Investor appetite remains strong despite impact of sea level rise, report says

Miami Beach among the most vulnerable areas in U.S.

TRD MIAMI /
Jan.January 06, 2015 03:45 PM

Flood-related losses will grow, but commercial real estate investor appetite remains strong in areas like Miami Beach, according to a CBRE report released Tuesday.

The report, titled “Rising Tides, Increasing Risk: How the Insurance Industry’s Response to Climate Change Could Impact Commercial Real Estate Investors,” found that current practices by insurers, lenders and property owners in the U.S. leave commercial real estate owners exposed to much of the risk of sea level rise.

Most lenders don’t require borrowers to buy flood insurance beyond the National Federal Insurance Program’s $500,000 coverage cap for commercial properties.

“As most commercial property owners have chosen not to purchase supplemental coverage, they are effectively choosing to insure themselves for damages in excess of that amount, exposing themselves to a risk that the insurance industry itself is backing away from,” CBRE Director of Research and Analysis Quinn Eddins said in a statement. “While current property owners appear willing to accept this risk, there may come a day in the future when potential buyers will not be willing to do the same.”

NFIP claims filed after hurricanes Katrina, Rita and Wilma in 2005, and Sandy in 2012, put the program $24 billion in debt to the U.S. Treasury as of December 2013, according to a news release.

Miami Beach, one of the most vulnerable areas in the country to sea level rise, also has the some of the most expensive real estate in South Florida. — Katherine Kallergis

 

Related Articles

arrow_forward_ios
From left: Nelson Gonzalez, Riley Smith, Jill Hertzberg, Dora Puig, Jim McCann and Dina Goldentayer

South Florida dodged a bullet with Hurricane Dorian. Here’s what that means for the resi market

Dealing with rising sea's will be tricky for Miami

How can Miami cope with two extra feet of water by 2060? ULI experts weigh in

Hurricane damage in Florida (Credit: iStock)

“No one should be lending for 30 years in most of Florida,” financial climate analyst warns

This is how Miami-Dade plans to protect itself from climate change

Institutional investors are factoring climate change into real estate deals in coastal cities: panel

Insurance premiums could rise as more extreme storms hit coastal markets

Miami taps Urban Land Institute to evaluate sea-rise plan, infrastructure investment

Glaser and partners propose 15-acre “West of West” district in South Beach

arrow_forward_ios