Climate Change and Real Estate

How much the climate will change – and what the full effects of that change will be – is not yet fully understood. However, over the near-term, global average temperatures are projected to continue to increase. This is likely to alter regional climates and ecosystems, and cause more frequent extreme weather events. To some extent, humanity will be required to adapt – as will the natural world. Governments, consumers, the investment community, and ­– perhaps most acutely – the insurance industry all recognize that climate change is a significant and prominent risk.

Risks

Climate change presents two key areas of risk for the real estate industry: infrastructural and financial. 

The first risk is climate-induced damage. Deterioration, damage caused by severe weather events like higher temperatures, intense rainfall and winds, and the obsolescence of structures not prepared for these factors will continue to challenge the industry. 

The second risk is the increased cost both of insurance and of the amelioration of structures to prepare them for the effects of climate change. (With regard to the life cycles of new structures, developers and owners would to well to consider designing to better standards of strength and durability than those dictated by current building codes.)

Commercial Buildings and the Environment

Buildings in Canada account for 30% of this country’s total green house gas emissions. Commercial structures alone generate approximately 5.4% of Canada’s CO2 output. As green awareness grows, the environmental responsibility displayed by the companies who occupy these buildings will be increasingly scrutinized – the building’s sustainable performance is, after all, a symbol of the businesses’ environmental culture.  In the coming years, buildings without beneficial environmental characteristics may attract fewer tenants – and considerably less investor interest.

Mitigation: Energy Efficiency and Renewable Energy

The first step in mitigating carbon emissions from a building is to optimize efficiency. This calls for a careful investigation of the insulation, the lighting systems and electrical equipment, and the maintenance and efficiency of the furnace or HVAC system.

Owners should consider the following strategies and technologies in a commercial building to improve its HVAC energy performance:

• reducing air leakage rates;
• increasing thermal insulation thresholds;
• using mixed-mode ventilation;
• installing heat recovery ventilator (pertinent to housing or small commercial buildings);
• designing in ground source heat pump space cooling and heating;
• installing solar thermal heating and cooling (absorption chillers);
• combined heat and power generated distributed heating and cooling (absorption chillers);
• integrating building management systems; and
• installing low-e triple glazing.

Adaptation

Unfortunately, some level of adaptation to climate change will be required. In buildings the potential areas of risk are likely to include:

• subsidence;
• substantial weathering of building outer skin;
• wind loading;
• storm water run-off (flood risk);
• building overheating;
• rising levels of humidity in certain areas increasing the potential for mould growth; and, reduced human comfort in the indoor environment; and
• reduced human comfort in the indoor environment

Short-Term Steps Toward More Sustainable Buildings

Currently accepted environmental impact rating systems measure two fundamental factors: the building’s effect on the environment as a whole, and its effect on the health and comfort of the people who inhabit it.

The vast majority of North American buildings were designed and built long before LEED and other standards emerged. This, of course, presents challenges to owners looking to improve sustainability in older buildings.  For example, size dictates a building’s environmental footprint to a large degree. Until now, buildings have often been constructed to dimensions far in excess of those that would be optimally efficient. This is only one of many obstacles existing structures face.

The following strategies should be considered by building owners looking to initiate sustainable practice in their building or portfolio:

• Assess your current sustainable performance using a proprietary rating system, or one designed for your own specific criteria (opportunities for sustainability are less accessible in remote locations)

• Evaluate the largest human impact of a building (air quality, daylight, thermal comfort, mould, noise, ecological impact); earmark capital and operational resources to reduce those impacts

• Enact financially accessible strategies first. (For example, re-lamping using T8 ballasts enhance employee comfort with a short payback. Incentives are available for this strategy.)

• Advertise your green achievements. Carpooling is becoming increasingly widespread anyway – celebrate measures like these

• Waste recycling – it isn’t very sexy but it costs nothing. Canadians currently recycle only 40% of the paper they use

• Consider green leases; get your tenants to buy into the space they are occupying as a green statement

Climate change is here to stay and the accommodation which the real estate industry has to make in-order to remain tenable over the coming decades will require working with all stakeholders designing, developing, building and using buildings and infrastructure to ensure their business remains profitable in light of the concerns now unfolding globally.