Climate and Real Estate Initiative

Climate Risk and Real Estate Markets: Uncovering the impact of climate risk on commercial real estate prices, markets, and portfolio allocations

Principal Investigators: Simon Buechler (lead)
Year: 2022
Topics: Climate and Sustainable Real Estate, Urban and Real Estate Economics

Commercial Real Estate (CRE) has constantly been exposed to extreme weather events. Still, an increase in those events has greater financial consequences borne by owners, occupiers, and insurers. Using the newest climate and real estate financial performance data combined with cutting-edge and interdisciplinary econometric techniques, this project will provide unique insights on the extent that CRE markets price in the risks from extreme weather and climate change. Moreover, the project will uncover the key channels through which these risks to real estate value materialize.

Addressing climate risk gaps in pricing will contribute to overall market functioning where assets are exposed to physical climate risk and facilitate adaptation strategies to increase the preparedness of buildings for future climate shocks. The outcomes of the project will inform policymakers, regulators, and practitioners in their efforts to increase resilience, advance socially equitable markets, and meet net-zero commitments.

Climate Risk and Real Estate Markets: Uncovering the impact of climate risk on commercial real estate prices, markets, and portfolio allocations