What does resilience mean for commercial real estate?
What it takes to prepare for disasters and then quickly return to full operations after a disaster

by Ryan M. Colker — U(Originally published in the September/October 2017 issue of BOMA Magazine.)

Around the world, the frequency, intensity and impacts of natural disasters are increasing. These events can significantly affect the social, economic and environmental functionality of communities. The ability of commercial buildings and the businesses they house to adequately prepare for such events and quickly return to full operations—a quality known as resilience—contributes significantly to a community’s ability to bounce back. In addition to the community-wide impacts, the state of individual buildings also can affect the long-term viability of the businesses that occupy those buildings.

Identifying measures to reduce risk and increase resilience, undertaking actions deemed cost-effective and communicating such actions to tenants and prospective tenants can help commercial building owners and managers serve their communities, while also providing value to their occupants.

Making the case, identifying capital

A key challenge for building owners looking to increase resilience is identifying where to invest. What mitigation measures will provide the best return? What outside funding opportunities can be leveraged? While each building and their risks vary, tools do exist to help support decision-making.

The National Institute of Building Sciences (Institute) is in the process of updating and expanding its 2005 study, Natural Hazard Mitigation Saves: An Independent Study to Assess the Future Savings from Mitigation Activities, for the Federal Emergency Management Agency (FEMA), which found that $1 invested in hazard mitigation saves society an average of $4. While the initial study was focused on societal-level benefits, the $1-to-$4 ratio has been widely applied to justify mitigation measures across the economy. The expanded study will look at benefits that accrue to the private sector. Results from the update and expansion to the Mitigation Saves study will provide insight into specific mitigation measures and the benefit-cost ratio of each.

Additional Resilience Resources

  • National Institute of Building Sciences: A number of resources, including the Natural Hazard Mitigation Saves study and the Developing Pre-Disaster Resilience Based on Public and Private Incentivization report, can be found on the Institute’s Multihazard Mitigation Council webpage at nibs.org/?page=mmc_projects.
  • Integrated Rapid Visual Screening (IRVS): The IRVS is a tool designed to determine initial or relative risk and resilience for buildings based on visual inspection only. The IRVS for Buildings categorizes 15 building types and addresses 20 hazardous events. More information can be found at bit.ly/IRVSforBuildings.
  • U.S. Resiliency Council (USRC) Ratings: Currently focused on seismic risk, the USRC has developed a rating system examining a building’s safety, potential damage (in cost) and likely recovery time post-earthquake. The system issues certified, silver, gold and platinum certification levels. The Verified Earthquake Rating can be used to identify buildings designed to be earthquake resilient. The Transaction Earthquake Rating is intended to support transactional due diligence requirements for investment decision-making and management of risk exposure. Learn more at www.usrc.org.
  • Sustainable Sites Initiative (SITES): In addition to buildings, criteria are available to support the resilience and sustainability of landscapes—whether associated with a building or not. Developed by the American Society of Landscape Architects, the Lady Bird Johnson Wildflower Center and the U.S. Botanical Garden, the system focuses on maintaining or replicating the services typically provided by natural ecosystems—including resilience features. The system is designed to complement Leadership in Energy and Environmental Design (LEED) certification. Visit sustainablesites.org.
  • FORTIFIED: The Insurance Institute for Business and Home Safety (IBHS) has developed above-code-level criteria for commercial buildings exposed to hurricanes, high wind and hail. Projects using the FORTIFIED system are third-party verified and could receive insurance and other benefits. The system can be used for new or existing buildings and offers bronze, silver and gold designations dependent on the types of strategies undertaken. More information can be obtained by visiting disastersafety.org/fortified/commercial.
  • Alliance for National and Community Resilience (ANCR): In addition to building-level approaches to resilience, many communities are looking to identify their resilience across multiple functions, including health, education, culture, emergency management, energy and communications. ANCR is in the process of developing a communitywide benchmark to support such assessments. BOMA International, the Institute and other organizations have signed on to be a part of this initiative. Visit resilientalliance.org to learn more.

While understanding the return on investment of mitigation measures is essential, finding capital to invest in such measures and capturing that value in lease agreements or building sales can be challenging. Working with industry stakeholders, the Institute’s Multihazard Mitigation Council and the Council on Finance, Insurance and Real Estate have identified a strategy to begin aligning costs and benefits into a holistic strategy of incentives called “incentivization.” Through such an approach, government incentives, along with incentives that mirror benefits accrued to the private sector (e.g., insurance or financial institutions), can be packaged together to provide building owners with clear direction and access to capital. While such an approach is in development, successful energy efficiency and ability programs can serve as a model. In fact, property assessed clean energy (PACE) programs in Florida and California do allow some hazard mitigation strategies to be funded through them.

Implementing mitigation measures

Once the case has been made and capital identified, owners and managers of existing buildings must identify their risks and the measures that will effectively address those risks. Such measures are not exclusively applied to the physical structure—policies and procedures must be in place.

Pre-disaster planning can assure that building and tenant staff are prepared should a disaster strike. When a hurricane is barreling towards your property, then is not the time to determine a strategy. Consult with your local emergency management office to identify risks and any resources they may have to assist in your planning. Ensure a clear communication path exists between building staff and tenants.

Integrated rapid visual screening (IRVS) tools developed by the U.S. Department of Homeland Security (DHS) and the Institute can assist building owners and others in identifying potential vulnerabilities where further evaluation and investment may prove fruitful. Your insurance provider may have tips as well.

Common mitigation measures include assuring mechanical and electrical equipment, pumps and fuel storage are located above areas prone to flooding. Consider the potential for wet or dry flood proofing of the ground floor to reduce losses and allow quick reoccupation.

If you have energy generation capacity or are considering it, explore the potential to support islanding of the building should the grid fail.

Depending on the extent of the damage, the jurisdiction may require an inspection before a building can be re-occupied. In some jurisdictions, this inspection can be conducted by a registered design professional or another third party. Talk to the local code department to see if this is acceptable and identify who to call in such an event. Make arrangements with them in advance to ensure your property is a priority.

Engage managers from neighboring buildings—measures they take (or don’t take) can impact your property. Their failure to secure potential projectiles during a wind event, for example, can result in damage to your building. Also, they may have important amenities you and your tenants may wish to access in the case of an emergency.

The Institute also is working with DHS’s SAFETY Act office, which provides incentives for the development and deployment of anti-terrorism technologies, to identify best practices in property management designed to advance resilience and that may qualify a property for SAFETY Act coverage.

In addition, other industry organizations are undertaking efforts to assist members of the building community to enhance their resilience. Where practical, such efforts are being coordinated and informed through the Resilience Building Coalition, an initiative that brought together 42 building industry organizations, including BOMA International, to identify a common understanding of resilience and the potential for collaboration to identify steps forward.

Community resilience

While commercial building owners and managers can make great strides to improve the resilience of their buildings, such efforts alone are not enough. The surrounding community must be resilient as well. If roads are impassible or communications systems or utilities are down, a resilient building will still remain unoccupied following a disaster. Building owners and managers should engage state and local policymakers and explain the value their buildings provide to a community—and how such benefits can be hampered if investments are not made in infrastructure and utilities. A community is only as resilient as its weakest link.

ABOUT THE AUTHOR: Ryan M. Colker is director of the Consultative Council and presidential advisor at the National Institute of Building Sciences. He also serves as staff director for the Council on Finance, Insurance and Real Estate; the Off-Site Construction Council; and the Commissioning Industry Leaders Council. Colker just completed a term on the BOMA 360 Performance Program Council and participates in numerous industry councils and committees. The Institute was established by the U.S. Congress in 1974 to bring the public and private sectors together to advance the built environment and can be found online at www.nibs.org.