CONTENT SPONSORED BY ESRI
Environmental variables associated with climate change require commercial real estate professionals to model and analyze potential impacts .
Photo by Irin717 location , carbon footprint , or tenant composition will benefit or be harmed by climate changes and decrease in value over time .
This evidence of the growing importance of factoring in climate-related data based on geography has also been noted by the Urban Land Institute ( ULI ). The group shared in the report “ Climate Risk and Real Estate : Emerging Practices for Marketing Assessment ” that real estate investors are already using climate risk data to make decisions in locations susceptible to climate change . With this data , some are determining whether to invest , or continue investing , in markets that are more vulnerable to climate impacts . But they ’ re not evaluating climate risk alone . They ’ re also factoring in resilience efforts by cities that invest in infrastructure and policy changes to reduce vulnerabilities . ULI says some real estate investors are even starting to pull out of certain markets entirely due to climate risk , another indicator of its growing importance in investment decisions .
In industries like commercial real estate , telecom , and retail — where choosing the right location is key to the bottom line — the ability to predict climate impacts on potential investments is a competitive advantage .
For example , engineering , design , and project management firm Atkins uses GIS technology to perform climate modeling , drawing on the precision of GIS-produced location intelligence to steer clients toward safer investments and fortify their supply chains .
Atkins ’ simulations use predictive analytics to create location intelligence on climate scenarios . The resultant GIS map
shows how and where tropical storms or extreme temperatures might disrupt the flow of shipping containers across global supply lines now and in the future .
TAILORING INVESTMENTS TO POPULATION GROWTH OR DECLINE As more people turn to climate risk data for guidance on where to live and work , businesses are keeping a close eye on how populations shift . The location of everything from a new retail storefront to a same-day fulfillment center to an office complex could turn on those outcomes .
Over the past 18 to 24 months , business planners have worked to understand population migrations , with varying levels of success . The COVID-19 pandemic , remote work , and climate-driven location decisions like those observed by Redfin have muddied the waters . But organizations with high levels of location intelligence have enjoyed more clarity .
They ’ re using GIS analysis to detect shifting sales locations , changing travel patterns , and cities and neighborhoods where populations are growing or declining .
USING LOCATION INTELLIGENCE TO MITIGATE INVESTMENT RISKS Climate risks and new market transitions due to the pandemic have altered the needs of both consumers and businesses and made it even more critical to gain visibility into all elements that may affect a potential property ’ s present and future value . Esri technology and services help commercial real estate professionals bring together data , world-class mapping , 3D modeling , and spatial analysis to gain location intelligence for smarter investment decisions .
Commercial real estate leaders who utilize GIS-based location intelligence have the tools to weigh the consequences of climate change on a particular location or building . Moreover , they can research entire markets to learn more about broader vulnerabilities to climate-related events like the intensity and frequency of hurricanes and wildfires . This insight allows them to better manage investments at both the market and neighborhood levels .
As climate risks alter the places where people buy houses and organizations build businesses , industry leaders in commercial real estate will use that clarity to adjust their investments . Commercial real estate professionals can use location intelligence from Esri to be proactive , understanding and measuring a potential investment ’ s resilience to climate-related effects . By taking this geographic approach , industry pros can make fully informed decisions and formulate smarter real estate investment strategies in the future .
This content was brought to you by Esri , provider of the world ’ s most powerful mapping and spatial analytics software . For more information , visit www . esri . com or contact Esri ’ s business team at bizteam @ esri . com .
Gary Sankary A subject matter expert in retail with nearly
40 years of experience who joined Esri in 2014
CIREMAGAZINE . COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 37