The commercial real estate sector is increasingly affecting the effects of climate change. The climate crisis has a direct impact on cash flows, capitalization rates and the availability of financing for commercial facilities. An additional problem is the insufficient level of insurance for weather phenomena.
– commercial property owners and investors are increasingly colliding with increased risk costs in the case of areas susceptible to events related to climate changeregardless of the individual exposure of real estate – says Joanna Mroczek, Head of Strategic Consulting & ESG at CBRE. – This trend may also apply to regions showing similar climate risk profiles, even in the absence of previous phenomena of such phenomena – he adds.
Economic consequences of climate change
The economic effects of climate change for commercial real estate include:
- lower levels of rent,
- higher vacant indicators,
- a longer time for searching for appropriate tenants in endangered locations,
- higher real estate insurance costs,
- Increased expenditure on management and necessary renovation.
These factors lead to a reduction in investment returns and affect capitalization rates. In addition, financing Such objects become both more expensive and more difficult to access due to increased risk.
The problem of insufficient insurance
One of the key problems related to the economic consequences of climate change is the inadequate level of insurance against weather phenomena. In the entire European Union, only 10 percent were insured in 1980-2023. Financial losses related to climate change, which indicates a significant gap in protection.
The CBRE report shows significant differences between EU countries in this matter. In Poland, almost all damage to climate change in the analyzed period was insured. However, in Germany, where the losses reached EUR 180 billion, the insurance level was less than EUR 80 billion. In Italy, the situation looked even worse – with losses exceeding EUR 130 billion, assets worth only EUR 10 billion were insured.
A new approach of tenants and owners
– According to our data, on a European scale 40 percent Tenants are increasingly taking into account the exposure to the effects of climate change and limiting the negative impact on the environment when choosing the location of an office facility – says the expert.
– this, as well as the economic consequences mentioned above, make it Real estate owners will try to alleviate the impact of such exposure, increasing the resistance of existing assets or building new office buildings with better immunity – emphasizes.
In the long run, buildings not adapted to climate challenges may lose value and attractiveness for potential tenants and investors.
The greatest risk for business
Real estate is only one of the industries that have the effects of climate change – its impact on the global economy is increasingly raised by the business itself. The same applies to other aspects of the ecological crisis. The twentieth edition of the cyclical report of the World Economic Organization, “The Global Risks Report 2025” published this year, among the ten largest economic risks for the world in the next decade Five environmental factors.
Four of them occupy the first four places in terms of severity; Among them we find appropriately extreme weather phenomena, loss of biological diversity and the fall of ecosystems, critical changes in planetary systems and deficits of natural resources. The list in tenth place is closed by pollution.
Rated for the second time as the greatest threat of extreme weather phenomena are to gain strength, In turn, the loss of biological diversity and the fall of ecosystems “advanced” to second place from the third place taken in the previous edition. Environmental risks relate to all parts of the world, while in the case of Latin America and the Caribbean they exhaust the list of the five most serious threats.
The climate and environmental results will be countable. According to researchers from the Potsdam Institute, the influence of climate change, who in April 2024 published their estimates in the magazine “Nature”, Regardless of the reduction of greenhouse gas emissions, the global economy is to lose 19 percent until the middle of the century. income. In turn, the authors from the American organization National Bureau of Economic Research predict that the increase in temperatures by 1 degree C will reduce global GDP by 12 percent.
What kind of consequences can Poland meet? These predictions also arouse serious anxiety. The report of the Polish Chamber of Insurance and EY published two years ago indicates that when achieving the goals of the Paris Agreement (and thus stopping the global temperature increase of 1.5 degrees Celsius compared to the era before industrial) The GDP of our country will fall by 3 percent, in the case of more insulation, however, it can be as much as 10 percent.
