Urban Resilience Program Explores Impacts of Climate Change on Real Estate

The Institute’s Urban Resilience Program explored the impact of climate change on real estate investment in new research prepared in partnership with ULI Corporate Partner Heitman LLC, and ULI Europe. Released in February 2019, Climate Change and Real Estate Investment Decision-Making points to the need for greater understanding throughout the industry of the investment risks posed by climate change. It also highlights proactive measures by Heitman and other leading firms to stay at the forefront of mitigation strategies and more accurately price risk into investment decisions.

Climate Risk and Real Estate Investment Decision-Making adds to the growing body of work that is being produced by the Urban Resilience Program, which is part of ULI’s Center for Sustainability and Economic Performance. The program helps ULI members, the public, and communities learn how to be more resilient in the face of climate change and other environmental vulnerabilities. The report was informed by insights from interviews with more than 25 leading investors and investment managers in Europe, North America, and the Asia Pacific region, as well as existing research.

“Understanding and mitigating climate risk is a complex and evolving challenge for real estate investors,” said ULI Global Chief Executive Officer W. Edward Walter. “Risks such as sea-level rise and heat stress will increasingly highlight the vulnerability not only of individual assets and locations, but of entire metropolitan areas. This report shows that Heitman and other leading ULI members are prioritizing this issue with provocative approaches to better gauge and develop mitigation strategies. Building for resilience, on a portfolio, property, and citywide basis, is paramount to staying competitive.”

  • “Understanding and mitigating climate risk is a complex and evolving challenge for real estate investors. Risks such as sea-level rise and heat stress will increasingly highlight the vulnerability not only of individual assets and locations, but of entire metropolitan areas.”

    – ULI Global CEO W. Edward Walter, CNBC, April 8, 2019

The report points to the emergence of strategies and tactics that investors are using to build climate risks into their investment processes, including the following:

– Mapping physical risk for current portfolios and potential acquisitions;

– Incorporating climate risk into due diligence and other investment decision-making processes;

– Incorporating additional physical adaptation and mitigation measures for assets at risk; and

– Mitigating risk through portfolio diversification and investing in mitigation measures for specific assets.

Whether or not their assets have already been directly affected by the impacts of climate change, “investors see climate considerations as a necessary layer of fiduciary responsibility to their stakeholders, as well as an opportunity to identify markets and assets that will benefit from a changing climate,” notes the report.

Since its release, Climate Risk and Real Estate Investment Decision-making has been presented at numerous Institute meetings and other industry events, including the ULI Europe Conference, ULI Asia Pacific Convivium, China Real Estate Chamber of Commerce, ULI Midwinter Meeting, Royal Institution of Chartered Surveyors Spring Conference, and ULI district council programs.

Subsequent to the report, the Urban Resilience Program produced Scorched: Extreme Heat and Real Estate, which explores how extreme heat is emerging as a growing risk factor and planning consideration across the United States, and how the real estate industry is responding with design approaches, technologies, and new policies to mitigate the impacts and help protect human health.

Other offerings from the Center for Sustainability’s Urban Resilience program include community assistance provided through ULI’s Advisory Services program and technical assistance panels led with district councils. Resilience-oriented advisory panels bring together ULI members to help communities address complex urban challenges with solutions that decrease community vulnerability to climate-related risks and capitalize on opportunities for improved environmental performance, economic development, and quality of life. Over the past several years, the center has participated in resilience panels throughout the United States and its territories, including Miami Beach; Miami; Seattle; Portland, Maine; El Paso, Texas; Norfolk, Virginia; Toa Baja, Puerto Rico; Brooklyn, New York; and St, Petersburg, Florida, with each one informing future advisory work.

Through the Urban Resilience program, the Center for Sustainability also launched Developing Urban Resilience, a website featuring member-nominated real estate developments that showcase best practices in resilient design, including the District Wharf in Washington, D.C.; Buffalo Bayou Park in Houston; and 181 Fremont in San Francisco.

Other ongoing work includes the annual Resilient Cities Summit, which the Urban Resilience program cohosts with the National League of Cities and the U.S. Green Building Council. The event brings together mayors, senior city officials, and resilience, sustainability, land use, and finance experts to discuss resilience challenges and share best practices in preparedness, adaptation, and climate mitigation. The 2018 summit focused on how public/private partnerships can help enhance city resilience, informing a 2019 summit that explored enhancing city resilience through the innovative use of data and metrics.

The Urban Resilience Program is generously supported by the ULI Foundation, New York Community Trust, the Kresge Foundation, and The JPB Foundation.

Give to the Annual Fund and the ULI Foundation to support ULI’s resilience work.

Use Navigator to apply for service on a resilience-oriented Advisory Services panel.

Find resilience-related research and other materials in Knowledge Finder.

Find resilience experts in the Member Directory.

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