Our industry is engaged in an important dialogue to improve the efficiency and resilience of real assets through transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
As climate patterns shift, real estate operators are seeing new pressures emerge around water use, extreme weather, and long-term infrastructure performance. Rising utility costs, system strain, and unexpected site disruptions are creating new challenges for tenant safety, operational continuity, and budget planning. While these risks aren’t new, their pace and scope are increasing—especially across retail, multifamily, and commercial portfolios.
Institutional investors are responding. Climate adaptation has become a strategic priority, as real estate stakeholders work to protect asset value, reduce exposure, and build long-term resilience. In this environment, proactive physical risk management is a fiduciary imperative.
Physical risk is intensifying across the built environment
The rising frequency and severity of extreme weather events is reshaping how the built environment is managed. In the United States alone, 2023 brought 28 separate billion-dollar weather and climate disasters—the highest number on record, according to NOAA. Global losses continue to mount, with climate-driven events leading to infrastructure damage, operational disruption, and higher capital risk.
Reports from the Urban Land Institute and McKinsey & Company further emphasize that unmanaged climate risk poses a direct threat to asset value, insurance availability, and investor confidence.
Multifamily and retail properties are especially exposed. These asset types often span multiple climate zones, depend on outdoor systems like irrigation, and support high volumes of tenant activity. In drought-prone regions, overwatering can drive up costs and risk noncompliance with local regulations. In wetter areas, undetected leaks or system failures can lead to costly damage and extended service interruptions.
Building resilience from the ground up
Traditional approaches to risk management—especially insurance—are becoming less reliable. As coverage options shrink and premiums rise, more owners are taking a proactive approach to resilience planning.
That means implementing site-level strategies and technologies that reduce exposure and improve operational readiness. Common approaches include:
- Water management tools like leak detection, stormwater mitigation, and smart irrigation.
- Heat adaptation measures, such as reflective roofs, shaded outdoor spaces, and drought-tolerant landscaping.
- Flood mitigation infrastructure, including permeable surfaces, smart flow valves, and improved site grading.
Together, these solutions help real estate teams reduce vulnerability, protect property value, and meet ESG objectives.
Real-time visibility into site conditions enables faster, smarter decisions
A key shift in resilience strategy is moving from occasional, backward-looking assessments to real-time monitoring of operational risks. While models and forecasts are still valuable, the ability to act on live site conditions has become essential.
Smart technologies now allow asset teams to:
- Detect leaks or irregular water use instantly
- Adjust irrigation and utility usage dynamically based on site data
- Benchmark environmental performance across sites
- Consolidate data for transparent ESG reporting and compliance
With this level of visibility, climate resilience becomes a continuous, data-informed process—not a one-time audit.
Real-world impact: Smarter water management at scale
For one of the nation’s leading owners and operators of retail and mixed-use properties, water management plays a central role in meeting ambitious sustainability goals—including achieving zero water waste by 2030.
With properties spanning drought-prone states like California and Arizona, the company adopted a smart water strategy to reduce outdoor consumption, detect leaks early, and protect curb appeal. By implementing WeatherTRAK smart irrigation and WaterCompass analytics across 25+ sites, they gained real-time visibility into usage and turned water from an operational risk into a measurable advantage.
In the first year alone, the company conserved over 35 million gallons of water and identified multiple hidden leaks—some with potential costs exceeding tens of thousands of dollars per month. Today, they continue scaling these technologies across their portfolio, treating smart water management as both a climate solution and a sound business strategy.
Climate resilience is a long-term advantage
Physical risk has long influenced asset performance. What’s changing is the expectation that owners take measurable, proactive steps to manage it—driven by investor scrutiny, insurance volatility, and escalating site-level disruptions like system failures and unplanned downtime.
Forward-looking portfolios are taking action by:
- Embedding physical risk assessments into acquisition and capex planning
- Investing in adaptive infrastructure and real-time monitoring
- Aligning resilience initiatives with ESG reporting frameworks like GRESB
As pressure grows from regulators, tenants, and investors alike, the ability to operationalize and report on climate resilience will increasingly define market leaders.
In an era of climate uncertainty, resilience is a competitive advantage. By investing in adaptive systems, real-time data, and risk-smart infrastructure, real estate stakeholders can future-proof their assets—and build portfolios ready to thrive in a changing world.
This article was written by Meg Mason, VP of Marketing at HydroPoint Data Systems Inc. Learn more about HydroPoint Data Systems Inc. here.