex warehouses in suburban industrial parks may need special provisions around HVAC maintenance or utility submetering. The negotiation table is where lease types are often blended. A tenant may accept a NNN lease in principle but request utility caps, specific exclusions, or pro-rata limits. Landlords may counter with reduced base rent or a free rent period but stand firm on CAM pass-throughs. Knowing where to flex—and where to hold firm—requires understanding not just the lease type but how it affects long-term performance. Experienced real estate professionals know that leases aren’t just legal documents. They’re operating manuals. When written and managed well, they reduce disputes, clarify responsibilities, and protect income. Whether gross, net, or modified gross, the goal is always the same: match the lease structure to the property's needs and the tenant’s profile, while keeping long-term value intact. Final Thoughts For landlords and tenants in suburban real estate, understanding lease types is only part of the picture. The fine print—operating cost allocation, escalation mechanics, CAM reconciliation, and maintenance responsibilities—will ultimately define whether the lease performs as intended. Gross, net, and modified gross are starting points. The real work is making sure the lease language supports your strategy, protects your investment, and minimizes operational surprises. Every lease tells a financial story. The more control you have over how it’s written, the more predictable that story becomes. In conclusion, navigating the complexities of commercial leases is crucial for both landlords and tenants. Understanding the nuances of each lease type can lead to better financial outcomes and smoother operations. By focusing on clarity and transparency in lease agreements, both parties can foster a more cooperative relationship that benefits everyone involved.

The One Big Beautiful Bill (OBBB), recently signed into federal law, is poised to shift the momentum of the commercial real estate sector in a very real and measurable way. While much of the public attention has gone toward its climate provisions and labor reforms, the real estate industry is laser-focused on the embedded incentives, mandates, and reclassifications baked into the legislation. At over 600 pages, OBBB has tentacles reaching across every corner of commercial property: from depreciation schedules and tax incentives, to zoning overrides and capital access mechanisms. This isn't a vague push for sustainability or vague funding promises—this is a structural adjustment to how commercial spaces will be financed, valued, retrofitted, and utilized across office, retail, industrial, and mixed-use assets. Investors, asset managers, REIT executives, and developers with exposure to suburban, exurban, or even tertiary market commercial holdings must now reevaluate their models—not because the sky is falling, but because the ground has shifted underneath them. Reclassification of Building Use and Function One of the headline changes under OBBB is the federal reclassification of building use definitions. In practical terms, this resets how properties qualify for deductions, grants, and accelerated depreciation—especially when repurposing space. For office assets, especially underutilized suburban B- and C-class inventory, the bill introduces a fast-track federal override process for adaptive reuse. This reclassification process can supersede local zoning codes, assuming the developer meets specific federal energy, density, and mixed-use criteria. This is expected to ignite a wave of conversion interest, especially among midsize private equity firms and family offices sitting on distressed or underperforming suburban office parks. Retail is also being impacted by these use-case updates. Anchored centers and mid-sized strip malls now qualify for partial mixed-use conversion credits even if the conversion stays below 50% of GLA. That’s a significant adjustment compared to previous thresholds, which required a majority-use switch. This is not just a semantic change—it unlocks new access to financing, especially through the expanded green bond channels that OBBB authorizes. Industrial is less affected by reclassification directly but stands to benefit from adjacent definitions. For instance, light assembly spaces connected to last-mile logistics hubs can now qualify under a broader “urban logistics corridor” label. This widens eligibility for site improvement credits, including EV infrastructure installation and solar integration. Tax Code Revisions: Depreciation, Deductions, and Direct Credits The bill introduces accelerated depreciation schedules for retrofitted commercial properties that meet updated federal energy benchmarks. Office buildings that undergo envelope improvements, HVAC overhauls, or smart building integrations can now depreciate those improvements over 10 years instead of 27.5. This has immediate modeling implications. Buildings formerly tagged as marginally cash flow positive under traditional depreciation now become tax shelters for strategic investors, especially in suburban office markets with older stock. The race won’t be to sell or demolish—it’ll be to retrofit and refile under the new code. Retail developers should pay attention to the expanded deduction eligibility on tenant improvement allowances. Under OBBB, retail centers with signed leases in designated suburban investment zones can deduct 100% of TI allowances in the first year, provided they meet specific energy use intensity metrics. This directly benefits grocers, QSRs, and medical retail tenants moving into repositioned centers, accelerating lease-up schedules and smoothing out debt coverage projections. Industrial properties, especially those over 75,000 square feet, now qualify for clean manufacturing tax credits if their tenants can meet specific sourcing and emissions thresholds. This doesn’t just apply to producers—it includes third-party logistics operators using certain green-certified packaging and equipment. Federal Zoning Overrides and Permit Streamlining A key mechanism within OBBB is the Federal Zoning Override Clause (FZOC). Under this provision, developers can apply to bypass certain local zoning restrictions if their project meets the criteria for energy performance, walkability, and housing adjacency. This applies most forcefully to office and mixed-use developers in jurisdictions with restrictive zoning boards or outdated suburban land use maps. For office properties, the FZOC makes redevelopment feasible in towns where upzoning has stalled for years. This could unlock value in sites that were previously stuck in bureaucratic limbo, giving regional developers a way around local resistance. It also changes the calculus on distressed office acquisitions—since previously unconvertible assets may suddenly qualify for mixed-use transition. Retail projects benefit from permit streamlining, particularly in suburban nodes targeted as “Mobility Enhancement Zones” under the bill. In these areas, new construction that incorporates transit-oriented elements—bike lanes, EV charging clusters, or mobility hubs—can bypass local architectural review and head straight into fast-track permitting. This is a huge deal for developers trying to hit tight delivery windows and attract national credit tenants. Industrial developers, particularly those operating near secondary airports or freight corridors, may now bypass certain environmental review steps if their project includes rooftop solar and noise attenuation infrastructure. This balances out the otherwise high upfront costs of ESG-compliant site prep, especially in suburban fringe markets. Federal Loan Guarantees and Capital Access The bill expands access to federally backed construction and bridge loans for commercial projects meeting sustainability, density, and workforce proximity targets. For the office sector, this means that developers retrofitting underutilized office buildings into co-working, healthcare, or educational facilities can tap into low-interest capital at scale. These loans are underwritten based on both environmental and workforce accessibility metrics, not just traditional LTV or DSCR ratios. Retail centers that integrate onsite workforce housing above or adjacent to their commercial footprint are now eligible for blended-use financing models through the new Federal Mixed Asset Facility (FMAF). This unlocks layered capital stacks, with the federal guarantee covering up to 40% of total development costs—especially helpful for retail centers in suburban opportunity zones. Industrial developers get the most straightforward path—projects tied to clean logistics, renewable energy, or localized manufacturing inputs can qualify for direct federal loan guarantees, similar to HUD guarantees on residential product. This lowers the cost of capital for new builds and expansions, particularly in areas with weak local credit markets or municipal debt constraints. Impacts on Valuation Models and Exit Strategies The recalibration of property categories, tax treatment, and federal incentives will force a reassessment of how commercial real estate is valued. Cap rates won’t move uniformly—buildings that qualify under the OBBB criteria will trade at premiums, while those that don’t may see spreads widen, especially in secondary and tertiary markets. Office valuations will hinge on retrofit potential and federal eligibility. Properties previously seen as obsolete could see higher bids if they fall inside a federal zoning override or fast-track tax benefit area. This also affects exit strategies—REITs and funds may hold longer if the asset's retrofit play becomes more profitable than a sale, or accelerate dispositions if they’re outside the qualified zones. Retail assets will bifurcate more dramatically. Centers able to reposition with mobility and housing components will hold or grow value; those stuck in outdated layouts without room for integration will see investor interest fall off. The smart money is already focusing on repositioning suburban retail into modular footprints that can evolve with tenant mixes and mobility infrastructure. Industrial valuations will skew upward across the board, but especially for those assets tied to ESG-aligned tenants. The inclusion of tax credits and green financing access makes it harder for traditional cap rate models to capture full upside—especially if you’re underwriting based on a 10-year hold. Institutional capital will increasingly discount assets that don’t meet new compliance metrics, shifting more dollars toward ESG-certified portfolios. Mixed-Use Opportunities and Competitive Pressure OBBB positions mixed-use development as a federally favored asset class. The bill defines mixed-use more loosely than previous IRS definitions—now allowing partial conversions, segmented use over time, and non-contiguous parcels tied by transit or utility overlays. This is particularly impactful in suburban markets where fully integrated vertical mixed-use isn’t feasible. Developers can now combine adjacent parcels—retail, residential, and light industrial—under a shared compliance framework and still qualify for bundled financing and tax benefits. That changes the game for land assemblage strategies and opens up new master-plan models even in mid-density suburbs. Competitive pressure is already intensifying among institutional players and family offices alike. The earliest adopters of OBBB incentives are scooping up properties and securing permits before local agencies catch up to the pace of the bill’s rollout. Expect private credit and non-bank lenders to start tightening standards for deals that don’t fall within OBBB’s favored zones or uses, further increasing pressure on holdouts. Final Thoughts The One Big Beautiful Bill is not just policy—it’s now the rulebook for how commercial real estate will be reshaped for the next decade. Whether you’re holding suburban flex space, anchored retail, or legacy office assets, this legislation is your blueprint and your deadline. Commercial real estate is about to become less about traditional asset class segmentation and more about eligibility, compliance, and adaptability. The winners won't be the biggest players—they'll be the fastest ones who understand where the new value lies and how to unlock it before the window narrows. 630-778-1800  | info@suburbanrealestate.com

The Opportunity, Broadband, and Building Better Act (OBBB) may not get the same kind of spotlight as headline-grabbing tax code changes or Federal Reserve decisions, but buried within its fine print are high-value incentives that commercial real estate investors would be smart to leverage. This federal legislation, passed with a mix of infrastructure priorities and economic development tools, has several hidden layers specifically structured to attract private capital into public priorities. It’s not a real estate bill on the surface—but its ripple effect through zoning, land use, capital stack strategy, and tenant demand is significant. If you’re working with suburban commercial real estate—especially mixed-use developments, light industrial, or retail conversions—this is not just another layer of bureaucracy. It's a blueprint for unlocking subsidies, streamlining development, and boosting ROI through federal alignment. Understanding how to mine those advantages requires looking past the headline dollars and into the embedded mechanics. Federal Tax Credits Targeted to Real Property Improvements Much of the tax-related opportunity in the OBBB flows through the modified and expanded New Markets Tax Credit (NMTC), along with strategic adjustments to the Low-Income Housing Tax Credit (LIHTC) and Renewable Energy Investment Tax Credit (ITC). These aren’t new tools—but their thresholds and qualifications have shifted, allowing investors to apply them more broadly in qualified census tracts and formerly excluded suburban growth zones. The 20% increase in allocation authority for NMTCs means suburban areas previously just outside the qualifying criteria can now fall within range due to updated census data. Mixed-use developments anchored by health clinics, early education centers, or job training spaces can often qualify—even when they’re surrounded by relatively high-income zip codes—because of targeted tract-level data. In addition, the OBBB restructured the renewable energy tax credit to include enhanced depreciation schedules for rooftop solar and EV infrastructure added to commercial properties. For industrial site conversions or office parks being repositioned with electrification in mind, this adds a layer of federal contribution that significantly reduces capex timelines. Infrastructure Grants Tied to Transit-Oriented and Utility-Ready Development Under the OBBB, more than $90 billion in discretionary funds are administered by the Department of Transportation and the Department of Energy, primarily for local governments—but the implementation is designed with private capital participation in mind. This is where forward-thinking investors can step in as co-developers or preferred land contributors. Transit-Oriented Development (TOD) corridors near expanding suburban rail or BRT lines are priority targets for these grants. The grant language explicitly favors public-private partnership models, meaning that developers with shovel-ready land parcels or entitlement momentum have a clear advantage. Investors who can bring environmental clearance, zoning readiness, and engineering plans to the table are finding themselves in strong negotiating positions with local governments seeking to meet OBBB grant criteria. Separately, grid modernization funds and microgrid demonstration grants now allow commercial property owners to qualify if their site serves as a host location for battery storage or district-scale solar arrays. Investors with properties near regional utility upgrade corridors can effectively underwrite infrastructure improvements through federal subsidy—unlocking long-term value, particularly in net-zero or ESG-targeted investment strategies. Development Subsidies Wrapped in Workforce and Digital Equity Language Much of the money in the OBBB is written with broad social goals—workforce inclusion, digital equity, and affordable access to community services—but this language often masks very real development capital. When translated into project execution, these funds often take the form of direct reimbursements, developer incentives, or no-cost long-term ground leases. Take, for instance, the Digital Equity Capacity Grant program. While it was designed to close the broadband gap, it includes provisions that allow commercial landlords to receive compensation for the installation of fiber infrastructure if it’s made available for community or public anchor use. This makes suburban business parks or retail centers potential grant recipients, provided they host a co-working space, educational nonprofit, or similar partner. On the workforce side, training facility subsidies have been made available to private developers willing to dedicate a percentage of a project’s footprint to career development, tech labs, or skilled trades incubation. In real terms, that means commercial developments—particularly in suburban locations looking to secure tenants in light industrial or warehousing sectors—can add qualifying square footage that attracts both subsidy and tenant demand. Public Asset Repositioning as a Private Investment Opportunity Underutilized municipal assets are now eligible for federal matching funds when repositioned for private economic development, especially in suburban counties under population thresholds of 250,000. The OBBB funds pilot programs that assist local governments in offloading or repurposing aging public buildings—from former city halls to public works yards—by subsidizing the predevelopment and environmental remediation costs for the new end-user. This opens a direct path for CRE investors to gain access to rare infill parcels or already-zoned properties without the typical holding costs or entitlement risks. Partnering with municipalities as reuse stakeholders puts the investor on the inside track for master lease agreements, ground leases, or first-rights-to-purchase arrangements at below-market rates. The added benefit? When these conversions align with green building standards or public benefit criteria (health, education, childcare), they often qualify for stacked incentives—making the cost of capital even lower. Financing Leverage Through Federal-Backed Credit Enhancements Another overlooked segment of the OBBB includes expansion of the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Railroad Rehabilitation & Improvement Financing (RRIF) program. While historically aimed at public infrastructure, the eligibility scope has broadened to include mixed-use developments adjacent to qualified transit projects. These credit enhancements essentially function as federal guarantees on portions of private construction debt. For investors trying to close capital gaps in suburban TODs or edge-city redevelopment projects, they now have access to low-cost financing with a safety net that reduces lender exposure. This can improve loan-to-value ratios, extend amortization periods, and create room for more equity-light deals without compromising leverage. Savvy firms are using this structure to push through deals in soft leasing markets, knowing the federal backing improves loan salability on the secondary market. Combined with local economic development incentives, the math starts to favor long-term hold strategies that might otherwise have struggled under traditional underwriting. Strategic Use of Local Match Incentives with OBBB Dollars One of the lesser-discussed but critically important strategies for investors is how OBBB funds unlock matching funds at the local and state level. Many jurisdictions have their own economic development trusts, enterprise zone funding, or real estate tax abatements—but they require a federal match or application trigger to activate. By aligning project goals with one of the dozens of eligible OBBB programs—especially those tied to energy, broadband, public health, or education—investors can bring federal momentum to the table and activate dormant local programs. In some cases, these matches include accelerated permitting, infrastructure fee waivers, or direct site improvements handled by the municipality. This tactic has been particularly effective in suburban counties with aggressive growth plans but limited general fund capacity. CRE investors who understand the sequencing of OBBB applications and local match requests can secure advantages that competitors miss—especially on large-scale or phased developments. Long-Term Impact on Asset Valuation and Exit Scenarios While much of the focus around federal incentive programs tends to land on the upfront capital benefits, the longer-term value play is in how these incentives influence asset valuation. Properties that are grant-backed or part of OBBB-aligned infrastructure nodes tend to carry a premium in future trades, particularly with ESG-focused REITs or institutional buyers looking for stable, low-volatility income streams tied to public sector anchor tenants or long-term federal alignment. In addition, appraisers are starting to give more weight to permanent infrastructure improvements funded through federal partnerships—whether it’s broadband fiber, stormwater management, or enhanced transit access. These are considered “hard benefits” that increase replacement cost and reduce vacancy risk, both of which drive cap rate compression at sale. Investors thinking about five- to seven-year holds should build their asset management strategies around this valuation shift, especially in suburban corridors currently being upzoned or re-mapped for growth. The window for early positioning is narrow, but the upside is considerable. Final Thoughts The OBBB isn’t designed to be an obvious real estate subsidy program, but it functions as one for those who understand how to align private investment with public goals. Its incentives require more paperwork, deeper collaboration with local agencies, and a clear grasp of emerging infrastructure priorities—but for serious CRE investors, that effort translates directly into value. From tax credits and grant leverage to infrastructure finance and asset repositioning, the act offers multiple levers that can be pulled—not just to reduce development costs, but to build long-term competitive advantage in suburban markets where demand is shifting, but traditional capital isn’t yet fully engaged. This is not about chasing short-term savings. It's about using federal alignment to engineer better real estate outcomes in places where the next wave of commercial growth is taking shape. Ignore it, and you’re paying more for less. Understand it, and you’re unlocking deals your competitors don’t even see on the map. 630-778-1800  | info@suburbanrealestate.com

Suburban communities across the U.S. are facing a rare alignment of economic pressure, underutilized commercial space, and a shifting demand for housing and mixed-use development. In this environment, the conversation around zoning reform has picked up momentum—and with it, attention has turned to the Office to Business and Business to Building (OBBB) concept. This approach has emerged as a tool to reimagine the footprint of outdated suburban office parks and dying retail corridors, particularly enclosed malls and Class B or C office space. The OBBB model, paired with strategic zoning reform, offers an opportunity to reprogram land use in ways that meet real market demands. But unlocking that potential depends on how local governments choose to revise zoning codes and apply them in the real world. This is not a theoretical exercise—developers, planners, and suburban stakeholders are already running into challenges tied directly to outdated zoning designations and resistance to higher-density reuse. The Pressure Behind the Push Office vacancy rates in suburban submarkets continue to stay above pre-pandemic averages, and Class B and C buildings have been especially slow to recover. Many of these assets are stranded: too costly to maintain as-is, too outdated to compete, and too restricted by current zoning to convert efficiently. At the same time, many municipalities are facing a housing shortfall, strained municipal budgets, and demands from residents for more vibrant, livable neighborhoods. This creates a set of contradictory incentives. Suburbs often resist increased density or mixed-use proposals due to fears over traffic, school crowding, or perceived changes to community character. Yet the status quo—vacant buildings, declining retail tax revenue, and deteriorating infrastructure—presents its own long-term risks. The OBBB approach proposes to flip the use hierarchy: treat commercial properties as land banks rather than fixed-use zones. This shift doesn’t require sweeping urbanization. It simply reframes how existing real estate is allowed to adapt. Zoning as a Barrier—and a Key The real constraint for most office-to-residential or mixed-use conversions isn't architectural—it’s regulatory. Suburban zoning codes, especially those written in the 1980s and 1990s, tend to strictly separate uses, enforce low FARs (floor area ratios), require excessive parking minimums, and limit building height and density far below what adaptive reuse projects require. Even when the market supports the financials for conversion, developers face a patchwork of use restrictions and conditional approvals that add time, legal risk, and soft costs. This makes marginal projects unfeasible and discourages serious investment in reimagining space. Some municipalities have begun to respond. Fairfax County in Virginia, for example, implemented zoning modernization (zMOD) to consolidate use categories and streamline the approval process. New Jersey’s Office Conversion Act created a state-level path for underutilized office properties to be converted to housing, with local zoning overrides if certain criteria are met. These changes aren’t cosmetic—they directly impact project timelines, costs, and investor confidence. How OBBB Fits into the Picture The OBBB model goes beyond single-use conversions. It promotes incremental reuse and a broader framework for repositioning underused suburban space. This could include: Converting office interiors to flexible residential or co-living units Demalling suburban retail centers into town-center-style mixed-use nodes Carving out ground-level office space for medical, childcare, or education uses Adding mid-rise infill housing or structured parking to create walkable street grids Zoning reform is essential here because it determines not just what is allowed, but how much friction exists in the process. Without significant changes to use tables, parking requirements, setback rules, and density caps, the full scope of OBBB-style development remains stuck at the conceptual level. Dealing With Community Pushback Zoning reform doesn’t happen in a vacuum. Local politics play a massive role in determining how far municipalities are willing to go. Public hearings on upzoning proposals often attract vocal opposition, especially in single-family neighborhoods adjacent to targeted redevelopment areas. Concerns range from school overcrowding to perceived loss of neighborhood character. But what’s often overlooked in these discussions is that the properties under consideration—low-occupancy office buildings, abandoned retail sites—are not contributing to neighborhood vitality either. Maintaining the current zoning doesn’t preserve the past; it stalls the future. Cities that have successfully implemented OBBB-style reforms often did so by focusing initial efforts on clear win-win sites: structurally sound office buildings with ample parking, located near transit or employment centers, and far enough from single-family zones to minimize immediate pushback. Community education is also critical. Framing these projects not as giveaways to developers but as solutions to traffic, affordability, and job retention concerns can reset the conversation. Most residents aren’t invested in defending empty parking lots; they just want to feel like their neighborhood won’t be overwhelmed. How Developers Should Be Positioning Themselves Developers exploring suburban office conversions need to be proactive in engaging with zoning boards and planning departments well before submitting formal applications. Those who succeed tend to treat zoning reform as part of the project rather than a separate hurdle. In many cases, the entitlement strategy becomes as important as the architectural program. Successful repositioning efforts typically begin with parcel-by-parcel analysis, not just of building conditions, but of zoning overlays, existing infrastructure, and political receptiveness. Sites near declining malls, for instance, may have more upzoning potential than stand-alone offices in lower-density areas. Projects that offer tangible public benefits—green space, stormwater improvements, affordable housing components—have a better shot at securing necessary variances or rezoning approvals. It's also important to track which suburban communities are reworking their zoning codes. Municipalities that are initiating overlay districts or form-based code pilots should be considered targets for pipeline projects. Timing matters: getting in during a code rewrite window can reduce entitlement risk significantly. Where Malls Come Into Play Malls present a special case for zoning reform because they often sit on parcels with significant infrastructure, access, and development potential. But they also bring complexity. Many are owned by REITs or multiple investors, and the existing covenants, easements, and operating agreements can limit redevelopment options. That said, where mall owners are cooperative—or where parcels can be acquired piecemeal—OBBB principles apply well. These sites can be reimagined into town center-style hubs, with mid-rise apartments, small-scale retail, office incubators, or healthcare spaces replacing or supplementing traditional anchor tenants. Zoning reform plays a critical role in these conversions. In most legacy codes, malls are zoned for large-footprint retail use and nothing else. The codes often mandate oversized parking ratios, restrict residential use entirely, and prohibit vertical redevelopment. Municipalities that want to unlock these sites need to write zoning that supports hybrid building types, flexible phasing, and density that makes infrastructure investments worthwhile. Financial Considerations Linked to Zoning Decisions It’s worth remembering that zoning codes don’t just affect what gets built—they affect how capital gets allocated. Institutional investors evaluating suburban conversion deals often factor zoning risk heavily into underwriting. A site with as-of-right mixed-use entitlements is materially more valuable than a similar site that requires variances or conditional approvals. Tax incentives and public-private partnerships can help, but without baseline zoning flexibility, even generous incentives fall flat. Local governments that want to attract serious developers and long-term investment need to align zoning codes with current market demand, not just legacy land use assumptions. The Next 3–5 Years: What to Watch The suburban real estate market is entering a transition period where formerly untouchable use patterns are now open for reconsideration. Office buildings will continue to see downward pressure, particularly those without strong amenities or transit access. Retail conversion will accelerate, especially in regions with population growth and infrastructure already in place. Zoning reform will be the lever that determines how many of these projects move forward—or remain stuck in limbo. Municipalities that modernize their codes to support mixed-use, flexible building types and density where appropriate will be better positioned to adapt to changing economic conditions. For developers, brokers, and property owners, the key is not just waiting for reform to happen, but participating in the process and positioning holdings accordingly. The OBBB concept gives a language and framework for this rethinking—but without legal pathways to support it, the model remains largely aspirational. The suburbs aren’t static. Neither should their zoning be. The question isn’t whether change will come—it’s whether the regulatory environment will let it happen in ways that are responsive, rational, and sustainable. Those who anticipate and align with that direction will shape the next generation of suburban development. 630-778-1800  | info@suburbanrealestate.com

Infrastructure investment has always been a directional signal for future growth, but the post-OBBB (Our Built Better Bill) environment raises the stakes in a way commercial real estate (CRE) investors can’t afford to overlook. With billions earmarked for road expansions, high-speed broadband, public transit, and utility upgrades across key suburban and secondary markets, it’s no longer enough to assess locations based on current accessibility or existing amenities. The focus now shifts to forecasting infrastructure-driven demand curves—and positioning early. CRE strategy has entered a phase where asset value is increasingly tied to projected functionality rather than present-day footfall or tenancy. Site selection decisions post-OBBB are being driven by a new playbook—one where proximity to planned projects, shovel-readiness, and government-aligned zoning overlays are the leverage points that separate top-tier portfolios from stagnant ones. Infrastructure Signals Are No Longer Speculative—They’re Institutional Before OBBB, infrastructure promises were mostly seen as political theater—easy to announce, harder to implement. Today, funded projects are not only real but tracked and under public scrutiny. The Department of Transportation, Commerce, and Energy have released layered project maps that CRE firms are already parsing through using GIS tools, AI-enhanced demographic overlays, and predictive logistics modeling. A single corridor expansion or transit line can reprice hundreds of acres of surrounding land in a 12–24 month horizon. Take the recent USDOT-funded beltline widening project in Central Florida—announced in late 2023, breaking ground in early 2025, and already impacting pre-development activity as far as 10 miles out. Industrial developers are bidding on sites that were formerly agricultural-zoned with long-term entitlements simply because access roads are now in motion. Investors who rely on traditional comps or 12-month trailing rents are already mispricing these zones. The underwriting lens must shift from ‘what’s here today’ to ‘what the access map will look like post-capex deployment.’ The opportunity cost of waiting for completion is growing steeper. Broadband Rollouts Are Rewriting Suburban Office Strategy For the first time in two decades, broadband capacity is being viewed as equal to power, water, and waste. Site selectors in the suburban office space—particularly near second-tier tech corridors—are focusing heavily on fiber rollout timelines. OBBB’s $65 billion broadband expansion program is enabling tertiary markets to compete for enterprise-level back-office hubs, engineering satellites, and fintech operations. Submarkets in North Carolina, Ohio, and Arizona that were previously outside of digital-first company maps are now securing site visits due to guaranteed multi-gigabit infrastructure. The impact extends beyond traditional office: flex space, R&D hubs, and logistics command centers now require symmetrical upload speeds and latency guarantees for embedded IoT operations and automation management. A significant number of municipalities have already begun issuing digital utility readiness certificates as part of planning board submissions—a move that gives early applicants a first-mover advantage with tech-forward tenants. Freight Efficiency Is Repricing Industrial Land Near DOT Projects Not all roads are equal. What matters post-OBBB is whether a roadway investment reduces freight drag, improves last-mile reach, or connects intermodal nodes. Site selection strategy for industrial is being reframed by the National Freight Strategic Plan priorities, which now dictate where the next two decades of goods movement will be optimized. Land located near upgraded arterial highways or new intermodal linkages—especially those tied to inland port projects—are already being repriced, regardless of whether vertical development has started. In Georgia, the I-16 and I-75 interchange improvements are not only triggering warehouse pre-leasing spikes, but also land-banking activity by major REITs who previously focused on Atlanta’s established zones. CRE operators with logistics-focused portfolios are aligning with state departments of transportation to review five-year roadmaps and weigh the permitting risk against asset appreciation. This isn’t just a land play—it’s a cost-to-serve reduction opportunity that feeds directly into tenant profitability models. Transit-Adjacent Retail Is in a New Category of Its Own Transit-oriented development (TOD) isn’t new, but what’s changed post-OBBB is the level of federal funding tied to suburban and exurban transit connectors. Light rail, BRT (bus rapid transit), and micro-mobility infrastructure are receiving full-cycle investment that bypasses the funding gaps typical of past urban transit attempts. Retail developers have taken note. There’s a wave of acquisition targeting TOD parcels not just for traditional shopping centers, but for mixed-use configurations that include medical retail, live-work studios, and hospitality-driven third places. What makes these parcels particularly attractive is the predictability of foot traffic and the alignment with state-level sustainable transportation mandates. Developers in markets like Minneapolis-St. Paul and Charlotte are acquiring air rights and pushing entitlement envelopes now, well in advance of ridership gains. The real upside lies in controlling anchor locations that will be naturally backfilled by demand as the transit corridors are completed. The Smart Money Is Following Utility Grid Modernization, Quietly One of the least discussed but most consequential OBBB-related initiatives is utility grid modernization. CRE developers who specialize in mission-critical assets—data centers, cold storage, medical, or cannabis-adjacent uses—are tracking substation upgrades, battery storage deployments, and microgrid pilot zones. Markets with aging transmission lines or limited power redundancy are increasingly seen as future-proofing risks. In response, site selectors are prioritizing parcels within a 5–10 mile radius of announced grid modernization plans. That means not only proximity to clean energy generation, but proximity to infrastructure that can actually support scalable load growth. California and Texas are early examples. The ERCOT and CAISO modernization efforts are shifting investment interest from urban cores to rural edges where redundancy and speed-to-power-up are improving faster than zoning restrictions in urban zones. This also opens the door to speculative zoning overlay requests and public-private infrastructure agreements that make sites viable earlier than their market comps would suggest. How Site Selection Strategy Is Being Rebuilt Around Predictive Infrastructure Timing The ability to forecast infrastructure deployment timelines is fast becoming a competitive edge. Traditional due diligence processes are being upgraded with predictive analytics tools that scrape permitting databases, track contractor bids, and monitor equipment deployment patterns to estimate when an infrastructure improvement will actually translate into usable access or capacity. Firms that can model this timing with 85–90% accuracy are not just better at site selection—they're building margin into the timeline itself. They’re acquiring land, initiating entitlements, and bringing sites to market in sync with infrastructure rollouts, avoiding the typical 12–24 month gap where holding costs eat into return profiles. This also changes the way investment committees are underwriting. The risk isn’t the infrastructure happening; it’s being too late to the re-rating. Timing now trumps raw location quality—especially in growth markets where several competing corridors may all look attractive on paper. Rethinking Entitlements and Zoning in the Wake of Infrastructure Announcements Infrastructure investment is beginning to reset the political will behind zoning boards and entitlement fast-tracks. Municipalities that previously took years to process mixed-use or multi-family zoning changes are being pressured by regional planning authorities to fast-track approvals in alignment with state infrastructure targets. Site selection firms are working hand-in-hand with land use attorneys and former municipal planners to position their applications as infrastructure-supportive developments—an increasingly persuasive approach that aligns with transportation and utility investment narratives. There’s also a noticeable uptick in jurisdictions that are pre-entitling land as part of OBBB-funded infrastructure corridors. Developers who stay passive until RFPs are issued are missing the opportunity to shape those pre-entitlement efforts in their favor. Strategic Land Banking Isn’t a Backburner Strategy Anymore Land banking has returned, not as a hedge but as a calculated infrastructure-aligned deployment tactic. National builders, REITs, and logistics-focused operators are acquiring sites two to five years ahead of full infrastructure activation, based on projected mobility improvements and broadband coverage. They’re locking in parcels at discount pricing, running minimal holding cost strategies (agriculture leasing, solar farm installations), and preparing for full entitlement only once infrastructure progress reaches a specific completion milestone—often 60% or higher. This isn't passive investment. It’s sequencing. With predictable infrastructure timelines, CRE developers are now programming land use strategies to optimize both asset readiness and valuation upticks. Final Thought: Miss the Infrastructure, Miss the Runway OBBB funding won’t last forever, but its impact will define the next two decades of CRE growth patterns. Those who treat infrastructure like a trailing indicator will find themselves perpetually paying premiums in zones that smarter capital entered years earlier. The strategy now isn’t just to follow infrastructure—but to forecast it with precision, build around it with intention, and align capital deployment with activation timelines. CRE professionals ready to recalibrate their site selection models accordingly will find themselves well ahead of the next wave of cap rate compression and tenant competition. The rest will be stuck chasing sites that got priced out before the asphalt dried. 630-778-1800  | info@suburbanrealestate.com

Sustainability is no longer just a buzzword in suburban real estate markets like the Oregon Bend-Bend Basin (OBBB). For landlords, especially those operating multi-family or mixed-use buildings, integrating green strategies isn’t about staying trendy—it’s about maximizing property value, reducing long-term costs, and taking advantage of significant financial incentives tied to energy efficiency and environmental stewardship. Across OBBB communities, local and state governments are increasing support for green initiatives through targeted programs. This includes substantial grant funding, tax relief strategies, and long-term financing mechanisms designed to make sustainability projects more feasible for property owners who are willing to invest in efficiency upgrades or renewable energy solutions. Let’s unpack what experienced landlords in the OBBB should know if they’re looking to leverage these green incentives—without wasting time on vague promises or programs that don’t apply to their properties. Oregon’s Energy Trust and Its Strategic Leverage One of the most valuable tools for landlords across the OBBB is the Energy Trust of Oregon. This independent nonprofit delivers cash incentives, technical assistance, and consulting to help property owners integrate energy-efficient upgrades. What makes this especially appealing is how specific the programs are: you won’t have to guess what might apply to your HVAC system or lighting—there are targeted resources and predefined incentive rates based on equipment and property type. Landlords working with existing properties can claim incentives for a wide range of upgrades, including high-efficiency water heaters, insulation improvements, smart thermostats, LED conversions, and window replacements. Multi-family units with central heating systems or older ventilation setups tend to benefit most, especially when dealing with buildings constructed before 2000. For new developments or significant remodels, the Energy Trust’s New Buildings Program allows landlords to secure incentives that scale based on modeled energy performance. Developers who exceed Oregon Energy Code standards can tap into tiered rebates or per-square-foot payments, depending on how far above baseline their projects perform. To get maximum benefit, landlords should engage with Energy Trust advisors during the design or planning stage. Advisors help optimize design strategies to maximize payouts. These are often underutilized resources despite the fact that engaging early on can result in five-figure returns across medium-sized buildings. Oregon Department of Energy (ODOE) Incentives for Clean Energy and Efficiency The Oregon Department of Energy plays a more macro role in statewide sustainability efforts, but its incentives can overlap significantly with what landlords are already pursuing at the property level. Two key programs stand out: 1. Oregon Renewable Energy Development Grant Program (RED Grants) These grants are designed for systems like solar photovoltaics, solar water heating, and wind projects. While residential projects under 25kW are common, landlords with larger portfolios or commercial-grade rooftops may qualify for systems up to 2 megawatts. The grant can cover up to 35% of eligible project costs, with maximums typically set at $250,000 per project cycle. 2. Small-Scale Local Energy Loan Program (SELP) SELP offers low-interest financing for energy-efficient upgrades and renewable energy installations. Unlike conventional loans, SELP offers repayment terms designed to align with actual utility savings, which significantly reduces risk for landlords. SELP is a particularly strong fit for landlords who own older properties but don’t have cash reserves to support full capital upgrades. Both programs stack well with federal tax credits, which means the total out-of-pocket investment is often far lower than landlords expect. Advanced owners who know how to blend state, local, and federal incentives can often cut renewable project costs by more than half. Local Utility Rebates and Demand-Side Management Opportunities In the OBBB, Pacific Power and Central Electric Cooperative (CEC) operate rebate programs that offer real dollar returns for energy-efficiency investments. These rebates cover both equipment and operational upgrades—heat pumps, smart controls, energy-efficient water systems, and even building envelope improvements. For landlords with larger portfolios, participating in demand-response programs opens an additional stream of value. Utilities offer compensation to building owners who allow their systems to “power down” during peak grid demand. In exchange, landlords receive capacity payments or bill credits. Smart thermostats, central air management systems, and advanced metering infrastructure (AMI) make participation seamless—and for buildings with high seasonal demand, the returns are meaningful. Landlords who embrace demand-side management will also notice lower long-term maintenance costs, particularly for systems that previously ran at full capacity year-round. Reduced mechanical stress and smarter scheduling lead to longer system life and fewer service calls. Federal Tax Credits: Still Valuable, Often Underutilized The Inflation Reduction Act (IRA) of 2022 created an extended timeline for clean energy tax credits through at least 2032. This includes the Investment Tax Credit (ITC), which provides up to 30% of the cost of solar, battery storage, and certain electric HVAC systems. The IRA also brought in enhanced provisions for landlords investing in affordable housing or buildings located in disadvantaged census tracts. The Low-Income Communities Bonus Credit can push the ITC from 30% to 40% or more, making it one of the most powerful cost recovery tools available. To qualify, landlords must meet either locational requirements or participate in tenant-focused energy access programs. Another powerful incentive for landlords is the Section 179D Commercial Buildings Energy Efficiency Tax Deduction. While historically used by large commercial developers, 179D now applies to multi-family residential buildings over three stories. The deduction can reach $5.00 per square foot if energy savings thresholds are met. Eligibility is based on third-party certification, which must prove that upgrades surpass a certain percentage of modeled baseline consumption. Landlords pursuing whole-building energy retrofits or installing high-efficiency central systems should consider securing 179D certification before finalizing work—failing to document improvements pre-installation can disqualify the entire deduction. Financing Tools for Green Retrofits Cash flow is often the primary constraint for landlords who want to implement green upgrades but can’t afford upfront capital investments. The OBBB region offers several financing mechanisms that shift sustainability projects from CapEx into manageable, long-term operational costs. Property Assessed Clean Energy (PACE) Financing remains one of the most powerful tools in the playbook. Oregon’s commercial PACE (C-PACE) program allows landlords to finance renewable energy systems, HVAC upgrades, and building envelope improvements with repayment structured as a property tax assessment. Since repayment is tied to the property—not the owner—it enables longer amortization periods (often 20–25 years), preserving cash flow and aligning costs with property value appreciation. What makes C-PACE especially attractive is that it's considered “off-balance-sheet” in many cases. This improves the landlord’s borrowing capacity for other projects while still enabling capital improvements. It’s also transferable upon sale, which makes it ideal for value-add investors looking to exit within 5–7 years. For landlords who prefer traditional lending, Green Loan programs offered through Fannie Mae and Freddie Mac are worth reviewing. These loans offer interest rate reductions when properties commit to certain energy or water savings benchmarks. Lenders often bundle these programs into refinance options, giving landlords the chance to unlock equity while upgrading property systems. Working with lenders who understand the documentation and verification requirements of these programs is essential—many conventional underwriters won’t walk you through the energy audit or benchmarking steps required to qualify. Common Oversights That Undermine Incentive Access Experienced landlords know that missing a deadline or failing to collect documentation can eliminate eligibility for some of the largest incentives. Here are three common missteps that often go unnoticed until it’s too late: 1. Beginning work before applying Most incentive programs require pre-approval. If your contractor starts work—even demolition or site prep—before you’ve submitted your application and received approval, you could lose access to grant funding or tax credits. 2. Not separating metering for commercial and residential uses Mixed-use properties that combine retail, office, and residential spaces must demonstrate energy savings across use types. Without separated metering or proper submetering, landlords often lose credit for efficiency improvements because the utility data can’t be isolated. 3. Relying solely on contractors to manage applications Contractors are often focused on getting permits and finishing jobs—not tracking incentive paperwork. Property owners should manage these processes directly or hire third-party consultants who specialize in maximizing incentive returns. Many local energy consultants offer performance-based fee models, which means they only get paid based on how much funding they secure for your project. Green Building Certification Is Not Required—But Strategic Incentives don’t require formal green building certification. You don’t need LEED, Earth Advantage, or ENERGY STAR designations to access most state or federal benefits. However, having third-party certification can support higher valuation at sale or appraisal, especially in investor-to-investor transactions. Moreover, some tenants—particularly in higher-end suburban submarkets—are beginning to demand more visible environmental commitments from landlords. Having green credentials can improve tenant retention, reduce marketing costs, and justify premium rents. For landlords considering green certification, align it with natural upgrade cycles like roof replacement, HVAC system renewal, or major unit remodels. This lets you fold certification requirements into already planned capex budgets, rather than triggering additional costs. Final Word Green incentives across the OBBB are real, accessible, and financially rewarding—if approached with a deliberate, structured strategy. Smart landlords aren’t just retrofitting to feel good about sustainability; they’re doing it to drive NOI, increase appraisal values, and reduce long-term liabilities. With the right combination of technical advisors, documentation discipline, and timing, these programs can generate six-figure returns on capital upgrades that would otherwise be deferred or ignored. Green building is no longer a niche concern in this region. For landlords who want to stay competitive and protect long-term asset value, it’s simply part of doing business. 630-778-1800  | info@suburbanrealestate.com

Ontario’s Building Better Buildings (OBBB) initiative has become a strong driver in pushing commercial property owners toward high-efficiency renovations. What started as a regional code refinement has evolved into a performance-based standard that increasingly rewards low-carbon strategies, penalizes energy waste, and leverages permitting advantages to accelerate progress. For owners, developers, and commercial landlords operating in suburban areas, ignoring the OBBB benchmarks can quickly become a financial misstep. Incentives are aligning across provincial agencies, utility companies, and municipal permitting offices to favor buildings that push toward net-zero readiness. The smarter route isn't a passive adaptation to code—it’s strategic, data-backed renovation that positions the asset for long-term operational savings and regulatory resilience. Let’s look closely at how solar energy systems, energy retrofits, and intelligent building controls can be integrated into OBBB-aligned upgrades—and how these moves create more than just compliance wins. Solar Integration: Beyond Roof Panels Solar systems are no longer add-ons or symbolic gestures. Under the OBBB’s performance pathway, they can be used to offset key energy-use penalties and improve a building’s Energy Use Intensity (EUI) rating. The catch? It’s not enough to throw PV panels on a roof and call it sustainable. Proper alignment with OBBB compliance means considering system placement, building orientation, inverter configuration, battery storage integration, and even how electricity metering is structured. South-facing panels on a tilt-optimized angle will still give strong yields, but newer regulations favor buildings that include peak-demand offsetting strategies. That’s where battery storage shifts from optional to valuable. Owners who combine solar arrays with lithium-ion battery systems can shave demand charges, create emergency backup capacity, and maximize time-of-use rate arbitrage—especially in commercial zones subject to variable tariffs. It’s also worth noting that solar integration under OBBB isn’t just evaluated on production potential. Solar-ready design is rewarded. This means electrical infrastructure, panel supports, and roof penetrations must be pre-configured—even if the full array is scheduled for Phase 2 of the build. Developers who wait to “add solar later” may find themselves failing to hit required TEDI (Thermal Energy Demand Intensity) or TEUI (Total Energy Use Intensity) targets simply because passive readiness wasn’t considered in early-stage planning. For larger suburban commercial centers, there’s another angle: parking lot solar canopies. These structures not only generate power but also contribute to stormwater management and vehicle shading—elements that can be tied into green infrastructure credits or municipal density bonuses. It's this multifaceted return that makes solar strategy in commercial retrofits far more compelling than the superficial installs of years past. Energy Retrofits That Move the Needle OBBB doesn’t merely encourage upgrades—it structurally favors retrofits that make deep energy cuts. Cosmetic energy improvements won’t hit the benchmarks anymore. To see meaningful gains under the program, property owners must target building envelope efficiency, HVAC load reductions, and thermal bridging mitigation. One high-impact move: re-cladding with continuous exterior insulation. Especially for commercial buildings constructed in the 1980s through early 2000s, existing façades often lack the uninterrupted thermal barrier needed to reach OBBB’s TEUI targets. Upgrading to high-performance cladding systems with integrated insulation and low-conductivity anchors can reduce thermal transmittance by up to 50%, dramatically improving heat retention and lowering mechanical load. Another focus area is commercial HVAC retrofitting. Traditional rooftop units or legacy chillers aren’t compatible with the thermal targets demanded under current code. Property owners who opt for variable refrigerant flow (VRF) systems, air-source or ground-source heat pumps, and demand-controlled ventilation setups are seeing not just energy reductions, but operating savings that accelerate ROI. In mixed-use suburban developments, where occupancy varies drastically from 8 a.m. to 8 p.m., these systems offer zone-specific control that aligns closely with the energy modelling methods accepted under OBBB protocols. Windows remain a common retrofit trap. Too many owners invest in double glazing without considering solar heat gain coefficients (SHGC) or thermal breaks. For compliance, the upgrade must be more than glass replacement—it should include framing improvements, low-e coatings tuned to building orientation, and integration with automated shading systems to prevent overheating during peak sun hours. Retrofitting is no longer about patching inefficiencies. Under the OBBB structure, the goal is to create a tightly sealed, thermally efficient shell paired with systems that respond dynamically to real-world load patterns. Smart Building Systems and Ongoing Performance Monitoring Technology is no longer an optional layer in commercial buildings—it’s integral to long-term compliance. Building automation systems (BAS), fault detection tools, and advanced energy metering are all considered best practices under the OBBB performance pathway. What gives smart systems an edge is their ability to convert performance modeling into real-time responsiveness. A building that passes OBBB code review on paper but performs poorly in operation could be flagged under future maintenance audits. Smart systems help prevent this discrepancy by aligning HVAC, lighting, and plug load use with real-time occupancy and external conditions. Some of the most valuable installations now include sub-metering at the tenant or system level. This isn’t just a management convenience—it’s a requirement for effective monitoring-based commissioning (MBCx), which will soon become a baseline expectation under expanded OBBB frameworks. Properties with a solid MBCx foundation can adjust energy strategies seasonally, isolate anomalies faster, and demonstrate post-renovation compliance with empirical data—not just theoretical models. Additionally, these systems make it easier to integrate demand response strategies. As more suburban grid operators implement time-based pricing or dispatchable load programs, smart commercial buildings can pre-cool or shed load on command, unlocking further utility rebates and energy credits. Tenants benefit from more stable comfort conditions, and owners see lower operating costs. Data storage and cybersecurity in BAS design also deserve attention. With new requirements for system interoperability and privacy compliance, OBBB-aligned buildings must treat digital infrastructure with the same level of design intent as physical upgrades. Failing to secure controls networks or enable remote patching protocols could not only create building downtime but put permit renewals or rebates at risk. Permitting Advantages and Financial Incentives One of the most underappreciated components of OBBB compliance is how it speeds up approval timelines and unlocks financial pathways. Municipalities increasingly reward projects that go above minimum code with expedited permitting, density relief, or development charge reductions. These benefits aren’t just available at the downtown core. Suburban municipalities—especially those aiming to attract more commercial tax base—are adopting performance-based fast tracks. In many regions, commercial retrofits that include solar arrays, VRF systems, and BAS monitoring have received planning approval in weeks, not months, cutting holding costs and allowing faster tenant occupancy. There are also targeted funds available through Enbridge’s Custom Retrofit Program and Save on Energy’s Existing Building Commissioning initiative. These programs prioritize projects that align with OBBB methodology and can demonstrate measurable emissions reductions. Building owners who combine these with Canada Infrastructure Bank financing or CMHC’s MLI Select for mixed-use properties can stack incentives, offsetting capital costs by up to 40% in some cases. Tax depreciation also plays a role. Accelerated capital cost allowance (CCA) classes for renewable systems and high-efficiency upgrades allow property owners to recover renovation costs quickly—especially when applied as part of a long-term energy performance contract. Planning for Future Code Shifts What makes OBBB worth taking seriously isn’t just the current targets—it’s the direction of the code. TEUI and TEDI benchmarks are already being phased downward every few years. Today’s compliance will not guarantee tomorrow’s occupancy permit. Smart owners are renovating not just to meet today’s targets, but to future-proof their assets. This means selecting HVAC systems that can be upscaled, designing solar-ready roof infrastructure, and ensuring all controls systems support over-the-air firmware updates and integration with future provincial platforms. Planning for this future also includes embodied carbon. While OBBB currently centers on operational energy, momentum is growing to integrate lifecycle analysis into commercial permitting. Properties that retrofit with low-carbon materials, modular elements, and local supply chains will be ahead of the curve when embodied emissions targets are rolled out. Final Word Commercial property owners operating in Ontario’s suburban markets can’t afford to view OBBB as a box to check. It’s a gateway to smarter energy strategy, more bankable renovations, and long-term resilience against tightening environmental codes. With solar systems designed for demand offset, envelope and HVAC retrofits that slash TEUI, and intelligent controls that bring operations in line with energy modeling, properties can meet and exceed code—not just now, but for years to come. The path to net zero isn’t theoretical anymore. The OBBB is making it a permitting reality. Owners who treat this as a strategic opportunity, not a compliance burden, are already outpacing the market. 630-778-1800  | info@suburbanrealestate.com

The Ontario Building Better Business (OBBB) initiative has the potential to reshape how small businesses in the industrial and office sectors approach leasing decisions. As commercial tenants search for growth opportunities, the structure and implementation of OBBB provides real advantages—if you know how to leverage them. This isn’t just about policy; it’s about timing, real estate strategy, and recognizing which parts of the OBBB you can use to improve your site selection, negotiation strength, and overall value from a lease agreement. For those actively seeking expansion or satellite spaces in Ontario’s mid-size and suburban markets, especially near secondary urban centers, the mechanics of OBBB open up a new layer of possibilities that weren’t easily accessible before. What is the Ontario Building Better Business (OBBB) Initiative and Why It Matters for Tenants The OBBB is a province-backed program focused on reducing red tape and supporting small business resilience through targeted incentives, accelerated permitting pathways, and infrastructure support. While much of the attention around OBBB has focused on its funding components and job creation metrics, those aren’t the real levers for office and industrial tenants. Where this initiative really matters is in how it enables faster occupancy timelines and incentivizes landlords and municipalities to prioritize certain tenant types. That’s a strategic edge. If you're a tenant preparing to negotiate lease terms or evaluating multiple options in a fast-moving market, the ability to benefit from a municipality’s OBBB-backed investment can directly influence your real estate ROI. How OBBB-Enabled Zoning Shifts Could Unlock Lease-Ready Inventory Municipalities participating in OBBB are being pushed to revisit zoning bottlenecks that typically delay commercial developments. In practical terms, this means a growing number of sites—especially light industrial parks and low-rise office complexes—will either qualify for expedited approvals or will see investments from property owners encouraged by new tax incentives. This shift impacts tenants directly. A space that may have required a 12-month approval window could be turned around in half that time. That accelerated path can make certain properties far more attractive during site selection because it reduces the holding cost associated with fitting out a new space. It also allows you to respond faster to new contracts, client growth, or shifting logistics strategies. In short, you’re not stuck waiting for bureaucracy to catch up with your timeline. The next wave of functional lease space is going to come from developers and landlords who are aligning with OBBB priorities. Tenants that can identify those properties early will have first-mover advantage in markets where desirable space remains tight. New Landlord Incentives Create a More Competitive Leasing Environment OBBB is pushing municipalities to compete harder for business tenants—and they’re passing that pressure along to landlords. Through property tax abatement programs, permit fast-tracking, and in some cases, direct grant access for commercial retrofits, landlords have more reason to offer flexible lease structures or turnkey delivery options. That competitive edge helps tenants in two ways. First, it improves negotiating leverage. A landlord with OBBB-aligned incentives will be more likely to accept shorter initial lease terms, longer fit-out periods, or tenant improvement allowances without building them entirely into base rent. Second, it can lead to meaningful reductions in operational expenses over the term of a lease, especially when municipalities are waiving fees or streamlining energy audits and HVAC approvals. What you want to watch for are properties marketed as “ready-to-occupy” with municipal support. These are typically spaces where the landlord has already secured OBBB-aligned approvals, which means you’re not carrying the delay cost. Positioning for Grants and Financing: Why Timing Matters Although the OBBB itself isn’t a direct lease subsidy program, it acts as a catalyst. Tenants leasing in qualifying municipalities or buildings can tap into federal or provincial programs that require location-based eligibility. That includes funding programs like the Canada Digital Adoption Program (CDAP) or certain SME innovation grants, which are often triggered by relocation or expansion activity. For industrial tenants, especially in logistics, light manufacturing, or food processing, the synergy between OBBB-enabled sites and federal productivity programs can significantly shift the cost-benefit equation of expansion. Instead of deferring growth due to high up-front lease costs, tenants can use their new location as justification for applying to tech grants, equipment leasing subsidies, or workforce training funds. The real strategy here is aligning your lease execution date with grant intake periods. If you secure your lease a few weeks before a new funding round opens, you miss the eligibility window. A well-timed lease backed by OBBB support not only gets you in the door faster but opens up extra capital to build out the space, hire staff, or upgrade equipment. Flex Space and Hybrid-Use Industrial Buildings Are Getting Preferential Treatment OBBB is particularly favorable to developments with flexible design. Buildings that offer a mix of warehousing, light industrial, and small office space are exactly the kind of assets municipalities want to push forward. These multi-use assets are becoming the go-to solution for small businesses that need more than just a loading dock or a storefront. They need adaptability. Landlords and developers are responding by shifting toward modular interiors and designing around hybrid-use tenants. For tenants, this means greater access to smaller-bay industrial units with improved HVAC, higher clear heights, and attached admin or client-facing zones. These were traditionally hard to find in the 2,000 to 10,000 sq. ft. range without compromising on infrastructure. If your current space is underperforming—or you’re planning satellite operations—targeting these hybrid-use spaces under OBBB-supported municipalities gives you a better match for modern workflows without forcing you into oversized or overpriced traditional assets. Long-Term Lease Flexibility Through OBBB-Backed Redevelopment One of the less obvious advantages of OBBB is its impact on aging commercial stock. In many smaller urban markets or outer suburbs, the vacancy rates in Class B and C properties have been a problem for years. OBBB is helping municipalities pitch these sites to developers as prime redevelopment targets. As these buildings are repositioned, often with partial demolition or full interior retrofits, tenants get access to more flexible lease packages than they would in newly built Class A assets. It’s common to see landlords offer early occupancy options, phased TI schedules, and even expansion clauses that kick in as parts of the building come online. For tenants willing to lease space in a reactivating asset—especially one with an OBBB designation—the trade-off often leads to higher customization, better deal terms, and longer growth runway within a single location. That’s especially valuable in the 3-to-5 year lease window where small businesses often hit their next scale milestone. How to Identify OBBB-Leveraged Opportunities During Your Site Search Knowing whether a property is benefitting from OBBB alignment isn’t always obvious on the listing sheet. Brokers and landlords may not always advertise this clearly. But there are telltale signs to look for during your site tours and RFP processes. Watch for: Mentions of municipal tax reductions or permit waivers Signage promoting “business ready” sites backed by local economic development offices New construction or retrofit announcements tied to job creation metrics Conversations around accelerated site plan approvals or turnkey delivery timelines New access roads, utility upgrades, or broadband installations near the site As a tenant, ask your broker to flag OBBB-supported areas early in your search process. Municipal economic development departments can also be helpful if you’re scouting on your own. Most have dedicated small business liaisons who know which industrial parks or office corridors are eligible and can fast-track answers. Leasing Strategy in the OBBB Era: Position Yourself Before the Market Reacts Small businesses that act early benefit most. By the time the broader market starts adjusting to the downstream effects of the OBBB initiative, pricing will catch up. Early adopters can secure lease terms in improved properties at pre-incentive rates while others are still hesitating. This is especially true in secondary suburbs where leasing velocity hasn’t yet surged but where municipalities are investing heavily in infrastructure upgrades and zoning modernization. Leasing in these markets now positions you as a preferred tenant for landlords looking to meet OBBB compliance while pre-leasing space. In high-demand regions—particularly around Greater Toronto Area’s outer belt—spaces aligned with OBBB will become the new standard for mid-size business expansion. If you’re not factoring this into your search criteria, you’re likely missing out on major competitive advantages that have real financial implications over your lease term. Wrapping Up For tenants looking to make smart leasing decisions in Ontario’s current environment, the Ontario Building Better Business initiative isn’t just government noise—it’s a signal. A signal that the smart money is looking not just at buildings, but at the policies backing those buildings. Understanding how OBBB shifts site readiness, landlord motivation, and municipal engagement puts you in a stronger position to lease space that doesn’t just work—but works harder for your bottom line.. 630-778-1800  | info@suburbanrealestate.com

The Opportunity-Based Building Boom (OBBB) isn't a trend—it’s the recalibration of how commercial real estate is conceptualized, funded, developed, and monetized. In markets across the country, suburban corridors and secondary metro rings are seeing early signs of a structural shift in how space is being demanded and used. The OBBB isn’t driven by speculation or low-interest borrowing. It's fueled by a calculated blend of technology, zoning adaptability, capital reallocation, and new expectations from tenants and investors alike. For brokerages, developers, asset managers, and suburban real estate platforms like SuburbanRealEstate.com, this shift is less about adapting and more about positioning—because being early isn’t optional anymore. Here are five specific ways the OBBB is poised to reshape commercial real estate over the next decade. 1. The Rise of Zoning-Fluid Developments Municipalities have already started rewriting codes to accommodate flex zoning and fast-track approvals. Over the next 10 years, OBBB-driven projects will increasingly rely on zoning-fluid developments, where a single property type can legally and functionally switch between multiple uses within a defined time window or as the market demands. The days of building a space to serve one function for 30 years are over. Under the OBBB, properties are being underwritten for how well they can transition between a coworking hub, a fulfillment node, a light manufacturing site, or a healthcare satellite—all within the same parcel. What used to be a liability in permitting complexity is now a selling point for institutional buyers hunting for long-term yield stability. This flexibility also accelerates velocity in secondary suburban markets, where traditional anchor tenants are becoming harder to secure. Developers who build for use-conversion from the start will have leverage as suburban demand grows more elastic and less predictable. With suburban municipalities aggressively courting economic resilience, zoning-fluid frameworks will become a competitive standard, not a speculative experiment. 2. Industrial-Mixed Space Hybrids Will Reshape Suburban Footprints Traditional retail-to-industrial conversions were considered fringe projects a few years ago. That equation is now reversing. The OBBB is carving out space for a new hybrid: structures that blend Class B industrial capability with hospitality-level amenities, soft-finish offices, and customer-forward design. Tenants that historically split their footprint across three separate leases—logistics, customer-facing retail, and administrative—are consolidating. This new asset class isn't speculative; it’s a response to margin compression and speed-to-market demands from tech-forward brands, DTC players, and regional logistics providers. From a suburban standpoint, this means that underutilized strip malls, Class C office centers, and dormant big-box spaces are more than just candidates for conversion—they’re optimal launchpads. The underlying infrastructure already exists: access roads, ample parking, municipal water and power. Layering in adaptive reconfiguration creates a new product type that serves operational, experiential, and logistical functions under one roof. In terms of valuation, these hybrids won’t be compared to last-mile or traditional warehouse comps. They’ll be benchmarked against modern mixed-use product with much lower vacancy risk. Investors who understand how to underwrite this complexity will control the most defensible suburban assets moving forward. 3. Capital Will Prioritize Modular, Redeployable Structures Permanent structures with fixed mechanical systems and non-relocatable shells are becoming harder to pencil out under OBBB economics. Investors are now willing to trade traditional cap rate advantages for speed-to-deploy, adaptability, and decommissioning agility. This shift in investor psychology aligns with how modular construction is no longer seen as “cheap” but as “future-proofed.” The next generation of commercial builds in suburban submarkets will be financed not based on traditional square footage metrics, but on the unit economics of mobility, longevity, and configurability. Expect to see prefabricated cores and shell systems tied to stackable buildouts, pre-wired vertical utility shafts, and digitally controlled MEP modules that can be re-routed without wall demolition. These aren’t mobile homes or construction trailers. They’re premium structures designed to move and scale like software. In markets just outside major metro rings—where tenant lifecycles are shorter and macro shifts hit with less predictability—these assets will hold more strategic value than conventional ground-up builds. If a medical tenant vacates, the property can be disassembled and reconfigured for a cloud kitchen or urban farm without triggering a full teardown. That ability alone will dictate which portfolios are considered “OBBB-ready.” 4. Data-Centric Asset Design Will Become a Financial Imperative The OBBB won’t reward generic design. It will reward data-fed development—where real-time tenant demand, heatmapping, micro-demographics, and behavioral analytics directly inform preconstruction choices. Traditional development still leans heavily on comps and anecdotal leasing data. Over the next decade, suburban commercial projects will be programmed using demand algorithms that scan live data streams: pedestrian movement, vehicle patterning, mobile location histories, and hyperlocal spending trends. This goes far beyond GIS overlays or demographic reports. We're talking about micro-zoning development decisions to match revenue probabilities within a single census block. Projects that embed this intelligence into their DNA will attract a new class of limited partners and institutional co-investors. The underwriting process itself will change, requiring data integration from the outset, rather than appending it as a marketing tool post-build. This shift will hit suburban retail corridors first. A lifestyle center that once anchored a strip of static stores may evolve into a modularized retail lab—rotating tenant models every six months based on tracked buyer flow and consumer behavior shifts. The result? Higher per-foot revenue, lower long-term risk, and a fundamentally smarter asset. 5. The Broker's Role Will Shift from Transactional to Strategic Navigator In an OBBB-driven market, brokers who stick to traditional lease-up or transaction-based roles will be sidelined. The next generation of CRE professionals—especially those operating in suburban zones—will become embedded advisors to developers, capital partners, and tenant reps. Why? Because property selection will no longer hinge solely on price per square foot or lease length. It will hinge on post-build potential, entitlement risk scoring, modular reuse probability, and secondary conversion scenarios. Brokers who can speak this language and quantify these variables will become indispensable. Tech adoption will only accelerate this. We're already seeing suburban brokerages investing in digital twins, aerial analytics, and scenario modeling for site selection. Over the next 10 years, expect suburban real estate platforms to incorporate virtual modeling, machine-learning tenant scoring, and predictive occupancy tools into their standard toolkits. SuburbanRealEstate.com and firms operating in similar spaces are uniquely positioned to lead here—not just by adopting tools, but by training their brokers to interpret them for developers and asset managers who demand more than glossy renderings and lease comps. Brokerage becomes less about listings and more about unlocking returns in unconventional ways. What This Means for Suburban CRE Players The Opportunity-Based Building Boom is not a passing wave. It is already shaping underwriting standards, municipal policy, buildout strategy, and investor psychology. For suburban-focused players, this is the best possible timing. The early adopters in suburban CRE are now holding the cards that larger institutional players are just starting to chase. Zoning-fluid development, modular industrial hybrids, redeployable structures, algorithmic design models, and redefined broker roles are no longer speculative futures—they’re the blueprint of what’s next. For those willing to invest in these strategies and reposition portfolios now, the next 10 years aren’t a waiting game—they’re a growth window. And those who execute well during this period will define the next generation of suburban commercial real estate. 630-778-1800  | info@suburbanrealestate.com

Commercial real estate owners are standing at a rare moment of advantage, thanks to the recently enacted legislation informally dubbed the “One Big Beautiful Bill.” Packed with infrastructure incentives, zoning flexibility, and public-private financing structures, the bill represents a concentrated opportunity for those prepared to act. This isn’t about reacting to policy shifts — it’s about strategically positioning assets to ride the front of this investment wave while municipalities, planners, and lenders are finally on the same page. Start with Your Permitting Strategy — and Don’t Wait for the Municipality to Catch Up Permitting will become the pressure valve in the months ahead. The bill provides federal support for cities to expand mixed-use corridors, incentivize transit-oriented development, and fast-track adaptive reuse. But local agencies are still lagging behind on how they process the new guidelines. The result? Bottlenecks and inconsistent interpretations across departments. Owners who can bring their own legal and planning teams to the table with clearly documented pathways — including alternate code references, fire/life safety justifications, and flexible use designations — will not only speed up approval but may actually influence how local departments adopt the bill’s provisions. If you own legacy assets near train corridors or previously underutilized commercial nodes, start aligning those parcels with the bill’s key eligibility zones now. This means gathering documentation not just on zoning, but proximity to infrastructure, walkability scores, and existing conditional use approvals that can serve as leverage. The goal is to make your project easy to approve under the new guidelines — not to wait for someone at planning to interpret them for you. In some cases, property owners who take initiative and submit a full schematic with cross-referenced code citations and economic impact analysis are seeing months shaved off the entitlement process. In California, developers using pre-approved objective design standards are seeing local agencies drop discretionary reviews altogether. That trend is expected to expand under the bill’s implementation funding — especially in Sunbelt metros that are racing to meet affordable housing targets through commercial conversions. Lock Down Financing That Matches the Bill’s Hybrid Incentive Structure Private capital is already reacting. Structured debt and JV equity are flooding into opportunities that sync with the bill’s mixed-use, green-forward agenda. But not all financing partners are ready to underwrite based on incentives that haven’t yet hit the local books. This creates a short-term mismatch in expectations, where smart owners can win. The solution is to align your cap stack with lenders and equity groups who are already familiar with the federal program timelines — specifically those who are tracking CDBG-DR allocations, Green Bank matching funds, and Qualified Opportunity Zone overlays. If your financing partner doesn’t understand how to underwrite against future tax credits or federal offsets, you’re going to waste months explaining the deal. Choose capital partners who are already pre-positioned with compliance pathways and can close on conditional awards or phased entitlements. For assets that require environmental upgrades or adaptive reuse retrofits, pre-qualifying for funding through state-administered energy efficiency programs can unlock layered incentives. These often stack with grants or credits tied to the bill but require technical documentation before any draws can be made. If you’re not working with an energy consultant who can deliver ASHRAE-level modeling within your pro forma timelines, that’s a missed window. And let’s be clear: bridge loans and mezz structures are going to spike in value as the federal incentives roll out in stages over 12 to 36 months. Getting flexible terms now — with interest reserves and milestone-based performance hurdles — will allow owners to reposition more aggressively without being boxed in by near-term yield constraints. Those waiting for a perfect capital environment will miss the first wave entirely. Don’t Assume the Municipality Knows What to Do — Get in the Room, Shape the Outcomes This bill was built to encourage private-public partnerships, but most city governments aren’t set up for fast collaboration. Municipal leaders are under pressure to deliver shovel-ready projects, but their economic development staff are still decoding the funding language. This creates an opportunity for property owners with credible visions to influence how these funds get spent. Now is the time to initiate direct contact with planning directors, economic development managers, and city attorneys. Come to those meetings not with a wish list, but with proposals that match city goals — including projected tax revenues, traffic mitigation, and long-term housing or jobs impact. Attach visuals. Reference the city’s general plan. Speak their language, but keep control of the narrative. One strategy that’s proving effective is bringing in your own land-use attorneys or retired city staffers as consultants in those meetings. These experts can both advocate and translate — helping ensure your project aligns with the bill’s funding channels and the city’s political appetite. The goal isn’t to navigate bureaucracy. It’s to help the city achieve its goals with your asset as the delivery mechanism. Also, don’t underestimate the political dimension here. Cities that receive early implementation success stories are being rewarded with additional disbursements. If you can offer a commercial conversion, TOD activation, or energy-efficient build that aligns with federal metrics, you give local leaders something they can champion. That kind of positioning creates long-term goodwill — and often leads to additional approvals or subsidies down the line. Convert Obsolete Assets While the Window is Open Vacant office space, older industrial flex, underutilized strip centers — these are now high-leverage repositioning plays. The bill is structured to encourage conversion of non-residential assets into housing, community services, or small business incubation. But this window won’t stay open forever. Once cities hit their allocation targets, incentives will tighten, and competition will rise. The most strategic owners are moving now on feasibility studies that align former commercial use with multifamily or workforce housing overlays. In some states, code changes have already removed discretionary review for these conversions — provided basic safety and energy codes are met. If you own or manage a 1980s-era office park within a designated commercial corridor, there’s no excuse to sit on it. Cities are looking to those parcels first. In many cases, these conversions qualify for brownfield cleanup grants, HUD financing overlays, and tax abatements — all built into the bill’s companion funding. But you need to be the applicant. Cities won’t file for you unless your project is part of their master plan. So either shape that plan — or work around it with pre-approved site plans that conform to statewide mandates. Waiting for your site to be designated is a losing strategy. Owners who already have entitlements or overlays in place should consider phased conversions — using early incentives to de-risk the first portion of the project and then re-investing proceeds into future phases as more public dollars become available. Prioritize Mixed-Use Activation Over Traditional Leasing The era of single-use leasing is on pause — at least when public dollars are involved. Under the new bill, funds are tied to economic activation, not just occupancy. That means ground-floor retail, community use space, and even co-working hubs with public access score higher than locked-in leases with national tenants. This doesn’t mean giving up on yield. It means reframing tenancy models around flexible use and civic integration. In practical terms, that might involve negotiating shorter lease terms with local operators, applying for small business grants on behalf of tenants, or building in TI packages that meet energy or accessibility thresholds. Owners who understand how to position their assets as community infrastructure — not just revenue generators — are getting preference when cities decide where to spend their implementation dollars. That’s not about philanthropy; it’s about market leverage. It also creates optionality. Assets that are built or renovated under the bill’s guidelines are more likely to qualify for resale to impact funds, ESG-backed REITs, or institutional buyers with mission-aligned mandates. That kind of liquidity is going to matter when interest rates remain stubborn or when traditional refinancing routes are limited. Final Note: The Clock Is Ticking This isn’t a five-year rollout. Most of the federal funds tied to the One Big Beautiful Bill come with implementation deadlines, spend-down benchmarks, and political reporting requirements. Cities that don’t show movement by the end of this calendar year risk losing funding — and so do the property owners who haven’t moved. If your assets sit in infill locations, have aging infrastructure, or could qualify for adaptive reuse — and you’re not already building a permitting and financing strategy around the bill’s incentives — you’re behind. Not fatally, but measurably. Start with what you can control: land use research, financing partner alignment, and direct engagement with city staff. If you move early, you don’t just get the incentives. You shape the opportunity itself. That’s not lobbying. That’s leadership. 630-778-1800  | info@suburbanrealestate.com

The reintroduction of 100% bonus depreciation under the One Big Beautiful Bill Act (OBBB) is shifting renovation planning into high gear for commercial property owners and managers. With the right strategy, improvements to HVAC systems, parking lots, and building technology can trigger major first-year deductions—if executed and categorized correctly. These aren't minor tax tweaks. This is about structuring renovation schedules and asset classifications to legally accelerate depreciation in ways that directly affect cash flow, asset valuation, and tax timing. Too many operators are still treating bonus depreciation as a general tax perk. The ones who will come out ahead in 2025 are those who understand how to align it with engineering-based cost segregation studies, current IRS depreciation guidance, and the Business Provisions Tax amendments that are part of the same legislative wave. If you're considering six-figure upgrades—or even low seven figures—you need more than a CPA. You need a plan that starts with the end-of-year tax return and works backward into construction scheduling, procurement, and invoicing. Let’s walk through how to get it right. 100% Bonus Depreciation Is Not Retroactive—But It Is Time Sensitive Under the OBBB Act, the restoration of 100% bonus depreciation applies only to qualified property placed in service during tax years 2025 through 2026. After that, unless new legislation extends the provision, the rate phases down again. That puts a two-year window in front of operators, and the clock is already ticking. Assets need to be in service—not just purchased—by year-end to qualify. That single distinction eliminates a lot of half-finished renovations from eligibility. The HVAC chiller sitting in a staging area in December won’t count. Nor will the access control system still waiting on software commissioning. This is where coordination with general contractors and subcontractors becomes a tax strategy, not just a logistics decision. Completion certificates, commissioning documents, and mechanical sign-offs all matter when you’re pushing an install into Q4. The tax code doesn’t recognize "substantially complete" as a benchmark. It wants placed-in-service, and that has a very narrow meaning. Cost Segregation: The Catalyst for Bigger Deductions The best way to leverage bonus depreciation is to start with a cost segregation study, even for renovations. Property managers sometimes skip this step under the assumption that it's only for newly acquired assets. That’s a mistake—especially now. A proper engineering-based cost segregation study can identify which components of your renovation qualify as short-lived assets (5, 7, or 15-year property), which are eligible for bonus depreciation. This is particularly important for items like low-voltage wiring, HVAC distribution, exterior lighting, security systems, and parking lot paving. These often get buried in 39-year property if left unsegregated. Let’s say you're resurfacing a parking lot and adding LED lighting with timers and motion sensors. Without a study, the full cost gets lumped into the building and depreciated over nearly four decades. With a study, the lighting can go into 5-year property, and paving could qualify as 15-year land improvements—both now eligible for 100% first-year write-off. Same spend, drastically better tax outcome. HVAC and Mechanical: The Hidden Goldmine HVAC upgrades, particularly in office or multi-tenant retail environments, offer one of the best opportunities for aggressive depreciation. But not every component qualifies equally. Rooftop units, split systems, ductwork, chillers, boilers, and control systems must be analyzed separately. Under the current MACRS (Modified Accelerated Cost Recovery System) guidance, some portions of a full system replacement—like thermostats, zone dampers, or smart control wiring—can be broken out as 5- or 7-year property. The Business Provisions Tax update further clarified treatment for certain energy-efficient commercial building components. Section 179D still applies, but it's separate from bonus depreciation. When you’re upgrading HVAC with energy goals in mind, coordinate both deductions. It’s possible to claim 179D for the energy portion of the spend and still bonus-depreciate eligible components not covered under that credit. And don’t overlook commissioning. ASHRAE compliance can determine whether a system qualifies under energy-efficient standards, which opens the door to parallel deductions. Tech Infrastructure: Networking, Access Control, and Smart Building Systems Another overlooked category: the building’s tech stack. In recent years, more property operators have invested in smart building infrastructure—access control, surveillance, smart thermostats, occupancy sensors, and networking gear. These assets, often depreciated incorrectly under 39-year property, are typically eligible for 5-year treatment. The trick is correct classification at the procurement and install stages. If you allow your general contractor to bill tech hardware under “general electrical” or “building improvements,” the line-item data won't be specific enough to reclassify. Work with an accountant or cost segregation expert in advance to specify invoice language and asset categorization. Be especially cautious with integrated systems. A security system that’s bundled with HVAC controls or elevator management can get stuck in long-life property if the vendor doesn’t break it out. Control the paperwork from the start to preserve eligibility. Parking Lot and Site Improvements: Don’t Miss the 15-Year Window Exterior improvements are frequently misclassified—and that’s a costly mistake. Parking lot expansions, curbs, sidewalks, lighting, drainage, signage, and even fencing all fall under 15-year land improvements. With bonus depreciation back at 100%, that means full expensing in the year the work is completed. The key point is that the land itself is not depreciable, but improvements to the land are. Too many owners conflate the two. Work with vendors who can split their invoices between land and improvement components. A paving contractor who delivers a single lump-sum invoice for "site work" may limit your ability to accelerate depreciation, especially in an audit. Also note that certain stormwater and drainage improvements—depending on your local jurisdiction and how they tie into the municipal system—can sometimes fall under different tax treatment. Have these reviewed in advance, especially if you're applying for local rebates or incentives tied to infrastructure development. Grouping Renovation Spend for Maximum Effect Timing renovations is not just about labor availability and weather conditions anymore. It's now a tax-advantaged sequencing exercise. If you plan multiple projects—say, HVAC upgrades in Q1 and parking lot improvements in Q3—there’s an opportunity to group them into a single depreciation strategy. But this only works if the assets are placed in service within the same tax year. Don’t assume your tax advisor will automatically catch this. Grouping works best when property owners or managers drive the strategy from the top down. You need coordination between the GC, accounting team, and any third-party cost segregation firm. Miss the timing, and you're locked into multi-year depreciation for a renovation that could have been fully deducted. Also consider how you’ll fund the improvements. Financing via certain lease arrangements can affect ownership status of the asset at year-end. If you lease an HVAC system and the lessor maintains ownership, you can’t depreciate what you don’t own. Evaluate your procurement method before committing. Legal Considerations Under the One Big Beautiful Bill Act The OBBB Act introduced bonus depreciation alongside a few critical restrictions under the Business Provisions Tax section. There’s now more scrutiny on basis adjustments and the timing of asset reclassification, especially for real estate held in partnerships or pass-through entities. If you're managing properties in a REIT structure or under a partnership with multiple LPs, be cautious of how bonus depreciation affects capital accounts. Aggressive deductions might trigger basis limitations or passive activity loss issues for some investors. In particular, real estate professionals who materially participate in the operation of the property can often take full advantage of bonus depreciation, whereas passive investors might be subject to more limitations. Your tax structure matters more than ever under this new regime. Final Thoughts The return of 100% bonus depreciation creates a narrow but powerful tax planning opportunity. But it's not a plug-and-play strategy. Success depends on engineering precision, invoice-level detail, and strategic timing. Renovation plans should now start with tax implications—not finish there. Whether you're resurfacing a parking lot, modernizing an HVAC system, or upgrading access control tech, every component needs to be reviewed, categorized, and placed in service with documentation that supports first-year deductions. Done right, these renovations can produce outsized tax savings that help fund the next round of capital improvements. Real estate professionals who want to maximize the benefit of this two-year window should be assembling their teams now. Contractors, cost segregation specialists, and tax advisors all need to be on the same page. Don’t wait until Q4 to get started. That’s how you miss the placed-in-service deadline and leave money on the table. 2025 and 2026 may be the last years for full bonus depreciation at 100%. Use them wisely. 630-778-1800  | info@suburbanrealestate.com