Climate Risk: Logistics & Industrial Global Outlook

RISK CLIMATE LOGISTICS& INDUSTRIAL

GLOBALOUTLOOK

DESIGNAND PLANNING CONSIDERATIONS

Case Study – A look into the future

Our client—a global financial services occupier— already has a sophisticated understanding of climate risk, having embedded C&W climate risk specialists into their day-to-day operations. For primary global office locations with significant headcount, C&W was engaged to review both current and potential new locations in key markets, including common residential areas for employees, providing a long list of future locations to consider. Importantly, the analysis didn’t just focus on risks, but also the proposed local government responses, seeking to identify mitigation and adaptation measures that were planned, in progress, and/or completed. This analysis allows our client to understand not only the potential risks as part of their future global expansion planning, but also the extent local climate risk mitigation and adaption measures reduce the level of potential risk identified.

The good news? Doing this upfront doesn’t have to cost a lot andwill likely save you significantly when you consider the avoided risks or downtime.

Design and planning rules differ widely around the world, including at a sub-market level, resulting in multiple rules across a single city. This creates challenges around approvals, but also in terms of managing risks—there is often no unified strategy around key topics like flood protection, wildfire management, or disaster planning. Planners have their work cut out for them now and into the future, but what should property players do? The simple answer is: don’t settle for the minimum. When it comes to climate risk protection, the planning regimes may outline the minimum expectation, but that may not necessarily protect you. It’s incumbent on asset owners to manage these factors themselves and not rely on basic planning rules.

It’s worth considering that climate risk represents a huge challenge to governments around the world, and the costs of deploying mitigation or adaptation measures are very high. Governments are not always moving quickly on this topic and do not have an unlimited budget. They must prioritize their efforts and, understandably, have historically focused on downtown areas, where people live, and other critical infrastructure. In terms of overall prioritization, commercial real estate— especially logistics and industrial areas—may be quite far down on the government’s priority list. This again indicates that smart asset owners should ensure they are covered via smart planning and design.

CLIMATE RISK: LOGISTICS & INDUSTRIAL GLOBAL OUTLOOK 24

CUSHMAN & WAKEFIELD