Stacking Solar, Signage & More: Boosting Small-Box CRE Yields by 50–200 bps

Loan Analytics, LLC
3 days ago
24 min read

Introduction:

Small-box commercial real estate (CRE) assets – self-storage facilities, RV parks, and fuel/convenience retail sites – traditionally generate stable but modest unlevered yields (often ~5–9% annually, depending on asset type). In today’s competitive lending environment, structured ancillary revenues from solar power, billboards, cell tower leases, and parking have emerged as high-impact income boosters. By “revenue stacking” these additional streams, owners can increase net operating income (NOI) and boost unlevered yields by an estimated 50–200 basis points (0.5–2.0%). This Loan Analytics blog article quantifies these ancillary revenue opportunities using current data and industry forecasts, examines the practical constraints (e.g. easements, roof load, zoning) that enable or limit such strategies, and discusses how lenders and appraisers should underwrite these non-traditional income sources. The goal is to provide lenders, investors, and credit committees with a data-driven analysis of ancillary income potential – including tables comparing uplift by asset class and constraint scenario – and to recommend standardized guidelines for crediting these revenues in loan coverage and DSCR tests.

Ancillary Revenue Opportunities in Small-Box Properties

Core thesis: Ancillary income streams can meaningfully raise a property’s NOI without major expansions, effectively increasing the property’s unlevered yield (cap rate) by 0.5–2.0% in many cases. For example, consider a self-storage facility valued at $5 million with a base NOI of $300,000 (a 6% yield). Adding $50,000 of ancillary revenue (via solar savings, signage, etc.) would lift NOI to $350,000 – raising the unlevered yield to 7% (a 100 bps increase). In smaller assets, even modest dollar amounts have an outsized effect on yield. Table 1 illustrates typical ancillary income potentials for each asset type:

Table 1 – Illustrative Ancillary Income Uplift by Asset Class (annual NOI contribution and approximate yield boost):

Asset Class	Solar Power	Billboard Lease	Cell Tower Lease	Parking/Other	Total Potential Boost (bps)
Self-Storage	~$10k savings (≈30 bps)	~$10–20k rent (≈40–60 bps)	~$12–18k rent (≈50 bps)	~$5–10k fees (≈15–20 bps)	~100–150 bps (if all stacked)
RV Parks	~$5k savings (≈10 bps)	~$10k rent (≈20 bps)*	~$10–15k rent (≈20–30 bps)	minimal (limited)	~50+ bps (select cases)
Fuel/C-Store	~$8–12k savings (≈20 bps)	~$15k rent (≈30 bps)	~$20–25k rent (≈40–50 bps)	~$5k fees (≈10 bps)	~100 bps (high-demand site)

As shown above, self-storage facilities are prime candidates for revenue stacking – they often have large, flat rooftops for solar and are sometimes near highways for billboard or telecom leases. RV parks (with higher base yields around 8–10%) can still gain incremental income via billboards or cell towers, though solar and parking add-ons are usually smaller factors. Gas stations and convenience stores can benefit across all categories: solar panels on canopies/roofs can cut energy costs by 80–100%, high-traffic locations can host lucrative billboards or digital signage, and spare land can be monetized for telecom equipment or paid parking (e.g. truck overnight parking or EV charging stations).

Let’s delve into each ancillary stream in detail:

Solar Energy Generation (Rooftop/Canopy): Installing photovoltaic panels on facility roofs or carport canopies converts underutilized space into an energy asset. The primary benefit is reduced utility expense, directly boosting NOI. For instance, Extra Space Storage (a self-storage REIT) added solar across 65 sites (5.5 MW capacity) offsetting 80–100% of each facility’s electricity use, yielding $600,000 in first-year energy savings (about $9,200 per site) and an estimated $15 million savings over 25 years. This translates to roughly 3–5% NOI uplift per facility just from lower electric bills. Federal incentives bolster the economics – the 30% Investment Tax Credit (ITC) for commercial solar was renewed through 2032, and accelerated depreciation (bonus/MACRS) can offset costs quickly. According to industry analyses, a $500,000 solar investment can pay back in ~5 years under favorable conditions, after which the power is essentially free. By 2025, many businesses view solar not only as sustainability practice but as a profitability strategy amid rising utility rates. Regionally, solar ROI is highest in sun-rich states (e.g. the Southeast and Southwest) with supportive net-metering policies. In sum, solar installations typically contribute $5k–$15k in annual NOI for small-box properties (depending on system size and local power costs), translating to a 20–50 bps yield increase for many assets. Importantly, this income is resilient: once panels are installed and paid off, the savings are relatively predictable over 20+ years, making it a finance-friendly ancillary stream.
Billboard Leases & On-Site Advertising: Leasing land or facade space for billboards or other signage can generate steady rent with minimal involvement. Small-box properties near highways or busy roads are ideal. A static roadside billboard in a secondary market might pay the landowner on the order of $10,000–$20,000 per year in ground rent. In premium locations, especially for digital billboards, rents or revenue-share deals can be much higher – digital signs can cycle multiple ads, multiplying revenue from a single sign structure. (In fact, the ability to deliver multiple rotating ads on LED billboards has significantly boosted profitability per sign.) The overall out-of-home advertising market is robust, valued around $58 billion in 2025 and projected to grow ~3.2% annually through 2029, indicating sustained demand from advertisers. However, supply of new billboard sites is constrained by regulation: many municipalities have strict zoning, height, and setback rules for billboards, and some U.S. states (e.g. Vermont, Maine) ban new off-premise billboards entirely. Thus, properties with grandfathered sign permits or suitable commercial zoning have a competitive moat for this ancillary revenue. For owners, a long-term billboard lease to a major operator (e.g. Clear Channel or Lamar) can be underwritten almost like a credit tenant lease, often with multi-year terms and built-in escalations. A notable case study: a self-storage owner in one report found that operating their own digital billboard could yield far more than a simple land lease – “a cell tower with two or more tenants can garner upward of $200,000/year... in contrast, leasing land to a tower company receives only $10,000–$20,000”. While $200k is an extreme scenario, it underscores the magnitude of advertising dollars at play. For most small-box CRE, billboard income might add 30–60 bps to yield (e.g. $15k on a $3M property is +0.5% yield).
Cell Tower and Telecom Equipment Leases: Ever-increasing demand for wireless coverage and 5G expansion has tower companies and carriers seeking new sites – and self-storage, RV park, and c-store properties often have the spare land or rooftop height to host equipment. The typical ground lease for a cell tower (or rooftop lease for antennas) can range widely based on location and network needs. In 2025, new cell site leases ranged from roughly $500 per month in rural areas to $5,000+ per month in urban areas. A median rent is around $1,000–$2,000/month ($12–24k annually) for a single-carrier tower in a suburban locale. These agreements often include annual rent escalators (~2–3%) and long initial terms (5–10 years) with renewal options, providing a very stable income stream if a tenant is secured. Additionally, if the site can accommodate multiple carriers (colocations), some contracts share a portion of subtenant revenue with the property owner – or the owner could negotiate a higher base rent for multi-tenant potential. The upside is significant: industry experts note that a tower hosting 2–3 carriers can generate well over $100k/year (though much of that goes to the tower operator). Property owners who simply lease to a tower company typically see a smaller fraction (again, often in the tens of thousands per year), but it’s essentially found money on excess land. For lenders, telecom rent can be considered akin to commercial lease income from an investment-grade tenant (major carriers like Verizon, AT&T, etc., or towercos like American Tower). However, one underwriting watch-out is the lease term vs. loan term: many carriers insist on termination rights or 5-year renewal cycles, so lenders may haircut this income if the lease could hypothetically end before the loan matures. Nonetheless, in practice carriers rarely relocate unless forced – the strategic importance of established tower sites (coverage area, zoning approval) means leases tend to roll over for decades. Overall, a cell tower can contribute on the order of $10k–$30k in NOI (depending on site class), equating to roughly 30–50 bps in yield improvement for many small-box assets. And beyond full towers, even minor telecom equipment can help – e.g. a rooftop small-cell antenna might pay a few thousand per year, useful for dense urban areas where macro towers aren’t feasible.
Parking Revenue & EV Charging: Many small-box CRE sites have surface parking or excess land that can be monetized beyond the primary business use. RV parks and self-storage facilities sometimes rent out spare spots for boat/RV storage or charge for premium covered parking – this can bring incremental monthly fees (e.g. 10 extra vehicle storage spaces at $75/month yields ~$9,000/year). Convenience retail and fuel stations can leverage parking in creative ways: for example, truck stops and larger gas stations now commonly charge for reserved overnight truck parking or for use of RV dump stations and showers. Even a modest 5–10 truck parking spots at $15 each per night could translate to >$20k annual revenue if demand is steady. Another emerging opportunity is EV charging stations – while the direct electricity resale margin is slim in many cases (and installation costs are significant), fast-chargers can attract high-income customers who spend money in-store during charging. Some station owners partner with charging providers for rent or revenue share, effectively treating EV chargers as tenants on their lot. As EV adoption grows, having chargers on-site can future-proof a fuel retailer’s business and add ancillary income. The parking industry at large is stable but evolving: U.S. parking facility revenues rebounded post-pandemic to $13.8 billion in 2025 (after ~9.2% annual growth from 2020–25 due to the recovery) and are forecast to reach $14.9 billion by 2030 (~1.6% CAGR, a much slower growth rate as the market normalizes). Macro trends like ridesharing and public transit expansion pose headwinds for parking demand – IBISWorld predicts that rideshare services and future self-driving cars will “steer consumers away from parking services” over the next five years. Still, location is everything: high-traffic urban centers and car-centric regions continue to support premium parking pricing. For instance, the West Coast and Sunbelt (e.g. Los Angeles, the Southeast) have heavy car reliance and thus sustained parking needs. In contrast, dense cities with robust public transit or younger demographics may see flatter parking growth. For a lender, uncontracted parking income (e.g. daily fees) is the least predictable ancillary stream – it can fluctuate with traffic patterns and economic activity. Thus, underwriting might only credit such revenue if there is a demonstrated seasonal trend or third-party operating agreement. Nonetheless, when present, parking fees can contribute perhaps $5k–$15k per year for a small property (or considerably more in special cases like event parking near stadiums), translating to ~10–30 bps of yield improvement.

Constraints: What Enables or Blocks “Revenue Stacking”?

Not every property can add every ancillary income – physical and legal constraints often determine which revenue streams are feasible. Key factors include:

Zoning and Land-Use Regulations: Local zoning codes may explicitly restrict or prohibit certain uses. For example, billboards are heavily regulated – many jurisdictions ban new off-premise signs or enforce height, size, and spacing requirements (e.g. one billboard per X miles of highway). A parcel’s zoning might need to be commercial or industrial to allow a billboard or a cell tower; even then, special permits are usually required. Similarly, installing a 100-foot cell tower could be barred in a residentially zoned area or limited by airport vicinity height rules. Lenders should verify that any ancillary use has either by-right zoning allowance or an approved special use permit. Easements also come into play: properties adjacent to highways might have state DOT scenic easements preventing billboard construction, or utility easements that limit where a tower base can go. On the other hand, sometimes creative easements can enable revenue: an owner might grant a solar easement to a utility or community solar developer to install panels on an unused corner, collecting lease payments (this can be an option if the owner doesn’t want to invest in the system themselves).
Structural Capacity (Roof Load & Design): The condition and design of improvements will dictate if they can host certain equipment. Solar PV arrays require roof space and structural load capacity – a newer steel roof may easily handle a distributed load, but an older building with lightweight trusses might need reinforcement (adding cost). Roof layout matters too: flat, unobstructed roofs are best; a heavily shaded or fragmented roof might severely reduce solar potential. For rooftop cell installations or small antennas, structural and wind loading must be considered, and there must be access for maintenance. If a building is too low (one-story) and surrounded by taller structures, a rooftop antenna may not provide adequate coverage – a ground tower might be needed instead. Ground-mounted solar has its own constraints: open land area and lack of shading are needed, and many small CRE lots don’t have enough unused space once parking and setbacks are accounted for.
Setbacks, Visibility, and Site Layout: Ancillary structures typically must fit within property boundaries with appropriate setbacks. A billboard, for instance, might need to be set back say 5–10 feet from property lines and not obstruct sight triangles at intersections. The structure must also have clear visibility lines for drivers – so nearby trees or buildings can’t block it. This means the site must have a positioning that faces the traffic flow. Not every self-storage on a highway, for example, has a spot where a billboard could be angled for clear view; some will be obscured by other development. Cell towers usually require a lease area on the ground (often a 20’x20’ or larger fenced area) plus a fall zone clearance. A cramped parcel may simply have no room to ground-lease a corner for a tower if all land is needed for parking or circulation. Even parking monetization is constrained by site layout – a convenience store cannot lease out customer parking spaces during business hours without harming its primary business, so paid parking might only be viable after hours or if excess capacity exists. Additionally, many cities set minimum parking requirements for businesses; an owner can’t legally eliminate required spaces for other uses.
Contractual and Operational Constraints: Some constraints are contractual: if the property is subject to a ground lease or franchise agreement, the primary tenant/operator might have rights that preclude the landlord from adding, say, a billboard that the tenant doesn’t approve (common in franchised gas station agreements). Similarly, a lender’s own requirements or existing loan covenants might restrict additional leases or alterations on the site without consent. Operationally, owners must consider interference and liability – e.g. will a cell tower construction disrupt facility operation during installation? Will solar panels’ glare bother neighbors or violate any agreements? These issues are surmountable with planning, but they require due diligence.

Crucially, not all ancillary revenues are mutually compatible. An owner might need to choose between options if they compete for the same physical or financial resources. For instance, placing a large billboard on the south-facing side of a building could reduce roof space or sunlight for solar panels. A ground space used for a cell tower can’t simultaneously be used for parking expansion. There may also be visual aesthetic trade-offs: a municipality that allows one special use on a site might be reluctant to approve a second (e.g. adding both a tower and a billboard could face community pushback). The most successful “revenue stacked” properties tend to have ample land area and strategic location – for example, a 5-acre travel center off an interstate might support a cell tower at the back, a big digital billboard facing the highway, solar canopies over the fueling lanes, and paid truck parking, all without interfering with each other. In contrast, a small urban storage building might only manage a solar array or a rooftop antenna.

Bottom line: A careful assessment of site constraints is step one in evaluating ancillary income potential. Lenders and investors should ask: Does this property have the physical capacity and legal entitlement to add the proposed ancillary use? If yes, the upside can be substantial – but if no, pro forma income from that source should be zeroed out.

Underwriting and Appraisal: Closing the Ancillary Income Gap

Even when ancillary revenues are present, there is often an underwriting gap in how they’re treated. Many lenders and appraisers take a conservative approach, sometimes ignoring or heavily discounting ancillary income in cash flow evaluations. This creates a disconnect: properties that genuinely generate extra cash may still be valued or sized for loans as if they didn’t. Part of this gap stems from inconsistent market data – not all comps have ancillary streams, so appraisers may exclude ancillary NOI to “level the field.” Additionally, lenders might view these revenues as less reliable than primary rents, defaulting to cautious underwriting.

However, as ancillary opportunities become more commonplace and quantifiable, the industry is moving toward standardized revenue-credit rules. Here we propose a framework to treat ancillary income in underwriting and appraisal:

Stabilized vs. Non-Stabilized Income: First, distinguish between in-place, contracted ancillary income and potential or uncontracted income. If an ancillary source is already up and running – e.g. a signed 10-year lease with an advertising company or a functioning solar array with a year of savings data – it should be treated as part of stabilized NOI (perhaps with a slight hair-cut for conservatism). By contrast, if an owner’s pro forma includes “$20k from future billboards” but no sign exists or no lease is signed, a prudent underwriter will give little to no credit until it’s more certain. Recommendation: Only credit income from executed leases/agreements or installations in place, or apply a substantial discount (e.g. 50% credit) for projections without seasoning.
Credit Quality and Term of Ancillary Leases: Not all ancillary dollars are equal in risk. A month-to-month parking fee is inherently less secure than a 5-year lease with AT&T on a cell tower. Lenders should stratify ancillary income by its durability. For example, telecom and billboard leases with investment-grade counterparties can be underwritten similarly to tenant leases. If the lease term extends beyond the loan term or at least well into it, consider counting 100% of that income in DSCR calculations (perhaps with a slightly higher cap rate in valuation to reflect re-leasing risk). Conversely, ancillary income that is shorter-term or from many small customers (like transient parking or campground firewood sales) might be either excluded from DSCR or included at a fraction (to be safe under stress).
Standardized Haircuts and Caps: Banks and valuers could adopt standardized haircuts for certain categories. For instance, solar energy savings – since they reduce a genuine expense and are relatively predictable – might be taken at say 80–100% credit (perhaps adjusted for panel degradation over time). Billboard and cell tower rents could be credited at 75–90% if leased to strong operators on multi-year terms (to account for a vacancy/renewal factor). Parking income might be credited at a lower ratio, e.g. 50%, unless under contract with a third-party operator or evidenced by multi-year history. These percentages can be refined as more market data on ancillary revenue stability becomes available. The key is to apply the same rules across loans to ensure consistency.
Appraisal Methodology: Appraisers should itemize ancillary income in valuations rather than lumping it blindly into NOI with a generic cap rate. A recommended approach is the “dual-cap” or segregated income approach: value the core property NOI at the market cap rate for that asset, then value each ancillary income stream either by applying a higher cap rate (to reflect higher risk/less liquidity of that income) or via a direct DCF of the contract term. For example, a self-storage facility’s storage rents might be cap’d at 6.0%, but the $15k from a billboard might be cap’d at 8–10% (or valued via a 10-year DCF with renewal probability) and then added to the core value. This prevents undervaluing the property (by ignoring the income) but also avoids overvaluing it (by treating $1 of ancillary equal to $1 of core NOI). Standard appraisal guidelines could be updated to include commentary on common ancillary types – e.g., “if present, cell tower lease income should be capitalized using a rate X% above the base cap rate, or excluded if lease term < 2 years”. The goal is a more nuanced valuation that properly reflects additional value from ancillaries without giving them full credit as if they were standard lease income.
DSCR and Coverage Tests: Lenders can incorporate ancillary revenue in coverage calculations, but with sensitivity. One best practice is to calculate DSCR both including and excluding ancillary income. For instance, if with ancillary NOI the DSCR is 1.30x but without it falls to 1.15x, the lender might decide to structure the loan such that it still meets minimum DSCR even if the ancillary falls away (perhaps by lowering LTV or requiring a reserve). Another approach is to allow ancillary income to count for DSCR only up to a certain percentage of total NOI – e.g., “greenlight” a deal if base DSCR is, say, 1.20x and ancillary lifts it to 1.30x, but not if the deal is completely reliant on ancillary dollars to pass. Essentially, ancillary revenue can be used to enhance coverage, but not to mask an otherwise non-viable deal.
Documentation and Market Evidence: Underwriters should require evidence for any ancillary income being counted. This could be copies of leases (for billboards/towers), utility savings calculations with engineering reports (for solar), or historical financials (for parking fees or other on-site sales). Market studies can also support assumptions – e.g., if a borrower assumes $500 per month per RV storage space, is that in line with local market rates? Here, data from sources like the Loan Analytics database or industry research (IBISWorld, etc.) can provide benchmarks to avoid overly rosy projections. For instance, if Loan Analytics data (2025) shows typical billboard ground rents in the region are $1,000/month, an appraisal shouldn’t give credit for $5,000/month unless a contract proving such exists.

By implementing the above guidelines, lenders and appraisers can close the gap in recognizing ancillary income. This not only rewards savvy owners for value-add initiatives but also encourages a more transparent, consistent market where such income is quantifiable. Over time, as more small-box properties successfully monetize ancillary opportunities, we may even see cap rate compression for those assets (since buyers will pay for the higher cash flow). Lenders who get comfortable underwriting these revenues can lend more aggressively (while still prudently) on assets that previously might have been evaluated on just their base income.

Outlook 2025–2030: Trends and Regional Variations

Looking ahead, ancillary revenue opportunities in small-box CRE are poised to grow, though not uniformly across geographies or property types. Here are key trends and regional factors expected over 2025–2030:

Solar and Sustainability Initiatives: The push for sustainability and cost efficiency will likely make solar panels as common as neon signs on small commercial rooftops. The economics of commercial solar continue to improve – panel efficiencies are rising, and installation costs per watt have gradually fallen. Federal incentives (30% ITC) are locked in for the foreseeable future, and many states have additional rebates or tax credits. Moreover, corporate ESG goals mean even mid-sized property owners want to tout renewable energy use. We anticipate steady growth in on-site solar generation capacity. According to SEIA projections, the U.S. could install hundreds of gigawatts of new solar by 2030 under favorable policies. While most of that is utility-scale, a notable share will be distributed commercial solar. We also expect energy storage (batteries) might enter the mix to help properties use more of their solar power overnight or provide backup – though for now, batteries are expensive, they may be viable by late decade for certain uses (and have their own investment tax credit now). Regionally, the Sunbelt (Southeast, Southwest) will lead in commercial solar uptake simply due to higher irradiation and often higher utility rates, whereas some colder northern regions might see longer payback periods. States with high electricity costs (California, Northeast) ironically also see strong solar adoption despite moderate sun, because the savings per kWh is greater. Lenders can expect more borrowers including solar upgrade plans in capex, and should be ready to underwrite those (possibly even financing them via green loans). The trend is clear: by 2030, a much larger percentage of self-storage and retail buildings will have solar, making it almost a standard revenue (or cost-saving) item rather than an exotic add-on.
Evolution of Outdoor Advertising: Out-of-home (OOH) advertising is one of the oldest ancillary uses (billboards have been around for a century), and it’s not going away – but it is evolving. The industry is shifting heavily to digital displays. As of 2025, roughly half of new billboard/sign revenue is from digital signs, and manufacturers are seeing robust demand for LED displays despite higher upfront costs. By 2030, many static billboards on major routes will likely convert to digital, allowing 6-8 rotating ads where there was 1, which in turn can increase the rent paid to landowners (often land leases include percentage-of-revenue clauses that benefit the property owner when ad sales increase). However, regulatory constraints will remain the limiting factor. No matter the technology, local governments control sign permits – we foresee a continued clampdown in many metro areas on new billboards (due to aesthetics or driver safety concerns). The flip side is that existing permitted sites become more valuable. A small-box CRE owner who already has a billboard on their site in a restrictive market holds a cash-flowing asset that’s hard for anyone else to replicate nearby. That could even become a securitizable income stream on its own (some owners sell billboard easements for lump sums). Regionally, expect the Southwest, South, and Midwest to remain friendly to billboards (many highways, growing populations, fewer bans), whereas places like New England and the Pacific Northwest may lean toward fewer physical ads. One emerging niche: on-premise digital signage – e.g. a convenience store might install a digital sign that shows gas prices and paid third-party ads. These blur the line between business signage and billboard, and could proliferate if cities allow them as “on-premise” signs. In summary, billboard revenues should stay steady to modestly growing in aggregate, and small CRE owners will continue to tap into that – but the big jumps will come only if you have a prime location or embrace digital formats.
Telecom 5G and Beyond: The telecom landscape will be dynamic through 2030. The rollout of 5G (and preparations for 6G) means densification of networks – more equipment needed closer to users. While large towers will still exist, many new installations are smaller antennas on streetlights, building rooftops, or distributed antenna systems. For property owners, this means more opportunities to lease out space for micro cell sites, though at lower rents than full towers. Small-box properties in urban/suburban areas might host 5G small cells (which could pay a few hundred dollars a month each). Meanwhile, the tower industry itself is mature; major carriers have merged (e.g. T-Mobile & Sprint) and share networks, but also newcomers like Dish are deploying networks which could require new tower leases. By 2030, analysts expect moderate growth in the number of cell sites – a continuation of incremental build-out. One important trend: infrastructure sharing. Carriers increasingly use third-party tower companies or even share tower infrastructure to cut costs. This could actually benefit property owners because instead of dealing with one carrier, you deal with a tower company that might load up multiple carriers on one lease. The risk to watch is carrier consolidation or technology leapfrogs (e.g. if someday satellites or alternative tech reduce ground tower need – not likely at scale by 2030). Regionally, rural areas that lacked coverage will get some new towers (good for RV parks in remote areas, for example, who might finally get a lease offer), while dense cities might see more rooftop small cell deployments (e.g. a self-storage in a city could have a dozen small 5G antennas along its roof edge). Bottom line: telecom ancillary income should be a stable or increasing opportunity, with very high occupancy (once a carrier is on your site, they usually stick long-term). Lenders in 2025–2030 can take more comfort in underwriting this income, especially as standard lease rate data becomes widely known (e.g. average cell lease ~$1.3k/month in 2024). We may even see aggregators – companies that lease space from property owners and then market it to carriers – simplifying the process for CRE owners.
Parking, EVs, and Mobility Changes: The parking revenue outlook is perhaps the most complex because it faces both opportunities and threats. On one hand, vehicle travel and commuting are rebounding in 2024–2025 with a growing economy. The parking industry expects demand to “grow in coming years as the economy regains momentum”, especially in sectors like airport parking, transit hubs, and mixed-use developments where new construction includes parking needs. Urbanization in Sunbelt cities and continued suburban growth suggest parking lots/garages in those regions will stay busy. On the other hand, rideshare and autonomous vehicles pose a medium-to-long term challenge – by 2030 the impact will be felt modestly (e.g. younger adults owning fewer cars, more “drop-off” traffic), but likely not a game-changer yet in most areas. Lenders should monitor markets like downtowns of major cities, where some garages are already repurposing space due to Uber/Lyft reducing demand. For a small property owner, the more pertinent trend is EV charging infrastructure. Adoption of electric vehicles is accelerating, and governments are pushing for massive charging station build-outs. By 2030, millions of EVs will be on U.S. roads, and fuel stations are increasingly adding fast chargers to serve them. While charging alone won’t replace gas sales revenue, it can bring ancillary income through charging fees, utility incentives, or partnerships. It also increases dwell time – EV drivers might spend 20–30 minutes at a site, potentially boosting convenience store sales (a secondary benefit akin to parking revenue). Regional differences: states like California, New York, etc. have aggressive EV mandates, so gas stations there are under pressure to add chargers sooner (often aided by grants). In contrast, rural areas with low EV adoption may not see much action until late decade. Another angle is sustainability and “green parking” – some cities might offer tax breaks for installing solar canopies over parking (combining two ancillary ideas) or for adding EV chargers. This could slightly improve the ROI of those projects and thus the willingness of owners to pursue them. By 2030, we predict that ancillary parking revenues will be strongest in contexts like: paid parking in dense areas, airport/travel centers, and EV charging hubs, whereas simply having excess asphalt in a small town may not yield much unless repurposed creatively.

In summary, the next 5+ years should see broader adoption of ancillary revenue strategies in small-box CRE. Market data will become richer – for example, by 2030 the Loan Analytics database will have a much larger sample of loans where solar, billboard, or tower income was underwritten, allowing finer-tuned credit models. Regionally, car-oriented growth markets (Southeast, Texas, Mountain West) will offer the most opportunities to “stack” multiple revenues (due to fewer regulatory barriers and plenty of space), while some coastal urban markets might limit certain ancillaries (like new billboards or large towers) but still embrace things like rooftop solar. For lenders, it will be increasingly important to differentiate assets with ancillary income potential from those without. Two self-storage facilities with identical storage occupancy and rents could have materially different total NOI if one has solar + a cell tower lease and the other doesn’t. That could influence not just DSCR, but also resilience: ancillary income often has low correlation with the main business (e.g. billboard rent comes from advertising sector, which might stay flat even if storage rentals dip, providing a cushion). Thus, one could argue properties with diversified income streams are lower risk in some ways, warranting slightly better credit terms.

Recommendations for Lenders and Credit Committees

For lenders evaluating loans on self-storage, RV parks, gas stations, and similar assets, the following recommendations can help appropriately account for ancillary revenues in underwriting and risk management:

Incorporate Ancillary Income Thoughtfully in DSCR Calculations: Don’t ignore reliable ancillary income, but don’t give it full credit without scrutiny. A practical policy is to include documented ancillary NOI in primary DSCR calculations with conservative assumptions, and also run a “DSCR minus ancillary” scenario. If the loan only meets minimum coverage because of ancillary income, ensure you are comfortable with the stability of that income or mitigate accordingly (e.g. require a reserve or lower LTV). This two-pronged approach catches cases where a borrower might be overly relying on, say, future parking fees to cover debt service.
Adjust Loan Sizing and Structure for Ancillary Revenue Risk: If a significant portion of NOI comes from ancillary sources, consider structuring the loan to account for their potential volatility. For example, you might size the loan to a slightly higher minimum DSCR to provide a buffer (recognizing part of the income is less certain). Alternatively, if an ancillary stream is new and ramping up (e.g. a newly installed solar array with limited operating history), the lender could hold back a small interest reserve funded from that projected income, to be released once the income proves itself over a year or two. The cost of such reserves is usually modest, but it protects both lender and borrower from shortfalls in the interim.
Due Diligence on Legal and Technical Feasibility: When ancillary income is part of the deal, underwriters should verify that everything is above-board. This means checking that permits and contracts are in place. If a borrower claims they will add a billboard, has the city already approved it? Is there a signed lease with an advertiser or billboard operator? For cell towers, ensure the lease terms (in the agreement) match what’s modeled in the cash flow (sometimes ground leases have revenue share or termination clauses that borrowers might gloss over). For solar, review the system size, warranty, and any performance guarantees if available – and confirm that the borrower owns the system (or clarify how a third-party PPA provider charges them, which could affect net savings). Essentially, treat ancillary income with the same rigor as primary income: get the paperwork and have counsel or consultants review key points. Many ancillary revenues are straightforward, but others (like selling electricity back to the grid, or hosting an EV charging station operated by a third party) can involve complex agreements. Knowing the details prevents unpleasant surprises down the road.
Leverage Industry Data and Benchmarks: Use available data (Loan Analytics database, IBISWorld industry reports, etc.) to sanity-check ancillary revenue assumptions. If a borrower in an appraisal asserts “cell tower will pay $4,000/month” but industry benchmarks for that area are $1,000–$2,000/month, ask questions – perhaps they are assuming multiple tenants or a very prime site, but you’ll want evidence (like a letter of intent from a tower company). By citing third-party data, lenders can justify to credit committees why they are (or aren’t) counting certain income. For instance, IBISWorld’s parking industry outlook notes ride-share is eroding demand; if a deal’s viability hinges on steep growth in paid parking revenue, that would be a red flag against those trends. Being informed about the borrower’s ancillary business lines makes for stronger underwriting narratives.
Encourage Borrowers to Lock-In and Insure Ancillary Income: Lenders can proactively encourage practices that de-risk ancillary revenue. For example, if a property is adding a solar array, suggest they purchase output insurance or maintenance contracts to guarantee production (some insurers offer policies that cover shortfalls in expected solar output). For billboards or cell towers, encourage longer lease tenures – perhaps offer slightly better loan terms if the borrower signs a 10-year tower lease instead of a 5-year, or if they obtain a corporate guarantee from the tenant. While lenders don’t control these aspects, raising them in discussions shows the borrower that the bank values those incomes and wants them solidified. In some cases, lenders could even structure performance covenants: e.g. if ancillary income comprises 30% of NOI, a covenant might require the borrower to replace that income within 6 months if a contract is lost (or maintain a certain occupancy of those ancillary facilities). This is more common in large loans, but the principle can apply to smaller deals informally.
Monitor and Adjust Over Time: Finally, recognize that ancillary revenues are a growing and shifting landscape. Regularly update underwriting guidelines as new data comes in. A few years ago, few would have counted EV charging income – by 2030 it might be standard in gas-station underwriting. Loan monitors/servicers should also keep an eye on ancillary components during the loan term. For example, during annual review, if a big ancillary contract is due to expire in a year, it’s worth inquiring if it’s been renewed. In general, diversify your risk assessment: a property with multiple ancillary streams is more resilient than one with a single extra income. So if one stream goes away, perhaps others cover it. This could factor into how you risk-rate the loan or what reserves you require. A nuanced approach will let lenders confidently lend a bit more against properties that smartly maximize revenue, without taking unknown risk.

Conclusion:

Small-box commercial real estate owners are increasingly finding creative ways to “do more with what they have” – turning rooftops into power plants, verges into advertising space, spare land into telecom hubs, and parking lots into profit centers. Our analysis shows these structured ancillary revenues can boost unlevered property yields by 50 to 200 basis points, a significant enhancement that can improve loan metrics and investment returns. Yes, realizing these gains requires navigating various constraints (from zoning laws to structural limits), but the case studies and data indicate that the effort often pays off.

For the loan analytics community – lenders, investors, and credit professionals – the message is to recognize and reward well-executed ancillary income strategies, while applying prudent underwriting standards to account for their unique risks. As we head toward 2030, ancillary revenues are likely to become an ordinary part of NOI for many “ordinary” properties. Those who integrate this into their analytics and loan structures will be better positioned to capture opportunity and manage risk. In short, a cell tower lease or a solar array is no longer just “a cherry on top” – it’s part of the new playbook for maximizing property value and should be part of the new playbook for savvy lending on small-box CRE.

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