Climate-related disasters are taking a growing financial toll on real estate assets in North America. For the commercial real estate (CRE) sector, this pervasiveness has introduced a critical challenge: how to systematically prioritize action. Owners and investors now have data to identify the hazards facing their portfolios, but when many assets face some level of physical climate risk, prioritization often feels overwhelming – leading to inaction or suboptimal action.
Recognizing the significance of this challenge, the BMO Climate Institute, in partnership with ClimateFirst Building Solutions Inc. (ClimateFirst) and Investment Management Corporation of Ontario (IMCO), conducted an analysis with the following goals:
Quantify the magnitude of potential financial loss for a representative multi-unit residential building (MURB) in different geographies to unlock the prioritization of assets at risk.
Demonstrate the potential financial impact of investing in resiliency measures at the building level.
Our analysis finds that:
Building-level risk quantification can provide a clearer view of potential financial losses and downtime under future climate conditions and pinpoints which assets require immediate adaptation investment.
When these priority risks are met with appropriate adaptation strategies, the financial case is compelling: avoided losses can significantly outweigh the costs. That is to say: resiliency is not just sound risk management, but a value-preserving investment strategy.
This case study demonstrates that while climate risks cannot be eliminated, their financial impacts can be materially reduced. By equipping decision-makers with transparent, monetary measures of risk and avoided loss, assets can be prioritized for investment and the business case for action can be more clearly demonstrated – making resiliency not just an aspiration but an investable strategy that preserves building value while creating long-term advantage.