By Shaun Keegan
Once seen as a sustainability play, rooftop solar is now a financial strategy for commercial property owners. By leasing unused roof space, owners can generate new long-term revenue streams and increase asset values, all without capital expenditure. With federal incentives in motion and state programs expanding, timing has never been more critical to lock in peak rooftop solar rates.
Recent guidance from the Treasury Department, coupled with the One Big Beautiful Bill Act, has shortened the period to claim federal incentives for rooftop solar. Commercial real estate (CRE) owners must now act quickly to obtain the full 30% investment tax credit (ITC) and secure financial benefits, while delays could lead to lower rental rates and lower returns.
- Through December 31, 2025, unrestricted projects are eligible for the full 30% ITC, keeping rental rates at their peak.
- From January 1 to July 4, 2026, new purchasing restrictions for solar equipment will come into effect, likely increasing project costs and decreasing lease payments.
- After July 4, 2026, new projects will no longer be eligible for the ITC.
The key model to pursue before the ITC sunset is Front-of-the-Meter (FTM) solar, which allows property owners to monetize rooftop space through lease payments while avoiding the complexity of purchasing the power produced. While rooftop solar will remain viable after the ITC’s full sunset, leasing rates are expected to decline.
CRE owners work with proven development partners to realize the full value of the ITC and finalize solar energy plans, even for buildings still under development. Projects that qualify for the ITC generate higher lease payments for owners, making this the optimal time to act. To maximize value, developers structure portfolio-wide partnerships that span multiple properties and secure current incentives.
State-level solar programs also extend benefits for CRE owners in a post-ITC market. For example, New Jersey just increased the capacity of its rooftop solar program tenfold, creating one of the most attractive markets in the country to accommodate solar energy. Other states, including Illinois, are currently proposing expanded programs and higher prices for renewable energy credits starting in 2026, which would maintain the higher lease rates that make solar so attractive to owners. Like New Jersey and Illinois, many states across the country are implementing guidelines for solar-friendly programs in response to rising electricity prices and growing support from the commercial real estate industry.
Industry advocacy has played a key role in shaping this landscape. Organizations, including NAIOP, publicly advocated for favorable guidance from the Treasury Department on guidelines set forth in the One Big Beautiful Bill Act, allowing property owners and developers to take advantage of the shorter period to claim the ITC. For CRE owners, the message is clear: the opportunity to secure the highest possible rental price is now available. For ITC eligibility, projects must be named and implemented by mid-2026. Delay beyond this point means lower rental rates and reduced federal incentives, even if rooftop solar development continues. Those who act quickly, partner with experienced developers and plan strategically across their portfolio will benefit from the highest lease rates, higher portfolio valuations and future-proof assets.
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