Healthy Buildings, Risk Management
The Business Case For Resiliency in CRE By: Alec Burchett, BOMA Georgia
Resilience. Defined as the ability to recover back to a normal state of operation following an adverse event, resiliency is an essential consideration when it comes to commercial real estate. When constantly dealing with various properties, people, and natural events, things will occasionally go wrong. Following these unfortunate incidents, properties must snap back to an acceptable level of operation if they wish to continue to be successful. John Scott with Colliers tells us that “resiliency is about creating plans that allows the normal routine to be able to accept shocks and stressors to its system.” When applied to commercial real estate, most will think of stressors and shocks as natural disasters that can raze a property. However, while this is true, there are many different aspects of resiliency a property can improve upon. Items such as financial resiliency, health and safety resiliency, and of course environmental resiliency are all items to be considered. These are all equally important, but here the focus will primarily be on the environmental aspects.
Building a Foundation When thinking about how a property can be more environmentally or physically resilient, first consider what can cause this need. Natural disasters do not always give a heads up. Too much rain can lead to severe flooding, causing damage and stranding individuals. Years of erosion on a building’s foundation can all culminate at a single moment and cause a collapse. Tornadoes can form, touch down and
8
CRE Insight Journal • Special Issue • 2021
leave a path of destruction, and then be gone in less than an hour. However, even with a heads up, these events can still cause massive amounts of damage. A couple design considerations can go a long way in helping a building bounce back from something like this. First, design, or retrofit, a property with the idea in mind that these events are out there and have the potential to happen to anyone. Next, be adaptive. If an event has happened in the past, use that knowledge to inform future choices and preparations. Figure out the weak points in your contingency plans and how they could be improved. For example, think about how if a building was flooded, and all of the electrical mains were ruined and had to be replaced because of the water damage. Moving forward, the building could move these electrical units up off of the ground level in order to prevent damage.
Benefits of Looking Ahead If a building practices resiliency in these ways, it can see several significant benefits. First, the building or property will have an overall reduced risk level. These resilient upgrades to the building show that even in the face of a disaster, the building will persevere. For tenants, this will be hugely appreciated as they will be able to get back to work sooner and help get things returned to normal. Second, the building will experience reduced insurance rates.
