As the articles mentioned, cornerstone commercial investments refer to those real estate assets that are able to withstand not only acute disruptions in the market but also longer-term threats like climate change or pandemics. To create resilient commercial investment portfolios, flexibility in building design is critical. Property managers need to incorporate elements that allow buildings to adapt to changing tenant preferences and demographics over time. This could involve modular construction or movable walls. It requires moving away from a mindset of maximizing short-term returns towards one of maximizing long-term resilience.
Flexible building design is key to resilient properties
The articles state that resilience is the most important trait for cornerstone commercial investments that can withstand both short-term and long-term threats. Some risks like climate change may not be diversifiable or insurable, so resilience needs to be built at the asset level through property design and management. Flexible floor plates, movable partitions, and modular components allow buildings to accommodate different uses over time as tenant needs evolve. Property managers should focus on maximizing lifespan resilience rather than maximizing near-term yields.
Property-level actions required as macro risks emerge
As the articles discuss, new property-level risks like climate change and pandemics are emerging that may not be diversifiable or insurable through traditional means. Therefore, building resilience cannot rely solely on traditional portfolio-level risk management tactics. Instead, individual assets need inbuilt mechanisms to handle threats. This could include features like elevated flood barriers, touchless technologies to reduce virus transmission, or oversized HVAC systems. Property managers need to take a long-term view and build in resilience upfront rather than expecting to handle every black swan event through insurance.
In conclusion, cornerstone commercial investments require resilient building design to withstand both short and long-term market disruptions. Flexibility, modular components and an asset-level perspective are key.