ENVIRONMENTAL
Climate Change and How it Might Affect CRE in the Future By: Molly Looman
While often a political hot-button, climate change has the potential for massive effects on the commercial real estate industry. The past couple of years have seen rising sea levels, larger storms and and increased emphasis on lowering the carbon footprint of commercial areas. Governments are beginning to create policies that will affect both developers and owners. To prepare yourself for possible issues, let’s look at a few of the major issues concerning climate change and how they might affect our industry.
Extreme Weather According to a report from the Union of Concerned Scientists, approximately 14,000 coastal commercial properties are at risk of inundation by 2045. The same report predicts sea levels rising 1.6 feet in a best-case scenario. Rising sea levels and increased danger of hurricanes has made coastal properties even more at risk. Ocean-related weather is not the only risk. River-flooding has become more common. According to the National Climate Assessment, heavy rain events have increased 37 percent since the 1950s. Just this year, federal officials warned 25 states that they could see a flood risk in May. All of this is not to scare anyone from owning a property or leasing one, it is information to keep in mind in the future. Developments should consider extreme weather possibilities in their construction and location scouting. Risk assessment and insurance systems are also changing with the recent weather. FEMA is releasing a new risk rating system that includes updated flood plain maps. This may be something to pay attention to if your area is at risk. Property resiliency might also be a major consideration moving forward, as people demand buildings that will last longer and efficiently.
Climate Change-Based Laws Climate change has been a major topic on both a state and federal level for decades. Recently, tighter regulations have been imposed to accelerate progress in certain areas. For example, New Yorks’s Climate Mobilization Act “requires that buildings exceeding 25,000 gross square feet reduce their greenhouse gas footprint starting in 2022 and each year thereafter so as to meet an established sliding scale of emission limits.”
28 Insight
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Issue 1, 2020
