The trend toward net-zero commitments, and tenants demanding more sustainable buildings, will fuel the need for data that reveals climate-related risks, according to business consultant McKinsey & Company. In fact, some real estate companies are already conducting climate stress tests on their portfolios to gauge whether climate changes will benefit or harm a property’s location, carbon footprint or tenant composition and decrease value over time.
Businesses are also watching how populations shift, as more people turn to climate risk data for guidance. Those outcomes could affect the location of properties ranging from a new retail storefront to a same-day fulfillment center to an office complex.
Environmental variables associated with climate change require commercial real estate professionals to model and analyze potential impacts. Using tools including geographic information systems, they can weigh how climate change might affect a particular location or building. In addition, they can research entire markets to learn more about broader vulnerabilities to climate-related events.
Adapted from “The How and Where of Climate Risk,” by Gary Sankary, published in the CCIM Institute’s CIRE magazine, Spring 2022. Sankary is a retail subject matter expert for Esri, a geographical information systems software company.