Commercial Real-Estate at Risk: An Examination of Commercial Building and Economic Impacts in the United States Using a High-Precision Flood Risk Assessment Tool

Abstract

Environmental changes are predicted to exacerbate changes in flood events, resulting in consequences for exposed systems. While the availability and quality of flood risk analyses are generally increasing, very little attention has been paid to flood impacts related to the commercial market. This is notable given that the commercial market is often made up of the most valuable physical structures in communities, employs much of the local labor force, and generally plays a key role in the sustainability of economies. This study provides the first national spatial model of flood risk for commercial and multi-unit residential buildings at a property level resolution within the United States. This is achieved through the use of high-resolution inputs (hazard and property data), flood hazard information for the four major flood types, multi-return period hazard information, component-based depth-damage functions, GDP and economic multipliers information, and future facing projections. This study estimates that over the next 30 years, the absolute count of commercial and multi-unit buildings with risk will increase 8%, structural damage costs will increase 25.4%, downtime days will increase 29.1%, and economic impacts will increase 26.5%. Additionally, these impacts are concentrated in certain spatial locations. A high resolution model capturing flood risk as related to these commercial buildings is important for a comprehensive understanding of overall flood risk within the United States.Classification CodesJEL C30, E00, G17, M20, R10, R30