According to a study, flooding poses a threat to the commercial real-estate industry, leading to increased costs and billions in damages.

Annual flood risk in the United States is estimated at 730,000 commercial, residential and office buildings. According to Arup, the global commercial engineering company Arup, and First Street Foundation, structural flooding damage is expected to cause $13.5 billion of economic loss in 2022.

Although the research included sea-level rise and pluvial flooding, it was more focused on flash floods.

Matthew Eby founder of First Street Foundation stated that this will absolutely have an effect on the structure’s value. “It increases the risk and the existing risks to these buildings which can then have a negative impact upon their value today.”

Eby said that companies such as Morningstar and Nuveen are looking into our data in order to determine what is at risk over the life of their assets. What can you do to protect your investment or assure that it’s the best type of commercial real property? 

First Street joined forces with Arup to expand its flood modeling capabilities beyond residential property. Arup and First Street teamed up to match flood modeling of commercial properties with Arup’s architecture knowledge. This enabled them both to assess the potential impact of flooding on specific types of commercial buildings in the country. They could then determine the economic impact of flooding on each type of building.

Ibbi almufti is the head of Arup’s resilience and risk team in San Francisco. “As climate changes continue to accelerate, flood risks will pose an economic risk to commercial properties across this country.” This new report can be used as a guidebook to help understand building-specific risks and take action to reduce the impacts of climate change.

The downtime estimate was also taken into account, which is how long the structure would remain inoperable following a flood event.

Researchers also proposed a cost for potential damages that could result from climate change. This price includes the possible loss of productivity and damage to local economies. According to the report, that is an increase in cost due to climate change-related flood risk.

All told, the United States will lose approximately 3.1 Million days of operations to local businesses next year. This could rise to 4,000,000 by 2051. This could increase the economic effect of lost productivity and output on all properties.

First Street and Realtor.com teamed up last year to place a flood score for every American house. The score may alert homeowners to consider flood insurance if they don’t have it. Flood maps for federal agencies are frequently outdated and did not include climate change effects until recently.

As the atmosphere heats, it retains more water. This is why we are seeing much heavier rain in this nation. Remains of Hurricane Ida caused unprecedented flooding in Northeast. This led to nearly 50 deaths and billions in damages.

Commercial real estate owners, tenants and investors are all affected by flooding.

Eby stated that the people who actually own these buildings include the average American with a 401k or the commercial real estate investors that have these $200-million buildings. He added that they will be able to better assess the potential risks and costs once they understand the current and future risk.