How important are climate factors to you when evaluating a market or building?
Seeing hurricane ida move through the south I am realizing that climate factors like flooding could take a large position in overall value when markets like New Orleans just get ravaged each decade.
[{"id": "hb9elmi", "text": "Two days and no one commented, probably because, in my opinion, CRE investors don't like to think about it.  The industry is more conservative than average, sure, but I'm not talking about aggressive denial of facts, I'm talking about just skimming over the issue entirely.\n\nThe thing is that I have tried a half dozen ways of measuring the potential effect of flooding on pricing in CRE and I usually come up with results that are meaningless, or statistically insignificant.  I'm told that in some markets, like Houston, New Orleans, and South Florida,  insurers are adjusting their models and landlords are seeing higher expenses from insurance; theoretically that should lower NOI and hit pricing.  Again, I haven't been able to measure that, though there's also a decent possibility I'm not as good of a statistician as I think I am.\n\nUltimately, if you pressed them, I think a lot of landlords just figure they've got time to get in and get out before flooding overwhelms them (though I won't deny some probably just disbelieve the whole thing).  Moreover, they do pay their insurance, so they probably expect that to come through; if the insurer isn't charging enough, that's on them.  Lastly, they definitely figure there will be mitigation by the state.  My understanding is that geography plays a part in that.  New York or Houston are probably salvageable.  Miami may not be.  But I don't think anyone underwrites to those assumptions.", "replies": [{"id": "hb9hhsi", "text": "You may be toodrunktoosail but this was very informative. Thank you.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hc6vq1w", "text": "Look at what large investment shops are saying/doing about it.\n\nhttps://www.blackrock.com/us/individual/insights/blackrock-investment-institute/physical-climate-risks\n\nJoe Schmo, CCIM only thinks about his next check. His client thinks about how to 1031 in time, and then has a 3-5 year investment window. So long as they find a greater fool, nobody wants to talk/think about climate change. \n\nThe denial and backwards thinking in real estate is amazing, Miami brokers and investors just want to pretend its not happening, even as major parts of the city are already pumping seawater out on the daily. \n\nThe big shops though, they are already quietly unloading their at-risk assets.", "replies": [], "depth": 1}]