Morningstar looked at a snapshot of roughly 47,000 buildings that it monitors out of the roughly $670 billion commercial mortgage bond market. Nearly 5,000 were at risk of severe or extreme flooding, the credit rating agency found.
An earlier version of this article incorrectly referred to potential damages in billions. This article has been corrected.
All told, it pegged about $539 billion worth of mortgage bond deals rated by the agency as having some exposure to severe or extreme flooding, leaving only a fraction of the market free of the threat. Flood risks helped inform this map, which shows Miami topping the country with an estimated $1.1 billion in structural damages at risk due to flooding at office, retail and multifamily buildings as sea levels rise, according to the report, which relied on data from Arup and the First Street Foundation.
Heavily exposed Climate change has been rapidly evolving, evidenced by the stunning increase in billion-dollar weather and climate disaster events since the 1980s, which makes historical data “less accurate,” according to the DBRS Morningstar team. While the commercial mortgage bond market finances only a cross-section of the nation’s buildings, the DBRS Morningstar report still provides a grim snapshot of the near unavoidable flooding risks most investors face.
With that backdrop in cities like San Francisco, lenders and investors have grown increasingly wary about financing office buildings.