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Asia Pacific Commercial Real Estate Owners Focus on Resiliency as Environmental Risks Increase

Push to make commercial real estate assets safer and more resilient continues to grow, reinforcing the critical role property managers need to play.

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Asia Pacific commercial property owners and managers are deploying greater resources towards ensuring buildings are more resilient to the long-term environmental challenges. The deepening industry focus on enhancing resiliency in commercial real estate assets is resulting from the coordinated efforts of building owners, tenants, contractors, and local authorities, according to CBRE’s Global Resilience & Property Management 2019 report.

The resilience of property portfolios to environmental stresses is a growing concern for real estate investors with a long-term horizon. According to respondents, key environmental considerations driving increased focus on building resilience in commercial real estate assets include:

  • Resilience as a capital generator: Allowing buildings to sustain capital values and an uninterrupted flow of operating income following a catastrophic event.
  • Future-proofing portfolios: Global investors are increasing their focus on various opportunities and resilience strategies when deploying capital.
  • Partnering with property managers: Partnership is seen as enhancing building-level resilience and increase long-term performance for the building owner.
  • Enhancing asset lifecycle practices: A growing understanding that specific practices can be adopted before, during and after damaging environmental events.
  • Strategies vary by property type: Retail, industrial and data center properties face sector-specific resilience challenges and are customizing strategies to align.

Rajesh Pandit, MD, Global Workplace Solutions & Property Management said, “Extreme weather events, climate change, and natural disasters are now ranked as the top 3 global risks, according to the World Economic Forum. As the increasing risk of natural hazards becomes a reality across the Asia Pacific and in India, investors are realizing the importance of future-proofing their property portfolios. Buildings with comprehensive resiliency plans more effectively overcome challenges when they inevitably arrive, which has a direct and positive impact on marketplace competitiveness and investment return”.

Interviews with top property professionals globally show that commercial property owners, in partnership with their property managers, are taking more deliberate steps to ensure safety and resilience against rising sea levels, hurricanes, earthquakes, and wildfires. Among the strategies being employed:

  • Increasing due diligence process on risk assessment prior to acquisitions.
  • Assessing the resilience of their entire portfolio rather than just for individual buildings.
  • Considering new reporting methods for resilience such as GRESB, an environmental, social and governance (ESG) benchmarking platform used by institutional investors.
  • Using available data to help make smart real estate decisions, including city- and federal-level hazard-assessment tools.
  • Forging earlier and stronger relationships with local elected officials and safety leaders, which helps to improve coordination when responding to environmental events.

The report also discusses the key role property managers play in understanding and assessing the vulnerability of a property to risks, based on location and region, and in navigating a risk should one arise.

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