Commercial Investors Are Studying Climate Conditions

Dated: 04/10/2019

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Report: Commercial investors should study climate change

NEW YORK – April 9, 2019 – A new report from the Urban Land Institute (ULI) indicates that rising climate-related risks and their likely impact on property portfolios "will be painful for investors who are caught off guard, but those who are prepared have the potential to outperform."

Natural disasters cost more than $300 billion in damage in 2018 – the bulk of it to residential and commercial real estate. In addition, the National Oceanic and Atmospheric Administration said that from May through July 2018, much of the East Coast saw rainfall up to three times normal levels.

"Risks such as sea-level rise and heat stress will increasingly highlight the vulnerability not only of individual assets and locations, but of entire metropolitan areas," says ULI CEO Edward Walter.

As a result, real estate investors are creating new approaches to better gauge and develop mitigation strategies.

"Building for resilience – on a portfolio, property and citywide basis – is paramount to staying competitive. Factoring in climate risk is becoming the new normal for our industry," says Walter.

In addition to storms and sea-level rise, investors must consider the potential higher costs associated with protecting cities and municipalities from both. For example, Miami is investing $200 million into resilience, installing pump stations and upgrading its infrastructure. Meanwhile, Miami Beach plans to spend twice that, raising sidewalks and seawalls. The money is coming from new bonds, with voters raising their own property taxes to protect their property.

Source: CNBC (04/08/19) Olick, Diana

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