Commercial LED Retrofit ROI:
The Real Numbers
You already know LED lighting uses less electricity. But what does the full investment look like for your building, and when does it start paying you back?
Most business owners and property managers we talk to already understand that LED lighting is more efficient. That's not news anymore. The conversation Ryan has with them usually isn't about whether LED is better. It's about whether the project makes financial sense right now, for their specific building, at their current utility rates.
That's a different question. And it depends on what you're currently running, how many hours your lights are on, and how you plan to handle the upfront cost. So instead of another article about LED vs fluorescent wattage, this is the business case. Real project costs, real savings, real payback timelines from the types of buildings Newman Electric retrofits across Vancouver WA and Clark County.
What a commercial LED retrofit actually costs
The cost depends almost entirely on the retrofit method and the fixture type you're replacing. There's a big range, and the cheapest option isn't always the best one.
| Method | Cost Per Fixture | Best For |
|---|---|---|
| LED tube retrofit (Type B) | $15 to $50 | Offices and retail with good-condition fluorescent troffers |
| Full fixture replacement | $80 to $200 | Older buildings where housings are damaged or yellowed |
| HID to LED high bay | $150 to $400 | Warehouses and industrial with metal halide or HPS |
| Exterior / parking lot | $200 to $600 | Parking lots, building perimeter, wall packs |
Prices include labor and materials. Clark PUD rebates can reduce these by 15 to 30% on qualifying fixtures.
Four buildings, four different returns
Every building is different, so the ROI is different. These four scenarios are based on projects Newman Electric has completed in the Vancouver WA area. The numbers are representative, not exact quotes.
Small Office
3,000 sq ft medical office with 40 fluorescent troffers
Project cost
$1,800
Annual savings
$720
Payback
2.5 years
Tube retrofit with ballast bypass. Lights run 9 hours a day, 5 days a week. After payback, this office saves $720 a year for the next 15+ years.
Retail Store
5,000 sq ft retail space with 80 fluorescent fixtures
Project cost
$4,800
Annual savings
$2,400
Payback
2 years
Full fixture replacement for a cleaner showroom look. Retail lighting runs 12 hours a day, 6 days a week, so the higher operating hours drive a faster payback despite the bigger upfront cost.
Warehouse
15,000 sq ft warehouse with 20 HID high bay fixtures
Project cost
$6,000
Annual savings
$3,200
Payback
1.9 years
Each 400W metal halide fixture replaced with a 150W LED high bay. Fewer fixtures, but each one saves 250W. Warehouse also gains instant-on capability instead of waiting 5 to 10 minutes for HID warm-up.
Restaurant
2,500 sq ft restaurant with 30 mixed fixtures (recessed cans, pendants, tracks)
Project cost
$2,200
Annual savings
$1,100
Payback
2 years
Mix of LED can retrofits and new pendant fixtures. Restaurants run 14+ hours a day and benefit from dimmable LED options that incandescent and fluorescent can't match. Better ambiance and lower bills at the same time.
The costs you don't see on your electric bill
Energy savings get all the attention, but they're not the only reason the ROI on LED is so strong. There are three costs most building owners absorb without ever adding them up.
Maintenance calls. Fluorescent ballasts fail every 5 to 8 years. Each replacement means scheduling an electrician, paying for the part and labor, and dealing with the downtime. In a 100-fixture building, you're handling several ballast failures a year. Ryan's crew has done plenty of one-off ballast replacements at $80 to $120 each. After an LED retrofit, those calls stop entirely.
Productivity and comfort. Flickering fluorescent tubes cause headaches and eye strain. That's not speculation; it's documented by OSHA. Employees may not complain about it directly, but anyone who has worked under old fluorescent tubes and then switched to LED panels notices the difference immediately. Better light quality, no flicker, consistent color temperature all day.
Liability in parking and exterior areas. Dim or failed exterior lighting is a liability issue. If a customer or employee gets hurt in a poorly lit parking area, the building owner is exposed. HID fixtures are especially problematic because when one goes out, it can take weeks to schedule replacement parts and a lift. LED exterior fixtures last years longer and maintain their brightness over time.
Section 179: Write off the full cost this year
Under IRS Section 179, your business can deduct the full cost of qualifying LED lighting equipment in the year you install it. You don't have to depreciate it over 5 or 7 years. The full project cost comes off your taxable income in year one.
Example: $6,000 warehouse retrofit
Project cost
$6,000
Tax deduction (25% bracket)
$1,500
Effective cost after deduction
$4,500
Payback at $3,200/yr savings
1.4 years
Talk to your accountant about your specific tax situation. Newman Electric can provide itemized invoices that make the deduction straightforward.
What to look for in a retrofit proposal
If you're getting bids from electricians, the proposal should give you enough information to actually evaluate the investment. Not just a total price.
Existing fixture inventory
The proposal should list every fixture type, quantity, and current wattage. If the electrician didn't count your fixtures, they're guessing.
Wattage reduction per fixture
You need the before-and-after wattage to calculate savings. This is also what Clark PUD uses to determine rebate amounts.
Projected annual energy savings in dollars
Based on your actual operating hours and your utility rate. Not a generic percentage. Newman Electric uses Clark PUD's current commercial rate in every proposal.
Rebate eligibility and estimated amount
Your electrician should know the Clark PUD rebate program and be able to tell you which fixtures qualify and how much you'll get back.
LED product specs and warranty
What brand and model of LED are they installing? What's the lumen output, color temperature, and manufacturer warranty? Cheap LEDs with no warranty will cost you more in the long run.
"We have been partnering with Ryan and his team for a couple of years now on our projects. They provide exceptional electrical services with a keen attention to detail, effective communication, and a commitment to staying on budget. Their unwavering integrity sets them apart."
General Contractor Partner, Google Review
Who pays: tenant or landlord?
This comes up in about half the commercial LED retrofit conversations Ryan has. In a triple-net lease, the tenant pays the electric bill. That means the tenant sees the savings directly, and they're usually the ones pushing for the upgrade. In a gross lease, the landlord pays utilities and keeps the savings.
Sometimes it makes sense to split the cost. The tenant benefits from better light quality and the landlord benefits from a more attractive, updated building. Newman Electric provides separate cost-and-savings breakdowns that both parties can use for the conversation. If you're a property manager evaluating LED retrofit across multiple units, Ryan can do a building-wide audit and give you unit-by-unit numbers.
For more detail on the energy math, ballast savings, and retrofit methods, see our guide on LED lighting energy savings for business.
Frequently Asked Questions
How much does a commercial LED retrofit cost?
Tube retrofits run $15 to $50 per fixture. Full fixture replacements are $80 to $200 per fixture. HID-to-LED high bay conversions cost $150 to $400 per fixture. A typical 50-fixture office runs $1,500 to $3,500 for tube swaps. These prices include labor and materials, and Clark PUD rebates can knock 15 to 30% off qualifying fixtures.
What ROI can I expect from LED retrofit?
Most commercial LED retrofits deliver 30 to 60% annual ROI. Payback is typically 1 to 3 years depending on building type, operating hours, and what you're replacing. After payback, savings continue for 10 to 20 years of LED lifespan. The combination of energy savings, maintenance reduction, and utility rebates makes the math work for most commercial spaces.
Can I deduct LED retrofit on my business taxes?
Yes. IRS Section 179 lets you deduct the full cost of qualifying LED equipment the year it's installed. Depending on your tax bracket, that can reduce your effective project cost by 20 to 37%. This shortens the payback period considerably. Talk to your accountant for specifics.
Who pays for the retrofit, tenant or landlord?
It depends on the lease structure. In triple-net leases, tenants pay utilities and benefit directly from energy savings. In gross leases, the landlord pays utilities and keeps the savings. Some landlords and tenants split the cost. Newman Electric can provide separate cost and savings breakdowns for both parties.
Related Services
Office Electrical
LED upgrades and electrical for offices
Warehouse Electrical
HID to LED conversions for warehouses
Retail Electrical
Lighting and electrical for retail spaces
Restaurant Electrical
Lighting, circuits, and electrical for restaurants
Parking Lot Lighting
HID to LED parking area conversions
LED Energy Savings Guide
Deep dive on LED energy math and rebates
Want a lighting audit for your building?
Newman Electric does free commercial lighting assessments across Vancouver WA and Clark County. Ryan's crew counts your fixtures, calculates projected savings, identifies Clark PUD rebate eligibility, and gives you a proposal with real numbers.