The Commercial Real Estate Climate Imperative: A New Playbook for Navigating Risk

The old rules of commercial real estate are collapsing. For decades, the industry relied on a tried-and-true formula: historical weather patterns, standard building codes, and predictable insurance. Today, as new development projects face accelerating disruption from storms, fires, sea level rise, and heat, that formula has become a liability. 

That’s why a coalition including The Resiliency Company, JLL, Ryan Companies, and the Urban Land Institute created the Risk Mitigation Playbook: a practical guide based on real-world experience written by the industry for everyone involved in commercial real estate (CRE) development, from lenders to engineers to owners. It captures what early movers already know: resilience is no longer optional, and the cost of getting it wrong is rising fast. We have the ability today to redesign CRE for a future of extremes—and forward-thinking projects are showing us what’s possible when resilience isn’t an afterthought. 

For example, when Trammell Crow Company acquired a 127-acre site southwest of Houston, Texas, nearly half the property lay below the base flood elevation, crisscrossed by pipelines and power lines that made conventional drainage impossible. The developer could have walked away, or swallowed the risk. Instead, it worked with the city in 2015 to dig a 25-foot-deep lake in an adjacent park, used the dirt to raise the site's elevation, and connected the two with a half-mile underground pipe.

Two years later, Hurricane Harvey dumped 50 inches of rain over four days, and roads turned to rivers—but Park 8Ninety stayed dry as the lake filled with stormwater. A new tenant opened on schedule the moment the floods receded. 

Park 8Ninety didn’t get lucky—they had a better strategy based on two realities: 

1) The New Normal is More Disasters, More Losses, and Soaring Insurance

Global insured losses from weather-related catastrophes reached $137 billion in 2024, with such disasters increasing 5-7% annually. Commercial buildings in high-risk states like Florida, California, and Texas have seen insurance costs surge 108% over the past five years.

Losses are increasing, and premiums are spiking. CRE economics are being rewritten in real time.

2) The Industry Has Not Caught Up

According to research from JLL, 53% of U.S. commercial real estate investment over the past decade has occurred in markets facing acute climate change risks. Thirty percent of banks have material climate risks in their commercial and residential real estate portfolios, representing $627 billion in loans. Only 21% of natural hazard-prone jurisdictions have adopted current hazard-resistant building codes. The traditional risk management approach that relies on historical patterns of weather and disaster, outdated codes, and conventional insurance is collapsing under its own contradictions.

In an exchange with The Epicenter, Joe Rozza, Chief Sustainability Officer at Ryan Companies, shared, "Relying solely on historical data and basic insurance is obsolete. True resilience requires collective, proactive action across the entire commercial real estate ecosystem." In other words, no single entity can climate-proof its portfolio alone. This is where the Risk Mitigation Playbook comes in.

The Risk Mitigation Playbook is a Guide for All CRE Stakeholders

The Risk Mitigation Playbook includes practical, actionable guidance for the modern risk landscape, providing the tools and strategies needed to protect assets, create value, and build a resilient foundation for future prosperity. 

The Playbook offers:

• Clear guidance for key stakeholders: to align lenders, investors, developers, designers, contractors, and building owners on the value of risk management.
• Enterprise-level risk management best practices: to help organizational leaders get on a path to mitigate risk and enhance value.
• Project-level risk management best practices: to facilitate cross-stakeholder collaboration and reduce collective risk.
• Purpose-built references and tools: to enable critical workflows, including physical risk assessments, building certification comparisons, insurance product selection, and contractual risk mitigation.

“Resilience is no longer just about reducing vulnerability to increasingly frequent and intense disasters,” Lindsay Brugger, VP of Resilience at the Urban Land Institute, told The Epicenter team. “It is an opportunity to create value. Higher rental premiums, increased investor interest, lower operating and maintenance costs, and preserved insurability all depend on informed risk management. This playbook equips the industry with a practical framework for aligning stakeholders around these value-added outcomes.”

Examples of Successful Proactive Climate Risk Management in CRE

Proactive risk management delivers tangible returns: recent studies show $4 to $7 in returns for every dollar spent on adaptation and resilience measures in buildings. A vanguard of developers, investors, and lenders is already putting these principles into practice, as climate-conscious decisions become sources of competitive advantage. 

The following case studies from the Playbook show how early movers are gaining ground:

Preserving asset value in Cape Coral, Florida. An acquisition team used climate risk assessment to identify major flood threats to a retail property, revealing potential losses of over $6 million on a $36 million asset. Rather than walking away, they incorporated targeted flood protection into their capital planning and negotiated a purchase price reflecting true ownership costs. This data-driven approach future-proofed the investment.

Reducing operating costs in Boston. The Eddy Apartments elevated critical systems above the floodplain, requiring higher upfront investment but lowering potential flood loss from $10 million to $1 million and cutting insurance premiums by 90%. A site-specific wind analysis allowed for lighter, less expensive steel while still enabling a resilient facade. The sustainable design attracted higher rental premiums and expedited permitting.

Attracting premium tenants in Miami. At 1450 Brickell, the developer fortified the Class A office tower with hurricane-resistant glazing far exceeding local codes. This commitment to tenant safety proved key to quickly leasing the building and attracting blue-chip tenants like J.P. Morgan Chase and American Express.

Front-Loading Resilience Delivers the Biggest Returns

These stories highlight different markets and different solutions, but there’s a common thread: resilience works best when it's baked into initial design and underwriting, not bolted on later.

“Our clients need actionable guidance to navigate the convergence of economic headwinds, escalating extreme weather events, and rapidly changing regulations,” shared JLL’s Janika McFeely with The Epicenter. “This Playbook fills a critical gap by providing stakeholder-specific best practices that demonstrate how forward-thinking risk management isn't merely defensive—it's a strategic differentiator that unlocks premium valuations, enhanced access to capital, and long-term market leadership in an increasingly challenging environment."

The refrain has become almost tired: preparing for climate change costs less than reacting to it. Yet the gap between knowing and doing remains dangerously wide. Organizations that act decisively now secure two kinds of returns: physical protection from the next storm, and market advantage over those still calculating the risk.

"These strategies go beyond defending assets against escalating physical and transition risks; they unlock new value," says Rozza. "The Playbook is the decisive framework the commercial real estate industry needs to ensure our developments remain resilient and competitive for decades to come.”

Download the Risk Mitigation Playbook here.

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