As the effects of climate change become apparent and the pandemic surges, real estate teams will need to consider how these new conditions will impact future projects.
According to a study released by the NYC Lower Coastal Resiliency, storm surges are expected to threaten 37% of the buildings in Lower Manhattan in 2050. And per data from the National Oceanic and Atmospheric Administration, analyzed by Jupiter Intelligence, flooding is trending towards doubling in Miami in the same time frame with 61% more properties at risk of chronic flooding.
This increased risk to development projects has insurers and investors taking notice.
Insurers' See Heightened Risk
For those choosing not to engage with the sustainability push, insurers are making it more difficult to ignore. In a recent interview with Bisnow, Stantec Senior Principal, Andrew Burnett stated that development teams are facing increased insurance premiums and increased risk from financial lenders. Both are asking, 'What are you doing to address a more resilient built environment?"
And it's not just about having proof of efforts for insurance providers. Burnett goes on to mention that his clients are starting to realize that they need to show financial partners that they are addressing heightened risk appropriately and are reaching out to companies like Aon to ask how to best approach the situation.
The impending environmental issues aren’t the only concern for insurers. There's, of course, the ongoing pandemic that is once again surging due to the Omicron variant. Per the CDC, 90% of new cases in New York state are coming from the dense metro area of New York City. As more and more businesses were in the process of bringing workers back to the office, the latest wave of infections could delay that again.
Add in the national labor shortage, inconsistent supply lines, and fluctuating material costs, and new developments are starting to appear riskier than ever. Risk management professional Kathryn Swazo, who serves as a vice president with Aon's Construction Services Group, recently stated In Bisnow, "We're seeing a big exodus of carriers from the Northwest region. There's capacity issues, and they just don't want to be involved in insuring many construction projects right now. They've taken a beating on some of these projects."
The Swaying Power of Real Estate Data Analytics
Worried insurers and investors won't help you get your development projects off the ground?
Instill enough confidence in your projects to get backing.
When the risk is at an all-time high, you need to exercise command over what you can control and demonstrate this capability to financial partners and insurers. What do you do when each of these risks rears its head? What plans do you have in place? Your strategy and tactics need to be clearly presented.
In the same interview with Bisnow, Brian Hearst, managing director at Aon Construction Services Group, shared that commercial real estate is an information game and that "in today's more competitive marketplace, the more information my client can give us, the more effective we can be and the more competition we can create in the marketplace to get the client better terms and conditions."
Data and documentation in surplus is the key to insuring your project. Having a good handle on all of your project information so that it can be quickly pulled up and shared is critical as we head into 2022. Take advantage of technology that’ll help you organize your data and proactively warn you of potential project risks to position your team as trustworthy in the eyes of investors and insurers.
How Technology Helps Insurer Projects
Many development teams lack the technology or processes to track down pertinent historical data quickly, established processes, project documentation, and risk avoidance measures for insurers and investors. Yet, the capability to organize and share it in a timely, concise, and high-quality manner has never been more crucial to financial backing.
Sending insurers a pile of documentation or spreadsheets that need to be decoded will not convince financial partners that your team is taking a modern approach to risk management. By implementing proactive intelligence technology for your development team, you’ll add the capability of quickly compiling and sharing your historical data and project documentation in a professional manner and therefore signal to backers that your team has its ducks in a row. Proactive intelligence also works as a risk avoidance tool by using AI to highlight project areas that are starting to veer off course.
Since market uncertainty will always be prevalent, utilizing tools that help you present your real estate project data in a digestible way and ensuring insurers and investors have maximum visibility when backing your project will be critical to success this year and many years after.
Northspyre is the first proactive intelligence tool for real estate development teams that want to harness the power of data analytics, automation and AI. Bring organization and efficiency to your complex projects, and reap even more benefits than pleasing insurers.