What does resilience mean for commercial real estate?
As the frequency, intensity and impacts of natural disasters increase, commercial buildings play a central role in a community’s ability to bounce back, says Ryan M. Colker. Property Australia looks at some lessons from the United States.
Colker (pictured) is presidential advisor at the National Institute of Building Sciences, a Congressionally established, non-government organisation in the United States that identifies and resolves problems that hamper the construction of safe, affordable buildings.
He also serves as staff director for the Council on Finance, Insurance and Real Estate, the Off-Site Construction Council and the Commissioning Industry Leaders Council.
He says a key challenge for building owners looking to increase the resilience of their assets is to identify where to invest.
“What mitigation measures will provide the best return? What outside funding opportunities can be leveraged? While each building and their risks vary, tools do exist to help support decision-making,” he says.
The National Institute of Building Sciences is currently updating and expanding its 2005 study, Natural Hazard Mitigation Saves: An Independent Study to Assess the Future Savings from Mitigation Activities, which was initially conducted for the US Federal Emergency Management Agency (FEMA).
This landmark study found that US$1 invested in hazard mitigation by FEMA saves society an average of $4.
“While the initial study was focused on societal-level benefits, the $1-to-$4 ratio has been widely applied to justify mitigation measures across the US economy,” Colker explains.
The expanded study will look at benefits that accrue to both the public and private sector, and will provide insight into specific mitigation measures and the benefit-cost ratio of each.
“While understanding the return on investment of mitigation measures is essential, finding capital to invest in such measures and capturing that value in lease agreements or building sales can be challenging,” he adds.
The Institute, together with other industry stakeholders, is working to align costs and benefits in a holistic strategy of incentivisation.
“Through such an approach, incentives can be packaged together to provide building owners with clear direction and access to capital,” he says, adding that successful energy efficiency and sustainability programs can serve as a model.
Once the case has been made and capital identified, building owners and managers must identify their risks and the measures that will effectively address those risks. But such measures are not exclusively applied to the physical structure – policies and procedures must also be in place, Colker warns.
“Pre-disaster planning can assure that building and tenant staff are prepared should a disaster strike. When a hurricane is barrelling towards your property, then is not the time to determine a strategy. Consult with your local emergency management office to identify risks and any resources they may have to assist in your planning. Ensure a clear communication path exists between building staff and tenants.”
Colker says building owners in the United States are using integrated rapid visual screening tools developed by the US Department of Homeland Security to identify potential vulnerabilities. The tools use context-based algorithms to categorise 15 building types and address 20 hazardous events, including arson and chemical attacks, fires, floods, earthquakes and landslides.
“Common mitigation measures include assuring mechanical and electrical equipment, pumps and fuel storage are located above areas prone to flooding. Consider the potential for wet or dry flood proofing of the ground floor to reduce losses and allow quick reoccupation,” Colker advises.
He says building owners should talk to their local council to identify if an inspection is required before a building can be re-occupied.
“Make arrangements with them in advance to ensure your property is a priority.”
Talk to managers from neighboring buildings too.
“Measures they take – or don’t take – can impact your property. Their failure to secure potential projectiles during a wind event, for example, can result in damage to your building.
“Neighbouring buildings may also have important amenities you and your tenants may wish to access in the case of an emergency.”
While commercial building owners and managers can make great strides to improve the resilience of their buildings, such efforts alone are not enough.
“The surrounding community must be resilient as well,” Colker adds.
“If roads are impassible or communications systems or utilities are down, a resilient building will still remain unoccupied following a disaster.”
It’s imperative that building owners and managers engage state and local policymakers to explain the value their buildings provide to a community, and how such benefits can be hampered if investments are not made in infrastructure and utilities.
“A community is only as resilient as its weakest link,” Colker concludes.
A version of this article first appeared in the September/October issue of BOMA Magazine, the publication of the Property Council’s sister organisation in the United States.