Climate change forcing real-estate developers to add weather-proofing

Along East Boston’s waterfront sits The Eddy, a two-building property with over 250 luxury apartments. Its harbor-side location provides unobstructed views of the Boston skyline. It also leaves the building particularly vulnerable to sea surges and flooding.

When developers imagined The Eddy in 2014, they kept that weather exposure in mind.

According to the Urban Land Institute, or ULI, the developers built The Eddy nine inches higher than the original property that was previously located on the site. They put an emergency generator on the roof, built an 18-inch floodgate layered with sandbags at the base and planted coastal vegetation that can survive a saltwater immersion. The developers also constructed The Eddy with walls that can withstand up to 100 miles per hour of wind.

Those renovations reduced The Eddy’s estimated flood loss risk from $10 million to $1 million, which meant ten-times cheaper annual flood insurance premiums, plus savings on wind insurance, according to ULI.

Since The Eddy completed construction in 2016, extreme weather has become more common. As a result, insurance has grown more expensive.

Climate-resilient features that might have once been considered architectural frills are now helping commercial real estate owners lower property costs in the long-term.

Lindsay Brugger, vice president of urban resilience at ULI, said that, along with reducing insurance premiums, climate resilience can generate savings by lowering operating expenses, improving the marketability of a building and avoiding construction costs when a natural disaster hits.

“Resilience should be for everybody. It does not need to be a luxury,” said Brugger.

A 2018 study by commercial property insurer FM Global found that for every dollar spent on hurricane protection, a building will lower its loss exposure by $105.

And a 2019 report by the National Institute of Building Sciences spoke on the non-financial savings as well. It found that implementing mitigation measures according to modern building codes could save 600 lives and prevent 1 million nonfatal injuries.

Commercial real estate properties have seen insurance rates rise an average of over 7% since 2017, according to an August Moody’s report. That’s compared to a typical yearly increase of about two to three percent.

“It’s not all really due to climate hazards, but that is one of the core issues,” said Kevin Fagan, who authored the report and leads Moody’s commercial real estate analysis division.

Some insurers have pulled out of high-risk markets like California and Florida, scared off and priced out by the increasing regularity of extreme weather conditions.

Christine Chipurnoi, an executive at USI Insurance…