Commercial Real Estate Faces Rising Threat from Flood damage in the future, Study Says

Commercial Real Estate

The commercial real estate industry faces rising threats from flood damage. This may lead to increasing costs in the commercial estate by billions of dollars according to a new study.

Around 730,000 retail, multi-unit residential properties and offices face an annualized threat of flood damage in the USA.

The research included sea-level rise, with a focus on flash floods (pluvial flooding).

Matthew Eby, Founder of First Street Foundation said, “It absolutely will have an impact on the value of these structures because you’re increasing the risk and the known risks to these buildings, which then has a negative impact on the value of them today.”

Eby added, “We have companies like Nuveen or Morningstar or these large institutional investors that are looking at our data to understand what’s at risk today and over that period of ownership. How do you plan against these things or ensure that you’re buying into the right commercial real estate assets?”

First Street partnered with Arup for going beyond simple flood threats.

Ibbi Almufti, the leader of Arup’s risk and resilience team in San Francisco said, “As climate change continues to accelerate, flood risk will pose an economic threat to commercial properties across the country. This new report will serve as a guidebook for understanding building-specific risk and for taking action to mitigate the effects of climate change.”

The threat of flood damage to the commercial real estate sector affects not just the tenants of the buildings and property owners but also the investors in those properties.

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