How Natural Disasters Impact CRE Investors
WHY GEOGRAPHIC DIVERSIFICATION IS CRITICAL TO CRE INVESTORS?
Natural Disasters Increasing in Frequency and Severity
The number of natural disasters has been increasing steadily over the last few decades
The U.S. averaged 20 “Billion-Dollar-Plus” natural disasters per year for the last three years
Diversification Can Mitigate Risk
Geographically diversifying a real estate portfolio reduces risks of an entire portfolio being impacted by one event
While insurance may mitigate the hard costs of a disaster, soft costs like time, short-term cash flow and the challenges of navigating the insurance claim process will still be incurred
Natural Disasters are Pushing Insurance Rates Higher
Apartment insurance rates increased by 33% last year – but not all areas have been affected the same.
*Through 2Q
Sources: Marcus & Millichap Research Services, RealPage, Inc.
