US Commercial Real Estate Faces $16.9B In Flood Damage By 2052: Report

Nearly 730,000 retail, office and multifamily properties in the continental U.S. face significant risks of flood damage over the next three decades based on dramatic climate changes, according to a new report issued by the nonprofit research and technology group First Street Foundation and global engineering and consulting firm Arup.

What Happened: The newly published report, "The 4th National Risk Assessment: Climbing Commercial Closures," warned that the annual costs to repair or replace damaged buildings could grow by nearly 25% from $13.5 billion in 2022 to over $16.9 billion by 2052, with climate change fueling these rising costs.

Furthermore, the report stated that flood damage to commercial buildings could result in 3.1 million days of lost business operation in 2022 due to repairs, and that number could increase by 29% to 4 million days by 2051.

The annualized financial impact to local economies is expected to grow by 26.5% from $49.9 billion in 2022 to $63.1 billion in 2052.

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Why It Matters: The report aggregates property-level data at the metro and state level, while data on the future flood risk to individual properties is available upon request from First Street Foundation.

"Business needs consistency and predictability in order to plan, invest, and grow their operations and allow communities to thrive," said Matthew Eby, founder and executive director of First Street Foundation, who cautioned that "American businesses and local economies face much more uncertainty and unpredictability when it comes to the potential impact of flooding on their bottom line than they may realize."

"As climate change continues to accelerate, flood risk will pose an economic threat to more commercial and multi-residential properties across the country," said Ibbi Almufti, chairman of Arup's global working group on climate risk and resilience, who stated the new report was designed to "provide the most comprehensive and up to date understanding of flood risk to various American communities and can embolden action to mitigate the effects of climate change."

Photo: Doug Letterman / Flickr Creative Commons