Severe weather events are being noted with increasing frequency around the globe, with some areas being particularly vulnerable–the Texas Gulf Coast is one such area.The one-two punch of Hurricanes Harvey and Irma in Texas during the summer of 2017 caused damage of about $354 billion (CDN) to the hardest hit districts, West Houston And Galleria. The Canada Pension Plan Investment Board (CPPIB) is the pending owner of 2.8 million square feet of office space in these districts.
These include hurricanes, an increase in rainfall and associated flooding, tornados, major storms, high winds–and with each year these events increase in number, and severity. Some areas that used to experience “100 year floods” are now seeing these floodwaters almost annually. With these extreme events come huge recovery costs–for homeowners, governments, investors (commercial buildings) and insurance companies. The CPPIB has investments in insurance companies and in commercial buildings; some of these buildings are in areas frequently affected by severe weather.
Two of the hardest-hit areas of the Coast by Harvey and Irma were areas with a large density of commercial buildings–West Houston and Galleria. The CPPIB is the pending owner of nearly 2.8 million square feet of office space in these districts. It’s not unreasonable to assume that insurance costs for these properties may spike, or insurers may even refuse to insure them. The threat of these risks undermines the value of these assets.