Climate Change and Real Estate

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Dan Probst - Jones Lang LaSalle

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Dan Probst
Energy and Sustainability Services

The Intergovernmental Panel on Climate Change latest assessment of weather and climate patterns, officially released this Friday, goes farther than previous reports in drawing a link between climate change and the frequency and intensity of extreme weather events.

The IPCC report is the result of the most extensive worldwide analysis of climate change and its effects on society. This rigorous analysis is necessary because we can’t simply look at one year or one region to see the developing pattern.

By looking at worldwide historical data, IPCC confirms that storms, record-high temperatures and heat waves are increasing over time, and the cost of these events is rising, both in terms of human life (mainly in developing countries) and economic damages (highest in developed countries but more crippling to developing countries).

We may think of property impacts as coming mainly from big disasters such as hurricanes, but this is not always the case. Extreme drought conditions in parts of the U.S. are causing the earth to crack, which can cause building foundations to crack.

A particularly rainy season may reveal flood zones we didn’t know about previously. The parameters of what constitutes a flood zone may have to be broadened, resulting in higher insurance rates for properties that are not actually at risk.

The risks of climate change affect the commercial real estate industry. At the same time, real estate is a major contributor to greenhouse gases that contribute to climate change. If we don’t do everything we reasonably can to reduce our impact on the planet today, we’ll regret it tomorrow.

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