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Sustainable real estate: Building in a time of climate change
While Nuveen’s sustainability strategy encompasses a broad range of ESG issues, we believe the physical effects of climate change and the transition to the low carbon economy will have the most significant influence on real estate asset values. Climate change can also alter the demand for real estate in a particular region or location, which could have a detrimental impact on asset values. We continue to monitor what we believe are the key physical risks.
It is critical that our investment process analyzes how climate risk may affect real estate opportunities. Our strategy includes our top-down tomorrow’s world investment strategy and a bottom-up assessment of individual investment opportunities. To identify investable cities, we screen for factors such as climate change vulnerability, air quality and electricity grid carbon intensity. We also assess the scale, growth and livability of a city. Scoring the sustainability of cities in this way helps us to incorporate resilience into our strategy.
When performing due diligence on building acquisitions, Nuveen’s investment and sustainability teams underwrite for opportunities and risks associated with energy efficiency, occupant health and wellness, and climate change risk. We seek to integrate ESG throughout our real estate investment management process to help preserve and create value for our clients.
Investing sustainably may drive value in real estate
The Nuveen real estate investment process addresses a range of environmental and social issues throughout the lifecycle of ownership. This helps us toward our goal of reducing energy intensity by 30% versus 2015 totals across all our properties by 2025.
Acquisition: assessing sustainability risk/opportunity as part of due diligence
Leasing: attracting tenants with sustainable buildings and managing legislative risk
Property management: improving the sustainability performance of buildings in operation
Capital improvements: managing the impact of sustainability risks on exit yield
Disposition: managing the impact of sustainability risks on exit yield
In this issue
The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature.
Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Past performance is no guarantee of future results. Investing involves risk; principal loss is possible.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.
A word on risk
Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well. Real estate investments are subject to various risks, including fluctuations in property values, higher expenses or lower income than expected, and potential environmental problems and liability. Please consider all risks carefully prior to investing in any particular strategy. A portfolio’s concentration in the real estate sector makes it subject to greater risk and volatility than other portfolios that are more diversified and its value may be substantially affected by economic events in the real estate industry. International investing involves risks, including risks related to foreign currency, limited liquidity particularly where the underlying asset comprises real estate, less government regulation in some jurisdictions, and the possibility of substantial volatility due to adverse political, economic or other developments.
Nuveen provides investment advisory services through its investment specialists.