Businesses Face Mounting Flood Risks

January 1, 2021

On December 12, the First Street Foundation released a comprehensive report detailing the risks borne by commercial properties from the increasing frequency and severity of flooding. The report notes that while most flood risk analyses thus far have focused on the residential markets, “the commercial market is often made up of the most valuable physical structures in communities, employs much of the local labor force, and generally plays a key role in the sustainability of the local, regional, and national economy.”

According to this report:

  • 729,999 retail, office, and multi-unit residential properties are at risk of annual flood damage in the contiguous United States, with the count of buildings at risk growing by about 8% by the year 2052;
  • The structural damage associated with this risk is currently over $13.5 billion annually and expected to grow to $16.9 billion over the same time period;
  • The combined lost days of building operation for all retail and office buildings is estimated to grow from 3.1 million to 4.0 million lost days of operation annually; and
  • The economic impacts on local economies is estimated to grow from $26.8 billion in direct lost output and $23.0 billion in indirect impacts due to downtime days to $34.0 billion and $29.1 billion ($63.1 billion total), respectively (~26.5% increase over the time period).
The report ranks metropolitan areas and states by exposure to flood risk. The top five metropolitan areas with the highest estimated vulnerability to flood risk include Miami, New York, Pittsburgh, Boston, and Houston.

The information and data highlighted in this report are likely to become increasingly important as policymakers dig further into the financial impacts of climate risk, as outlined in the following article, on regulator guidance to banks on climate.

 

Contact

Sairah Burki
Managing Director, Regulatory Affairs
703.201.4294
sburki@crefc.org
The top five metropolitan areas with the highest estimated vulnerability to flood risk include Miami, New York, Pittsburgh, Boston, and Houston.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.

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