Resilience. It’s not a term commonly associated with real estate, however, growing environmental stresses and their threat to the built environment are bringing it to the forefront of long-term real estate investment strategy.
Resilience is defined as the ability to avoid or bounce back quickly from an adverse event. In the realm of real estate, it pertains to buildings being able to sustain capital values and an uninterrupted flow of operating income following a natural disaster or catastrophic event.
Australia remains one of the most ‘at-risk’ environments in the world due to our exposure to extreme weather events. Whether it’s bushfires, hail-storms, floods, cyclones or dust-storms, Australian property owners are realising how important it is to ensure they prepare their assets and occupiers for these incidents.
Smart property organisations are building in resilience strategies that examine the physical robustness of assets as well as how to operationally ensure the safety of those inside and around buildings. Resilience of assets will continue to be a critical strategy to ensure minimising impacts of climate change.
And while resilience is becoming a key consideration for investors weighting risk across their portfolios, property managers are integral to enhancing building-level resilience given their relationship with key stakeholders. Property managers are at the interface of four significant interest groups: building owners, tenants, contractors and local authorities. The outcomes of property managers’ daily interactions with these groups all ultimately have a significant bearing on the building’s overall resilience and long-term performance for the building owner.
In particular, they have an important role to play in understanding and assessing the vulnerability of a property to risk, based on location and region – and in navigating risk should one arise. Beyond existing practices, property managers can enhance resilience by leveraging data on environmental hazards. With greater awareness of the information available, property managers can be more proactive in responding to risks.
A proactive property management approach is key to ensuring resilience and minimising risk – but its success largely hinders on the building owner’s willingness to take a long-term view on their real estate strategy.