Climate risk needs to be integrated into real estate decision-making, says Colliers

Climate and environmental pressures are intensifying across EMEA and are becoming harder for real estate leaders to ignore and is increasingly influencing location decisions, operating performance and long-term asset strategy.

Colliers’ report, Building Resilience: 5 Megatrends Redefining Corporate Real Estate, identifies climate risk as one of five global megatrends redefining corporate real estate strategy. The research highlights two converging forces: the growing physical impacts of extreme weather events, and rising regulatory and stakeholder expectations for action, both of which are challenging the future viability of parts of the existing building stock.

In EMEA, the report finds many organisations remain underprepared. Despite increasing awareness of exposure to heat, flooding and environmental disruption, climate risk is still frequently treated as a sustainability issue rather than embedded into core location strategy, lease decisions and capital planning. Leaders, the report notes, often remain in a ‘wait and see’ mode.

This gap between awareness and action carries material implications. In some markets, new ESG and environmental requirements could render a significant proportion of buildings obsolete over the coming years without intervention. At the same time, shifts in climate patterns are altering the risk profile of locations previously considered comparatively resilient.

The report underlines the need to build climate literacy and resilience into everyday decision-making, embedding physical risk awareness across real estate, facilities, finance and operations.

Translating this risk into the EMEA context, Sam Addison, Head of Project Management, EMEA at Colliers, argues that many organisations are still underestimating the operational consequences of physical climate exposure.

“While progress on decarbonisation is encouraging, there remains a significant gap in recognising how physical risks such as flooding and extreme heat can affect buildings, supply chains and the people within them,” Addison said. “Over the next five years, these risks could become critical.”

Addison is direct on what this means for occupiers and investors in practice. “Organisations should not be signing leases without understanding the climate risk profile of the asset. A risk-based approach helps prioritise capex, inform portfolio strategy and avoid locking into assets that will underperform.”

The research highlights the opportunity presented by new technologies, materials and design approaches. Nature based solutions, such as landscaping to reduce temperatures or improve water management, are gaining traction as cost-effective, non-invasive ways to reduce exposure while enhancing the working environment.

Overall, the message from the report is one of urgency grounded in pragmatism. Organisations that integrate climate risk into real estate decision-making today will be better positioned to protect asset performance, operational continuity and long-term value as environmental pressures intensify.