At Least A Few Real Estate Investors Are Paying Attention To Climate; Wall Street, Of Course, Is Ignoring Them

[hatrack]

BOSTON — Three years ago, Owen Woolcock was on Zoom trying to convince a real estate investor to swap some of his buildings in the New York City area for properties in cities around the Great Lakes. Climate change was overturning assumptions about what makes a profitable housing investment, argued Woolcock, an Australian who had recently launched an investment firm called Climate Core Capital. Desirable locations from Austin to Miami were set to become expensive, riskier bets. Overlooked locales, he argued, would begin to draw money and people as they avoided the worst of the 21st century’s volatile climate.

The Wall Street veteran on the other end of the call managed tens of millions of dollars in real estate for a wealthy family, Woolcock recalled. Although he said he agreed with Woolcock’s forecast, he couldn’t sign on. “The problem is,” Woolcock remembered him saying, “I have spent the last seven years going to my investment committee and telling them to invest in the Sun Belt, so my personal track record is tied to the opposite of what you guys are saying.” In the past decade, hundreds of thousands of people have moved to places threatened by climate change, bidding up real estate from flood-prone coastlines to the fire-scarred Southwest. But a small group of investors — including Woolcock and his partner Rajeev Ranade, along with iconoclasts like David Burt of DeltaTerra Capital — are pushing in the opposite direction.

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Woolcock believes many risky places in the United States may start to look a lot like the Dust Bowl: cities with vulnerable economies hit by climate-driven disasters will wither after repeated blows. If people lose faith in these places’ ability to rebound, they could enter a slow, inexorable decline. New Orleans may be one of them. Its population has never recovered from Hurricane Katrina. Today’s population remains 20 percent lower than it was before the storm and continues to decline despite a $110 billion package of federal assistance — roughly twice the value of the city’s residential real estate at the time.

New Orleans now has the strongest levees in the country, said Allison Plyer, chief demographer at the Data Center, a Louisiana research nonprofit, but it’s not enough to prevent further decline. She and other experts say New Orleans’s economy must grow beyond tourism and the fossil fuel industry to arrest its decline, especially as the costs of keeping the city dry continue to rise. “Disasters accelerate preexisting trends,” Plyer said in an interview. “If you’re declining, you decline faster. … The incredibly sad thing is the number of shocks keep coming.” Woolcock sees vulnerable pockets like New Orleans forming around the country. The climbing cost of insurance premiums, maintenance and taxes for new infrastructure may convince some to leave — and even more not to come.

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https://wapo.st/4fC2HC1

https://www.washingtonpost.com/climate-environment/2024/11/05/real-estate-investor-climate-change-risks/

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1. K&R

Very interesting article. Thanks hatrack.