BROOKLYN, N.Y. and SAN FRANCISCO— A new report from First Street Foundation and global engineering and consulting firm Arup provides new insights for communities at risk of flooding.
While previous studies by First Street Foundation have provided flood risk data for individual homeowners, this report offers a data-driven assessment of flood-related risks on the commercial market.
Titled “The 4th National Risk Assessment: Climbing Commercial Closures,” the report employs novel techniques to assess the risk of flood damage to 3.6 million retail, office, and multi-unit residential properties across the United States and related economic impacts, considering today’s climate and the changes anticipated to happen over the next 30 years.
The report identifies the economic impact to metropolitan areas and states from lost days of productivity and output caused by damage to retail and office buildings as well as the associated closures due to repair times. Altogether, the report provides investors, business owners, financial institutions, and economists with crucial data on the extent of flood risk to commercial and multi-unit residential properties and helps to quantify economic loss associated with that risk in ways not previously possible.
Key findings from the report include:
- A total of 729,699 retail, office, and multi-unit residential properties face risk of flood damage in the contiguous United States
- The annual costs to repair or replace damaged buildings could grow by roughly 25% from $13.5 billion in 2022 to over $16.9 billion by 2052 due to climate change
- Flood damage to commercial buildings could result in 3.1 million days of lost business operation in 2022 due to repairs, growing to 4 million days by 2051 – an increase of 29%
- Damage to commercial buildings has both revenue and downstream consequences for metropolitan areas and states. 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
Commercial real estate supports the economic heart of American cities and multi-unit residential properties also play an important part in keeping the economy moving by housing members of America’s workforce, many of whom have had to work from home during the pandemic. As the frequency and severity of floods accelerate along with the changing climate, gaining a more comprehensive understanding of the total risk posed to these buildings and understanding the uneven effects of climate change across different metros and states is vital. This study is arming individual commercial and multi-unit residential property owners, investors, and policy makers with important data, which can be used to guide investment, adaptation measures, and policy change.
“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. “In partnership with Arup, we are demonstrating 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. Flooding that leads to lost days of operation and lengthy repair times for local businesses could have significant broader national and even global economic consequences.”
“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, chair of Arup’s global working group on climate risk and resilience. “Arup and First Street Foundation are joining forces to provide important knowledge for businesses, property owners, and investors to forecast potential losses over the next three decades. This new report will 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.”
The report aggregates property-level data at the metro and state level.
