When investors in Florida consider the potential of a commercial real estate investment, they are used to taking several factors into account that could affect the long-term value of their stake. After all, many people favor investing in real estate because of its potential to retain and increase value over longer periods of time. Experts are cautioning that climate change may introduce other variables that should also be considered when evaluating a potential investment.
Larger firms in the commercial real estate space are dedicating significant resources to planning for climate risk and how it could affect their portfolios. There is a range of issues related to climate change that could impact the value of real estate, including a greater likelihood of extreme weather and associated repairs as well as the threat of rising sea levels and accompanying flooding. While some note that investors could see a sudden decline in property values in the case of climate change, they also noted that those who are conscious of these issues and make decisions on that basis could outperform the market.
The effects of climate change have become more apparent. In 2017, damage to real estate from extreme weather reached a historic high as floods, wildfires, mudslides and other natural disasters caused more than $300 billion in damage. In 2018, the East Coast had rainfall that exceeded normal levels by three times, and extreme precipitation has become dramatically more common in the past 30 years. As a result, investors are urged to examine the climate profile of a particular property when considering whether to add it to their portfolio.
Entering the commercial real estate market can involve a number of complicated factors and require significant research and due diligence. A real estate attorney can work with property investors to complete this process successfully and negotiate a favorable contract.
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If you have any questions regarding real estate law, please do not hesitate to contact me, Santiago J. Padilla, Esq., either at 800-483-7197, or [email protected]