How Can Owner-Operators Build Climate Resiliency for Properties?
Article
How is climate change effecting the commercial real estate industry and what are some tools owner-operators can use to help create climate risk strategies for properties?
“The road to climate stability is paved with the stones of bold decisions.” – Christiana Figueres, diplomat and international climate negotiator.
In the last decade, extreme weather acevents have surged by nearly 40%, showing a continuing increase of our climate’s chaotic nature (National Association of REALTORS®). In 2023, this realization of escalating climate change caused commercial real estate (CRE) insurance costs to increase by 12% (TIME). This fluctuation underscores today’s urgency for property resilience that owner-operators need to embrace to combat the onslaught of ever-shifting environmental conditions. As challenges such as extreme weather, rising sea levels, and extreme temperatures become more apparent, ensuring long-term operational stability and market value are critical priorities for the CRE industry.
How can you create climate risk resilience and stability for commercial real estate?
The 21st century has seen profound advancements in technology within the CRE sector. These advancements have opened new innovative solutions to owner-operators to help identify risk, create sustainability, and build resiliency. Using technology to identify vulnerabilities and develop strategic responses to climate risk has become a necessity. These measures can not only enhance resilience against the adverse effects of climate change but also reduce the environmental footprint of CRE properties. This article highlights key indicators of climate resilience and explores the tech innovations that are transforming the commercial real estate landscape. By providing transparency into these strategies, owner-operators can better navigate the complexities of climate resilience, ensuring the stability of their properties in an increasingly unpredictable world.
What are some measurable indicators of climate resilience?
- FEMA flood maps are used to identify flood-prone areas. These maps provide detailed information on flood hazards and are crucial for assessing the risk of flooding to commercial properties. Incorporating FEMA data into risk assessments helps owner-operators make informed decisions about property investments and necessary flood mitigation measures.
- National Environmental Policy Act (NEPA) assessments evaluate the environmental impact of proposed developments. These assessments ensure that any potential adverse effects on the environment are identified and mitigated. For commercial real estate projects, NEPA assessments are critical for understanding how climate change might affect the environmental sustainability and regulatory compliance of a property.
- The National Oceanic and Atmospheric Administration (NOAA) provides detailed climate data, including temperature trends, precipitation patterns, and sea-level rise projections. NOAA data lets commercial real estate stakeholders understand potential long-term climate trends and their possible impact on property values and operational risks.
- Local hazard mitigation plans outline strategies to reduce the risks from natural hazards, including those exacerbated by climate change. These plans are developed by local governments and include measures such as infrastructure improvements and land-use planning. Integrating these plans into property risk assessments helps owner-operators align their strategies with local resilience efforts.
What technologies utilize climate data to build resiliency in commercial real estate?
- Geographic Information Systems (GIS) technology helps map and analyze geographic and spatial data, identifying the area’s most susceptible to climate risks. GIS is useful for visualizing flood zones, wildfire risks, and other environmental hazards, allowing for more precise and effective planning and mitigation strategies.
- Software-as-a-Service (SaaS) platforms like Envirosite’s Property Risk Map provide actionable insights for assessing and managing environmental property risks. These platforms offer real-time data on various environmental factors, including climate risks, enabling owner-operators to make informed decisions and implement effective risk mitigation strategies.
- Predictive analytics and artificial intelligence (AI) analyze vast amounts of climate data to forecast future risks and suggest adaptive measures. This can model potential impacts of extreme weather events on specific properties, enabling owner-operators to take proactive steps to create mitigation strategies and enhance resilience.
- Blockchain technology provides secure and transparent ways to track and verify environmental compliance and sustainability efforts. By recording data on a blockchain, owner-operators can ensure that their properties meet regulatory standards and demonstrate their commitment to sustainability to investors and regulators.
Adapting to the increasing threats posed by climate change is no longer optional for commercial real estate owner-operators; it is a necessity. The integration of comprehensive climate risk assessments and resiliency strategies are fundamental steps in fortifying properties against environmental uncertainties. These measurements in combination with technological advancements are revolutionizing the CRE sector, providing innovative solutions to enhance climate resilience. These technologies enable real-time monitoring, precise risk assessment, and strategic planning, which are crucial for adapting to an unpredictable future. Embracing adapting to these new advancements will equip owner-operators to face the challenges of climate change head-on, transforming potential vulnerabilities into growth and innovation opportunities. By staying ahead of the curve and being proactive about climate resilience, the CRE industry can secure a sustainable and prosperous future.
