Insurance costs squeeze commercial real estate as climate risks rise
Landlords and developers face mounting insurance premiums due to climate-related disasters, putting extra strain on an already struggling commercial real estate market.
Emily Flitter reports for The New York Times.
In short:
- Insurance premiums for commercial properties have surged, with rates up 50% in storm-prone areas, doubling in some places this year.
- Landlords, already dealing with higher interest rates and operating expenses, find lenders unwilling to ease strict insurance requirements.
- Delinquencies on commercial real estate loans have risen, but experts see the insurance issue as a significant challenge rather than a looming crisis.
Key quote:
"Insurance pricing has caused deals to come to a halt and has forced deals into foreclosure in some cases."
— Danielle Lombardo, the chair of the real estate, hospitality and leisure division at Willis Towers Watson
Why this matters:
Rising insurance costs reflect broader financial risks driven by climate change, potentially destabilizing real estate markets. Without relief, higher expenses could force more properties into foreclosure, affecting communities and the economy.
Read more: Insurance woes increase as climate change impacts profitability
