Though climate change is a political football in Washington, its ramifications for real estate developers and investors nationwide are becoming increasingly real.
The now-notorious Camp Fire in California in November was the state’s deadliest wildfire ever, claiming more than 85 lives and destroying about 15,000 structures. And nine of California’s 10 worst fires have occurred since 2000, with two of them in 2018.
Extreme weather has only grown more extreme of late.
The aftermath of 2017’s devastating hurricane season — in which hurricanes Harvey, Irma and Maria battered the Atlantic Coast — is still being felt. That’s not to mention 2018’s Hurricane Florence, which caused severe damage in the Carolinas, and New York’s Hurricane Sandy back in 2012.
Even as politicians debate climate change and President Donald Trump dismisses the issue, scientists unequivocally agree that environmental factors are behind these events. A report released in late November by the U.S. Global Change Research Program, a federal program, painted a dire picture, including a prediction that climate change will shave 10 percent from the U.S. gross domestic product by 2100.
Despite the property damage that these storms have caused, the industry has continued to build pricey condos and other developments on waterfronts in locations ranging from South Florida to Los Angeles to New York.
Michael Mann, a professor of atmospheric science at Pennsylvania State University, said the lack of response is “rather ironic since the real estate industry may be among the hardest hit by climate change.”
Here’s a look at how climate change is transforming real estate — and what the future could hold.
The estimated cost of damages that NYC suffered from Superstorm Sandy. Among the hardest hit landlords were TF Cornerstone, Boston Properties and the Moinian Group. Many had to shutter buildings in Lower Manhattan for months. Plus, homes and businesses from the Rockaways to Red Hook to Staten Island were also severely damaged or destroyed.
The number of continuous miles around Manhattan where the city is constructing a new “protective system” to help minimize water damage in the event of a major storm or flood. The $335 million project has been dubbed the Big U after the Bjarke Ingels Group (aka BIG) that’s leading the design of the U-shaped barrier.
The number of pages in the damning climate-change report released in November. The document, which many said the White House tried to bury by releasing the day after Thanksgiving, pegged the economic costs to the U.S. at $141 billion from heat-related deaths, $118 billion from rising sea levels and $32 billion in infrastructure damage by the end of the century.
The number of California homes at high risk for wildfire damage. Meanwhile, insurance companies have gotten more strigent with standards, making it harder for many to get coverage. Last year, insurers owed policyholders a record $144 billion. Evan Greenberg, the CEO of insurer Chubb, said in August that “the evidence of climate change is immediately apparent, profound and disturbing.”
The value of Kim Kardashian and Kanye West’s mansion in Calabasas, California. The celebrity couple had a private firefighting crew to protect the home during the latest fires. That controversial trend is reportedly being bankrolled by insurance companies looking to protect assets.
The rate at which NYC’s water levels rose during the 20th century compared to the global average. Still, about 12,350 apartments are being planned, or constructed, in flood zones in the five boroughs. In Brooklyn, Rudin Management and Boston Properties have teamed up with WeWork to build an office tower at Brooklyn Navy Yard’s Dock 72, which is surrounded by water.
The number of 311 calls that New Yorkers placed about damage from Superstorm Sandy in the first nine months of 2017 — five years after the storm. In addition to $19 billion in damage, the hurricane caused 43 deaths in NYC. On the day of the storm, the city received 8,054 calls.
The number of miles of NYC coastline. The federal government is redrawing the city’s flood maps — a move that could jack up insurance premiums to a median of $4,200 a year from $500. RAND Corporation, a think tank, estimated that more than 25,000 NYC properties could be designated high risk for the first time as a result of the new maps.