The commercial real estate industry faces an intensifying threat from flooding, which is likely to lead to billions of dollars in increasing costs, a new study says.
Approximately 730,000 retail, office and multi-unit residential properties face an annualized risk of flood damage in the United States. The structural damage from flooding is projected to cost $13.5 billion in 2022, increasing to over $16.9 billion by 2052, according to the First Street Foundation, a nonprofit research and technology group, and global commercial engineering firm Arup.
“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,” Eby added. “How do you plan against these things or ensure that you’re buying into the right commercial real estate assets?”
As climate change continues to accelerate, flood risk will pose an economic threat to commercial properties across the country. In total, local businesses in the United States stand to lose the equivalent of 3.1 million days of operation next year alone. By 2051, that could grow to 4 million. That would, in turn, increase the economic impact from lost productivity and lost output for all these properties.
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