These companies are trying to predict what climate change will do to real estate investments

2019-08-10

Excerpt from this story from CNBC:

Investors are turning to a new breed of high-tech start-ups that can measure the risk climate change poses to real estate — from an hour to decades into the future.

And these firms count major corporations and cities as clients. One of them is Jupiter.

“We’re essentially physically modeling what’s happening with the atmosphere and the water or the fire at a very specific level of detail, and typically at the asset level, which is now only possible because computers have gotten so powerful and relatively inexpensive,” said Rich Sorkin, CEO of Jupiter.

Launched barely three years ago, the Silicon Valley-based company already has over $40 million in investor capital from firms including Energize Ventures, Ignition Partners and Data Collective. It also receives funding from the National Science Foundation and NASA for work in cloud computing and satellite observations.

The company’s primary goal is to incorporate climate impact data on flood, fire, heat, drought, cold, wind and hail events into risk modeling for real estate assets. Its clients include the coastal cities of New York and Miami.

“We’re seeing a dramatic expansion in large corporations coming to us, unsolicited, and saying, ‘We need to understand the risk to this office complex or the risk to this hotel, or the risk to this power plant, or refinery, or neighborhood where we have hundreds of millions of dollars of mortgages out,’” Sorkin said.

“Markets are just waking up to the need to do this kind of risk assessment,” said Frank Freitas, chief development officer at Four Twenty Seven. “For real estate, what people want to know in addition to the scores and relative exposure, is what is the world going to look like at this location in 10 years, 20 years, 30 years. Am I going to have five more days of flooding or 10 more days of high heat? What are the physical, observable outcomes?”