Integrating flood risk in real estate management strategies

Abstract

Due to climate change, there is an increasing severity of extreme weather events and a rising sea level. This combination will lead to more flood-prone areas and areas at higher risk of flooding, which makes real estate located in these areas more vulnerable to flooding. Especially in the Netherlands, where a majority of the land lies below sea level, the risk of flooding is increasing. Real estate assets of organisations, often located in economically attractive but flood-prone regions, are increasingly exposed to physical damage, business disruptions, reputational risks, and a potential decline in property value. Flood risks are becoming an urgent concern in real estate management (REM) in the owner occupier context. However, owner-occupiers of organisations have dual responsibilities: the asset as a workplace and operational continuity to retain business performance. While real estate owners, who also occupy the assets, continue to prioritise financial performance and operational efficiency, flood risks are not yet represented in REM strategies. This research explores how flood risks can be integrated into real estate strategies to support portfolio management on strategic, tactical and operational levels. The study answers the following main question: “How can real estate owner occupiers integrate flood risk management into their real estate strategies?”

To answer the research question, this research follows a multimethod approach, qualitative and exploratory. This study combines desk research, empirical research, and a synthesis. The desk research, a literature study, focuses on exploring different concepts and their interrelationships. Concepts covered include (corporate) real estate management, risk management, flood risks, flood risk assessment, asset management, and business operational management. Its purpose is to identify flood risks in the real estate sector and examine their impact on real estate management, both strategically and operationally, at the asset and operational level. The empirical research includes exploratory interviews, three case studies, in-depth interviews, and a cross case analysis. The purpose is to gain empirical insight into how flood risk is managed in REM and create practical knowledge to integrate flood risks into real estate management strategies. In the synthesis, the knowledge gathered in the desk research and the empirical research is combined.

This research aims to gain knowledge about the impact of flooding on real estate, integrating flood risks in REM, and to explore how owner-occupiers of real estate can start integrating flood risks into REM strategies. The practical deliverable following the academic insights delivered in this thesis is a theoretically informed roadmap that can be used to guide the integration of flood risk into real estate management strategies for owner-occupiers of corporate and public organisations.