When Hurricane Helene made landfall in Florida’s Big Bend on the night of September 26, 2024, the greatest damage didn’t happen along the coast. It happened hundreds of miles inland.
Within a day, record rainfall and flooding overwhelmed Asheville, North Carolina. Biltmore Village and the River Arts District, two long-standing commercial corridors, were largely destroyed. Ground-floor retail, restaurants, galleries, and offices that had operated for decades were inundated or swept away as the French Broad and Swannanoa Rivers surged.
The financial impact was severe. Helene caused an estimated $78.7 billion in damage nationwide, making it one of the costliest Atlantic hurricanes on record. Asheville-area tourism revenue was projected to drop by $585 million in the first quarter of 2025 alone. Yet only about 2% of households across the disaster-declared counties in North Carolina, South Carolina, and Georgia carried FEMA flood insurance—and in many of the hardest-hit inland counties the share was well under 1%. Commercial property owners were left with limited options for recovery.
By traditional measures, Asheville looked like a low-risk market. It’s far from the coast and outside commonly mapped flood zones. That assessment didn’t hold.
This is the shift property managers are now facing. Sustainability isn’t a niche concern or an optional add-on. Climate, insurance, energy, and regulatory risks are showing up across most U.S. commercial and multifamily portfolios. Planning for them is no longer separate from day-to-day management. It’s part of protecting assets, supporting residents/tenants, and meeting fiduciary responsibility.
For years, sustainability in real estate management was treated as a value-add. Owners who wanted certifications pursued them. Owners who didn’t, didn’t. That framing no longer fits today’s risk environment.
By 2026, climate-related and regulatory risks affect most U.S. commercial and multifamily properties in ways that are financially and operationally material. Sustainability planning is now part of basic risk management.
If sustainability still feels relevant only to trophy assets, coastal markets, or owners with formal ESG mandates, there’s a good chance portfolio-wide exposure is being underestimated.
The data below draws on federal agencies, peer-reviewed research, and industry sources. Taken together, it shows why sustainability now needs to be addressed at the portfolio level, not just property by property.
Energy benchmarking and Building Performance Standards (BPS)
About 30-35% of U.S. commercial floor area and 25-30% of institutional multifamily units are covered by mandatory energy benchmarking. Penalty-bearing BPS programs already affect 15-20% of institutional commercial space and 10-15% of institutional multifamily, including many major office markets.
Property insurance volatility
Virtually all institutional commercial and multifamily assets face rising premiums, tighter terms, or reduced capacity. Insurance costs now average 2.4% of property income nationally and reach 4-5% in some storm-exposed metros. Multifamily premiums continued to rise sharply in 2024, with regional surveys, such as the Federal Reserve Bank of Minneapolis’s survey of Upper Midwest owners, reporting average year-over-year increases of roughly 45%, while national same-store benchmarks showed more moderate increases of 12-28%.
Severe storms
Roughly one in five commercial and multifamily properties faces severe or extreme hurricane wind risk. Severe convective storms affect most properties east of the Rockies, with hail risk particularly acute in central U.S. industrial corridors.
Wildfire exposure
Around 5-8% of commercial buildings and 10-15% of multifamily units are located in elevated wildfire zones. The Wildland-Urban Interface now contains nearly one-third of U.S. housing, with institutional exposure concentrated in the West and parts of the Southeast.
Drought and water stress
An estimated 40-50% of U.S. commercial and multifamily properties are in markets with recurring moderate or worse drought conditions. The most financially material impacts are concentrated in the Southwest and parts of California, where water restrictions and development limits are increasingly common.
Landslide risk
While landslide exposure affects a smaller share of buildings overall, it’s highly localized and costly when it occurs. About 3-5% of commercial buildings and up to 10% of multifamily units face elevated risk, primarily in hillside and coastal-bluff markets.
Flooding
About 6% of properties fall within FEMA Special Flood Hazard Areas. When rainfall-driven flooding is included, long-term flood risk rises closer to 20%. Nationally, hundreds of thousands of commercial and multi-unit residential properties face material flood exposure.
Sea level rise
By 2050, only a small percentage of properties are directly exposed by count, but a much larger share by asset value due to premium waterfront pricing. Institutional exposure is concentrated in major coastal markets.
Extreme heat
All properties face higher cooling loads and HVAC stress. By the early 2050s, roughly one-quarter of U.S. commercial and multifamily space is projected to sit within an Extreme Heat Belt stretching from Texas to the Great Lakes. Multifamily properties face added resident health and habitability risks during heat events.
Grid reliability
More than half of U.S. commercial and multifamily properties are in regions classified as high risk for power supply shortfalls through 2030. Nearly two-thirds are in regions rated elevated or high risk, increasing the importance of energy resilience and operational continuity planning.
A property that looks like a low-priority sustainability candidate on paper often isn’t. A stabilized suburban industrial building or a Class B garden-style multifamily community may still face four or five of the risks above once they’re mapped together.
Looking at risks one at a time misses the compounding effect. Insurance, energy, heat, water, and regulatory pressures tend to overlap.
The real shift is this: the question isn’t whether a property is pursuing a green label. It’s whether there’s a documented plan for:
Meeting local energy benchmarking or BPS requirements
Managing insurance availability, deductibles, and premiums
Improving resilience to the dominant local hazard
Maintaining operations during grid stress or outages
Protecting resident/tenant health during extreme heat or air quality events
Managing water use in drought-prone markets
Here’s the underrecognized point. Most well-run sustainability programs already address many of these issues. The language may differ, but the work often overlaps. In practice, sustainability planning is risk mitigation.
Real estate managers operate under a fiduciary duty to property owners, as outlined in the IREM® Code of Professional Ethics. Traditionally, that duty has focused on asset value, resident/tenant satisfaction, operating costs, compliance, and capital planning.
Each of those responsibilities now includes a sustainability dimension:
Asset value includes exposure to insurance disruption and performance-based penalties.
Tenant satisfaction includes thermal comfort, indoor air quality, and reliable building systems.
Cost control includes energy, water, insurance, and capacity charges rising faster than inflation.
Compliance includes mandatory benchmarking and public disclosure in dozens of jurisdictions.
Capital planning includes electrification, envelope improvements, and grid-interactive upgrades.
Integrating sustainability into standard management practice isn’t about chasing an external agenda. It’s about doing the core work of the profession in today’s risk environment. Many owners and investors now see it that way, too.
Most managers don’t need a new framework. They need to overlay their portfolios against the risks above and identify the two or three that matter most at each asset.
From there, IREM resources on sustainable operations, capital planning, and the IREM Certified Sustainable Property (CSP) framework offer a clear, practical path forward.
The sustainability conversation in real estate management has moved on. It’s no longer about whether. It’s about which risks, which assets, and what timeline. That’s a reframing worth acting on.
Most properties face multiple sustainability-related risks, even if they don’t look “green” on the surface.
Energy benchmarking, insurance volatility, and grid reliability now affect a large share of U.S. portfolios.
Many sustainability practices already overlap with risk mitigation, resilience, and cost control.
Integrating sustainability into everyday operations supports asset value, compliance, and resident/tenant well-being.
You don’t need a new framework. You need better visibility into which risks matter most at each asset.