M oney and people. These are the things that power commercial real estate. However, in recent years the industry has begun to take more seriously the emergence of a new paradigm: climate change.
Say what you will about the science and politics, but the topic of climate change and how it is already impacting real estate development is here. And based on conversations at Bisnow events and in our news reporting over the past year, this is a topic that is firmly on the minds of real estate professionals around the world.
That’s because the threat of rising sea levels is no longer something that might happen. It is already happening — from New York to California to the Philippines to Italy. Small communities and major gateway cities alike are now experiencing the effects of rising tides.
If the science is right and these trends continue, one can only assume that the money will follow — or leave, depending on one’s perspective. Not yet, however. Because while the science might tell you to go, the money and people are telling you to stay.
Spurred by the increased urgency of the chatter around climate change, Bisnow undertook an investigation of the impact rising sea levels could have on CRE along the Eastern Seaboard of the United States, a region that is particularly vulnerable as far as the developed world is concerned.
The science is complicated, but, in essence, if Antarctic ice melts at the rate scientists predict, the water it releases will flow toward East Coast cities in the U.S. that house a large share of the world’s most valuable real estate.
From New York, Boston, Washington, D.C., and Miami, our reporters found an industry no longer blind to the problem, but one that is still responding to short-term incentives and searching for lasting strategic solutions for the decades ahead.
Let’s be clear: Deals are still closing in Boston Harbor, construction crews are maneuvering cranes on South Beach, and the U.S. real estate industry is thriving in 2020. There is money to be made and the capital is flowing to meet the demand.
Why would developers shy away from Miami now, when people are still flocking there? For all of the data about people seeking homes inland away from the coasts, Miami’s population is growing and companies are still aggressively competing for space in Manhattan. Until the consumers of real estate begin to alter their behavior, the real estate industry has no incentive to change.
But depending on your time horizon, that might change. In each city report within this story, we included interactive maps produced by data analysis firm Climate Central, which highlights the areas that will be underwater by 2100 if climate change goes unchecked. This is not to be alarmist. We simply want to highlight the changes that rising sea levels could bring upon markets that are highly active today.
Dates like 2050 and 2100 might seem far off, and when it comes to the balance sheet of a real estate firm, perhaps they are. But if you had a child today, they might be getting married by 2050 or buying their first house. By that point, places like Miami or Washington, D.C., are more than 90% likely to have experienced floods that extend beyond 6 feet above sea level, potentially causing billions of dollars of damage and making some areas uninhabitable.
Rising sea levels are a problem that will have an impact tomorrow, but that tomorrow is not as far away as we think.
— Mike Phillips, UK Editor