Article
Climate Change Is a Threat to Property Values. 4 Canadian Cities Are Ranked Among the Best Prepared.
September 28, 2023 3 Minute Read
Four Canadian cities are leading the way when it comes to weathering the impacts of climate change on real estate, according to a new report from CBRE Econometric Advisors.
The inaugural North American City Sustainability Study ranks Montreal, Ottawa, Toronto and Winnipeg among the Top 10 most resilient cities thanks to their commitment to net zero carbon or greenhouse gas emissions by 2050, and increased use of renewable energy over the past five years. Also featured in the Top 10 are Austin, Boston, Denver, New York, San Francisco and Washington, D.C.
The report assessed a total of 66 cities based on their capacity to withstand transition and physical climate risk, and their mitigation and adaptation initiatives.
“The cities that take the lead on sustainability today will have a competitive edge as the economy shifts to a low carbon, more sustainable future,” says Robert Bernard, Chief Sustainability Officer at CBRE. “With over 50% of the world’s population living in cities, cities will be critical in driving sustainability and helping communities adapt to climate risks.”
Weathering the Storm
Water stress remained low or unchanged across all four ranked Canadian cities, and renewable sources such as hydro power generated most of their electricity (94% in Ottawa and Toronto, 99% in Montreal and Winnipeg).
Over the past five years, air quality improved in three cities, while the number of days where heating was required – heating uses three times as much energy as cooling – decreased in Winnipeg, Ottawa and Toronto.
All four Canadian cities boasted strong green-bond programs to help fund local climate projects and initiatives, including Winnipeg’s Made-in-Manitoba Climate and Green Plan. Winnipeg increased its number of LEED-certified buildings, an initiative also undertaken in Toronto.
Climate Resilience Improves Real Estate Decisions
The report notes that all four Canadian cities are vulnerable to property damage from extreme weather conditions such as winter storms, flooding and severe thunderstorms, but their capacity to withstand climate change and its effects will help to protect property values and draw interest from real estate clients.
“The transition to a low carbon future is increasing the complexity of real estate decision-making,” says Dennis Schoenmaker, Executive Director and Principal Economist at CBRE Econometric Advisor. “Occupiers and investors have a host of new factors and costs to consider, including new regulations.
“Cities that show climate resilience will attract more occupiers looking to meet their own decarbonization goals and are likely to benefit from a halo effect on property values.”
A 2022 CBRE survey revealed that reducing greenhouse gas emissions is a top priority for nearly 70% of commercial real estate organizations. With buildings accounting for 39% of global energy-related carbon emissions, commercial properties play a significant role in helping occupiers reach their carbon reduction targets.
As the world moves towards a low carbon future, sustainable buildings and resilient cities will continue to attract real estate investor interest.
Those that don’t keep up may eventually find themselves marooned at sea, literally and figuratively.
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