Jul 01, 2024

Adapting Commercial Real Estate to Climate Change: Strategies for Managing Risk (Webinar)

Webinars | by ClimateCheck | 3 Minutes

The commercial real estate sector faces significant challenges in managing both transitional and physical risks due to climate change. In a recent webinar hosted by ClimateCheck partner ClimateFirst, industry experts shared insights on strategies to enhance resilience.

Learn more about ClimateCheck and ClimateFirst’s first-of-its-kind partnership to enable commercial real estate (CRE) stakeholders to assess financial risk due to climate change.

Featured speakers:

  • Kathryn Bakos, Managing Director, Finance and Resilience at the Intact Centre on Climate Adaptation
  • Breana Wheeler, Director of Operations for sustainability certification system BREEAM
  • Nicole Engels, Chief Growth Officer for ClimateCheck
  • Hamoda Youssef, Director of Client Development for ClimateFirst
  • Moderator: Mike Williams, Co-Founder of ClimateFirst

Watch the full on-demand webinar

Factors Driving the Need for Adaptation in Commercial Real Estate

Kathryn Bakos, Managing Director of Finance and Resilience at the Intact Centre on Climate Adaptation, emphasized the financial benefits of early adaptation measures.

"We know that for every dollar that we put into place for adaptation, it saves us on average, $3 to $8 over a 10-year period. Therefore, by putting adaptation measures in place now, that will save us as individuals, businesses and governments over the longer term," she said.

Breana Wheeler, Director of Operations at BREEAM USA, discussed how BREEAM’s sustainability benchmarks guide building owners and operators in enhancing resilience against climate risks.

"Science is our purpose and taking that science to apply it to built environment challenges is our mission," she said.

Utilizing Climate Risk Data for Investment Decisions

Nicole Engels, Chief Growth Officer at ClimateCheck, highlighted the role of ClimateCheck’s detailed risk assessments in guiding investment decisions.

“It's really important that, when you're looking at your portfolio [and] you're looking at your specific assets, that you try to really understand what are all the risks that are hitting that asset, and how you can mitigate those risks,” she said.

ClimateCheck evaluates risk to individual properties, portfolios and specified areas across different climate-related hazards — heat, precipitation, drought, flooding, wind and fire — to create a 1-100 risk score for each hazard. Our risk ratings reflect current and projected risk based on both historical data and projections through 2050. We offer several products offering analysis at different resolutions and in different formats. Clients can choose from Property Reports, Screening Reports, Portfolio Reports, Bulk Data and more.

ClimateFirst produces climate value at risk reports by inporting ClimateCheck climate risk analysis and information from the property’s Building Condition Assessment into ClimateFirst’s proprietary CVaR model, which uses AI to calculate the asset value at risk for the individual property. From there, ClimateFirst also determines highest value property resilience measures for the property in question.

Financial Implications of Climate Change on Building Systems

Hamoda Youssef, Director of Client Development at ClimateFirst, provided a detailed analysis of the financial impacts of climate change on building systems. He used the impact of climate-driven extreme heat on a chiller air conditioning unit.

Youssef explained that increased heat stress can reduce the service life of chillers from 25 years to as low as 12 years by 2052. This reduction leads to higher replacement costs, with the adjusted capital replacement cost exceeding $1 million compared to a baseline of $700,000. This results in a climate value at risk of approximately $350,000.

To hear more insights, watch the full on-demand webinar.