Green Real Estate Carries Fewer Risks

While attending the Real Estate Institute of British Columbia’s Conference on the Effects of Climate Change on Real Estate I was impressed with the receptiveness of Real Estate professionals to the hard hitting messages from scientific researchers evaluating impacts of Climate Change on Real Estate in BC. By the end of the conference there was a grounded sense of responsibility and intention to move into action.

The conference was centred on a report called Hot Properties, How Global Warming Could transform B.C.’s Real Estate Sector (davidsuzuki.org/Publications/hot_properties.asp). The report was funded in part by the REIBC and was conducted by the David Suzuki Foundation. The report discussed many climate change issues which are applicable to Ontario’s marketplace including; Extreme Storm Events, Wildfires, Flooding, Storm Water Flows and Summer Water Shortages. The underlying message is clear, Canadians and their properties are susceptible to climate change, and Realtors, Builders, Architects and Planners have an important role to play in educating the marketplace and helping clients mitigate their property-based exposure.

Credible Science?
Historically, the David Suzuki Foundation has been perceived by some as a leftist “tree-hugging” lobby group. Today, in an age of spin-doctor green washing, the Suzuki Foundation has become a relied upon source of scientifically grounded information. Their recommendations defy propensity for information tampering making them an undisputed and trusted source of information.

Climate Change Risk Mitigation for Developers:

Risks for Planners and Regulators:
“Make Sure zoning and Development guidelines adequately protect residents and local development against identified vulnerability to global warming – and the municipality itself from liability – when planning or permitting new development, installing infrastructure or approving retrofits to existing developments.”…

Green Commercial Building
There is increasing demand for LEED® (Leadership in Energy and Environmental Design) in Public, and Commercial spaces. There is a reason that these property owners are investing time and capital in creating future friendly buildings, and it has very little to do with doing the right thing.  Chris Corps, the former Canadian Chair for the Royal Institute of Chartered Surveyors, when presenting a Green Values report asserts that “Green is good for asset value”.  Chris offers a myriad of case studies of green office, industrial, retail, residential, and educational buildings from Canada, the United Kingdom, and the United States that are better investments than non-green alternatives. The report reveals that the benefits of building green are realized in the asset value, improved occupancy rates, higher productivity rates for commercial tenants and (usually) lower operating costs for green buildings. Chris Corps reports that construction costs are similar and post production building performance is remarkable.

The Consequences of not Going Green
The David Suzuki Foundation Report directs Builders, Architects, Planners and Other-Stakeholders to “Act now to help members understand and adapt to the shifts in public concern, government regulation and insurance coverage on climate change-related issues that are now imminent or already underway.” It goes on to say that Real Estate Professionals must “be able to identify and accurately quantify the potential liabilities of properties inadequately protected from climate change impacts”. When I examine how this impacts my business I reflect on my fiduciary role in serving the interests of my clients. Moving clients into conventional new buildings is in effect selling them obsolete product. Existing buildings offer opportunities for significant retrofits for energy efficiency, and I spend a lot of time discussing these possibilities with clients. REIBC has done a tremendous job in illuminating the risks and opportunities for Real Estate Professionals, Developers and Planners in an era of climate change. Experts within the province, such as John Godden and his team at ClearSphere, are identifying opportunities that are specific for Ontario. The Future of Agricultural irrigation and the inflationary costs of home heating and cooling are serious challenges to the ‘Development Status Quo’. The message to Development Professionals is clear – become aware of the issues, and protect your clients from losses.

Smart Growth in Ontario

Ontario’s land use policy, is articulated in Places to Grow (http://www.pir.gov.on.ca/English/growth/index.html), the provincial government has taken an important step to mandating a more sustainable future for Ontarians. The Places to Grow initiative is a plan to accommodate 4 million new residents in Ontario, without the continued pace of GreenField Suburban Development. The Plan sets clear targets for increased density, with a focus on infill development throughout Ontario. There is an undertone of Smart Growth, promoting the benefits of mixed housing types and mixed commercial uses for urban and suburban centres, allowing people to live, work and shop without the need of an extensive commute. These values are reflected in urban populations across Canada, and the movement is fuelled by an aging boomer population who are seeking close proximity to health care, basic needs and lifestyle amenities.

Insurance
With climate change comes less predictable weather patterns, more frequent and intense storm systems, and increased risk of environment related property damage. For properties which are prone to particular kinds of violent weather patterns, this will be an ongoing issue for insurers. Properties that are in immanent danger are those which are situated: at near or below sea level, close to trees, close to forests, in areas where heavy rain which

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