CRE Confronts the Increasing Risk of Wildfires

Amid the country’s worst wildfire season record, the Urban Land Institute (ULI) has issued a report charting how the real estate industry can best prepare and respond. The report, “Firebreak: Wildfire Resilience Strategies for Real Estate,” published with support from the Kresge Foundation, shows that real estate developers, urban planners, and public leaders increasingly are aware of the land-use drivers of wildfires, their concern about the consequences of wildfires, and how they are implementing asset and community-scale resilience efforts.

“As we’ve seen in the West, the devastating impact of wildfires is continuing to increase year after year, and the real estate industry needs to be prepared to adapt to this new normal,” said ULI CEO W. Edward Walter.

Among the key takeaways in the report:

• Wildfires are a national risk: Wildfires are becoming increasingly frequent, large, unpredictable, and destructive due to climate change; development patterns and large-scale forestry management approaches are additional factors. While wildfire property risks are concentrated in the western U.S., and in particular California, wildfires can occur in every state. Moreover, unhealthy air quality from wildfire smoke and the increasing costs of firefighting are challenges in many communities across the U.S.

• Community and market disruption: Repeated evacuations, building loss, employment interruption, and the day-to-day stress of living with poor air quality, without electricity, or under threat of wildfire can harm individuals and disrupt entire communities.

“Low-income communities are often most vulnerable, given the burden of emergency and recovery expenses as well as the likelihood that lower value homes do not incorporate resilient technologies,” the report states. “As longer and more intense fire seasons become the new normal, repetitive losses, insurance shifts, and population displacement could also lead to long-term changes in regional economies and real estate markets.”

• Wildfires affect housing affordability: Demand for suburban living and the high costs of urban housing contribute to new development in high-risk wildfire areas. Furthermore, wildfires reduce the already short supply of housing and exacerbate affordability and access problems in rural and urban areas.

• The real estate industry is implementing effective solutions:ULI says the industry is increasingly aware that infrastructure and people in high-risk areas are almost certain to be threatened by wildfire and is focused on preparing for that eventuality. Best-practice resilient construction, development, land, and infrastructure management can significantly decrease the negative outcomes of wildfire events, setting communities up to more quickly recover from wildfire events and to thrive in the long run.

The report details a broad range of options to mitigate wildfire damages and increase community health and safety. These include structure hardening, defensible space and vegetation management, strategic density in lower-risk areas, hazard-informed comprehensive and regional planning, and tenant and community engagement.

“Firebreak” also profiles developments, policies, and programs that have successfully incorporated wildfire resilience strategies, including Avimor in Boise, ID; Rancho Mission Viejo in Southern California; Pepperwood Preserve in Northern California; and Austin’s recently enacted Wildland Urban Interface Code.

For comments, questions or concerns, please contact Paul Bubny