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Extreme weather, rising insurance premiums, new carbon regulations, and shifting market expectations are pushing commercial real estate (CRE) into uncharted territory.
Extreme weather, rising insurance premiums, new carbon regulations, and shifting market expectations are pushing commercial real estate (CRE) into uncharted territory. Stakeholders across the value chain—lenders, developers, architects, owners, contractors—are being asked to make decisions that hinge on exposure types that didn't materially affect portfolios a decade ago.
To help the CRE industry navigate this new reality, The Resiliency Company has developed the Risk Mitigation Playbook alongside professionals from over 55 companies. It distills the essential practices that help teams understand their exposure, align on priorities, and make smarter, future-ready decisions.
Here are three takeaways from the Playbook about how to build the risk literacy that makes all other resilient strategies possible.
Make risk a shared language across the team
Every stakeholder in the CRE ecosystem faces different forms of exposure. Risk literacy helps each understand how those exposures intersect. For example, design teams need to know how future heat projections shape materials and cooling requirements. Owners and operators need fluency in insurance market shifts and how premium increases can erode Net Operating Income.
Organizations can build this shared grounding by regularly circulating learning resources: hazard data, emerging regulatory trends, and training materials like ULI’s Introduction to Climate Risk and Resilience course, or the AXA Climate School. When teams know the difference between acute and chronic hazards, or how carbon regulations translate into potential retrofit costs, conversations change. Decisions made early in site selection, procurement, and design start to reflect future conditions, not just historical assumptions.
Transparent risk assessments drive clearer decision-making
Transparent conversations about risk help organizations define their acceptable risk tolerance. Stakeholders can align upfront, resolve tradeoffs faster, and avoid costly surprises later in the CRE project lifecycle. This clarity shows up immediately in deal structuring and design decisions.
For instance, NAIOP reports that a large developer used climate-modeling software to map climate hazards across its portfolio. After this analysis, the firm revised both its site-selection strategy and building design, installing reinforced storm shutters and reducing glass facades to withstand extreme winds.
Risk data is dynamic, not static
Risk changes over time. When everyone is on the same page about prioritizing risk management from the outset, it's easier to accurately track cost impacts, such as construction delays due to extreme weather, rising premiums, damage estimates, and business interruption data.
Industrial real estate investment trust Prologis runs a physical risk analysis on its entire global portfolio (looking at flooding, heat, sea level, etc.) and then refreshes that data daily to feed its investment process. JLL did a risk assessment for a retail owner who was preparing to sell, and discovered the property had significant hidden flood exposure. By raising this issue early, the owner could retrofit flood barriers before marketing the building, preserving their investment return.
The first step of many
As insurance markets reprice climate exposure and regulations like SEC climate disclosure requirements expand, organizations that build risk literacy early can refine their enterprise risk strategies year to year, justify investments in resilience and energy performance, and identify which mitigation measures deliver the strongest returns. Awareness creates the essential foundation for action—and every other strategy depends on it.
Read more in the Risk Mitigation Playbook here.
Read more about insurance on The Epicenter here.
Read more about resilient public infrastructure and government solutions on The Epicenter here.
Read more about resilient real estate on The Epicenter here.
45%
45% of commercial real estate leaders plan to only select buildings that are resilient to climate events by 2030, according to a JLL Future of Work survey.
Source: JLL
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The Epicenter helps decision makers understand climate risks and discover viable resilience solutions. The Epicenter is an affiliated publication of The Resiliency Company, a 501(c)3 nonprofit dedicated to inspiring and empowering humanity to adapt to the accelerating challenges of the next 100+ years.
RSG 3-D's non-combustible panel system offers a financially competitive alternative to conventional construction that delivers wildfire, earthquake, and hurricane resilience.
The federal government's retreat from climate adaptation has created a gap in data, funding, and coordination, but a new decentralized ecosystem of nonprofits, state governments, and coalitions is stepping up to fill the void and may prove more resilient to political disruption in the long run.
Resilience districts give local governments a new financing mechanism to fund climate adaptation, but their success depends on applying a forward-looking, risk-informed approach rather than defaulting to traditional bond financing logic.
The housing affordability crisis and the wildfire crisis aren't distinct challenges. They're a self-reinforcing cycle that requires investing in resilience to break.
