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episode # 302

Vancouver Real Estate & Climate Change with Cal Inman

With fires burning all Summer and the recent atmospheric rivers and devastating floods, climate change should be on your mind if you are considering where to buy a home or invest in Vancouver or British Columbia, in general. But if only there was an easy way to search and make sense of the best available climate data? Enter Cal Inman, Bay Area developer, UC Berkeley Lecturer, and now CEO of ClimateCheck, a resource that empowers property buyers, owners and brokers by quantifying investment risks in relation to the climate crisis in simple terms. How should we think of climate change in relation to real estate purchases? How can we mitigate existing risks? And are certain regions of North America absolutely off limits moving forward? All your climate questions and concerns answered on today’s episode!

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Episode Summary


 

Who is Cal Inman?

My background is in commercial real estate; I have run a development shop in the Bay Area since 2009 doing mostly small projects. Five years ago I started lecturing at UC Berkeley and that’s where I came across a lot of climate data. 

What is ClimateCheck?

ClimateCheck gives property level assessments of a given property’s risk to climate change. We look at natural hazards like fire, floods, precipitation, extreme heat, etc. This data has been available for a while but mostly in academia and government. Folks on Wall Street were using this data to inform their real estate decision making, which struck me as an important factor in buying property. But that data isn’t accessible to everyone else. That’s where ClimateCheck comes in. It’s a one stop shop to aggregate all the best climate data and make it accessible to anyone making a real estate decision. 

BC has seen a lot of climate disasters lately with wildfires, flooding, mudslides, atmospheric rivers, etc. Climate change never used to be a concern in real estate but now it’s the most important thing.

Do people want climate data for real estate?

The experience in BC is not uncommon. No matter where we live in the world, we’re seeing an increased frequency and intensity of these climate events. That creates more awareness of the issue and demand is born out of that. We started the company out of my interests: Are my properties in the Bay Area going to flood? Will they experience a fire? 

A lot of the climate information you see in the paper is very broad and intangible. But what does it all mean for your biggest investment, your real estate? 

Not only are folks more interested in this type of climate data, particularly younger folks that are more concerned about the environment, but real estate has progressed extremely fast. There’s massive amounts of data ingestion that goes into a real estate deal. Whether you’re a big or small investor, you’re used to taking in data. And climate data should be a piece of that. 

How do you make the academic climate data more accessible to everyday consumers?

The bottom line is I rely on my entire team – smart people who understand data and are passionate about what they do. We rely on a network of scientific advisors because the science is constantly changing and evolving. That’s the first step; it’s very academic and exploratory. We then bring in all of this data and process it to get actionable insights. Then there’s the tech stack that allows the data to be searchable by area or type. The last step is the business part – getting the data out to folks. It’s complex and takes time to get this data in front of people. We want to see climate data next to every real estate listing. 

What can you learn from a climate risk assessment tool?

You can type any address into ClimateCheck and we give five risk factors a rating from 1 to 100; 1 being the best and 100 being the worst. The rating is relative to all the other properties one might be looking at. We then give meaningful narrative about what that score means. For example, we tell you what a hot day in Phoenix is and how many times that will happen by 2050. If there’s more hot days in the future, what does that mean for you? Anyone can understand this kind of data. 

Are institutional investors using climate data?

Absolutely. As a small investor in the Bay Area, I am always trying to watch what the big dogs are doing. There’s a lot to learn. 

How is climate data used in commercial real estate?

The climate data in commercial real estate is being used in a few different ways: 

First, it’s being used in the due diligence phase for new properties. For example, is there an increased risk for flooding at this property? 

Secondly, it’s used in ongoing portfolio management. Investors want to understand what the current and future risks are, and how to mitigate them. For example, an investor we’re working with is looking at extreme heat. They want to know what they can do to reduce their utility bills as they know it will get hotter and they’ll need more AC in their buildings. 

Lastly, this data can inform investment decisions. Investors can ask, where should I be investing? Maybe you don’t want to be in an area with extreme heat risks or flooding potential. 

Why are investors using climate change data?

Using climate data is becoming best practice for due diligence. You don’t want to be the last person trying to sell a property with a nasty underground tank to deal with. There’s also the ESG (Environmental, Social, Governance) factor. A lot of investors are required to comply with ESG mandates such as lowering their carbon output, knowing their risk to climate change, etc. 

In the US we’re also seeing a big push for climate risk disclosures for future transactions. A lot of changes in real estate happen for the small investor last, and that’s what we’re trying to change. Let’s get the information to the small guys now. 

Are big investors using climate data? Is climate data being used effectively?

For large investors, the number of people using the data is growing. And a large number of people are already using this data. It’s new data and it’s growing, but it is being used. 

However, climate data is just one factor. There’s a lot of other important things for investors to look at. I still make investments and I do look at the climate science, but I’m also looking at location, population growth, yield, etc. 

How can we mitigate climate risks in real estate?

There are a lot of things we can do at the community level, the state level and higher to help mitigate climate change risks, like building a seawall or firebreak. And there are mitigation efforts you can make on individual properties too. ClimaetCheck isn’t a fear-driven tool telling you not to buy property in a certain area. It’s throwing up a red flag to start a conversation about your risk and what you can do about it. You want to know exactly what you’re buying and what remediation will cost. 

Where should we invest in real estate based on climate change? 

We try not to provide overall investment advice as different groups have different objectives. Domestic water availability demand is outpacing supply and that’s important to some folks, but not to others. It depends on an individual’s risk tolerance and investment thesis. 

Does climate change affect urban areas differently than rural areas?

Definitely. We’ve done some research on density and growth. Smart urban growth is really sustainable, financially speaking. It also allows you to protect yourself against hazards. A large population with a good tax base allows you to build the things that will protect you, like a seawall. 

In the more rural areas, you don’t have a big population of people to help fund mitigation efforts. These areas may be more prone to climate risks, like wildfires, and don’t have as many defences. 

Are you more or less optimistic about the future of our planet?

I’m an optimist at heart. The demand for this data and people’s reaction to it has been incredible. Having this information and starting these conversations is important. Folks need to know what the risks are and how we can protect ourselves against them. 

We also need to look at mitigating the causes of climate change. But those conversations won’t happen unless people are engaged and seeing climate change as personal to them. We all have a horse in the race, but not everyone is aware of that yet. There are a lot of smart people and a lot of money involved in this, so I’m optimistic. 

Is ClimateCheck free? 

ClimateCheck’s mission is to share climate information with every stakeholder, including the consumer. We will always have free information for small investors, home buyers and home sellers. 

What is ClimateCheck’s business model? 

Our business model is data licensing to lenders, listing portals, data analytics companies and many others. We’d like to see climate data right next to all of the critical information for a listing. We’re talking to the right people and the interest is there for sure. 

Is ClimateCheck available in Canada? 

We’ve had a lot of interest from the Canadian market and we’re really excited to expand into Canada. The amount of interest from the Canadian government has also been very exciting. We’re actively working on those data sets. 

Can people in Canada use a proxy city in the US to check out ClimateCheck?

For sure, you can check out border properties. You can input any US address you know to give you an idea of the type of data we cover. But every area is unique, and hazards may change from block to block, and even from property to property. The data is very granular. That’s why we take our time to go through the data and ensure we’re presenting the right information. 

Find out more: https://climatecheck.com/

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