Landlords and developers are facing higher insurance premiums due to climate-related disasters, further straining an already depressed commercial real estate market.
Emily Fritter reports for the New York Times.
in short:
Commercial property insurance premiums are soaring, with premiums increasing by 50% in storm-prone areas and doubling in some areas this year. Landlords, already dealing with high interest rates and operating costs, find lenders reluctant to ease strict insurance requirements. Although real estate loans are on the rise, experts see insurance issues as a major challenge rather than an immediate crisis.
Main quotation:
“Insurance pricing is halting transactions and, in some cases, forcing transactions into foreclosure.”
— Daniel Lombardo, Head of Real Estate, Hospitality and Leisure at Willis Towers Watson
Why this is important:
Rising insurance costs reflect broader financial risks from climate change and have the potential to destabilize real estate markets. Without relief, increased spending could force more properties into foreclosure, impacting communities and the economy.
Read more: Insurance woes grow as climate change impacts profitability
