Real estate leaders today are grappling with twin imperatives: decarbonization and market resilience. At Audette, we're committed to pushing the boundaries of this conversation, always seeking to expand our understanding and share insights with our community.
Our CEO, Christopher Naismith, recently sat down with Lauren Zullo from Jonathan Rose Companies and Thomas Stanchak from Stoneweg US to explore a critical question: How can we integrate resilience into decarbonization planning in a way that strengthens investment decisions?
As climate risks intensify and regulatory pressures mount, the need to future-proof real estate assets is crucial, but translating this urgency into actionable strategies requires a deep understanding of what resilience means in the context of modern real estate investment.
In this conversation, Lauren and Thomas break down how their teams are approaching this challenge, from aligning capital planning with climate data to redefining performance metrics that account for both environmental and financial outcomes. Their insights offer a practical roadmap for navigating the intersection of resilience, decarbonization, and long-term value creation.
Defining Resilience: More Than a Buzzword
As the real estate industry evolves, the concept of resilience has become increasingly central to investment strategies, but what does resilience truly entail in today's market?
Lauren Zullo, Managing Director of Impact at Jonathan Rose Companies—a firm renowned for its focus on affordable and mixed-income housing—presents a comprehensive framework for understanding resilience. "We think about resilience in two big buckets: physical risks and transition risks," she explains. This approach encompasses everything from flood and wildfire threats to regulatory changes and shifts in the capital market.
Thomas Stanchak, Managing Director of Sustainability at Stoneweg US, which focuses on multifamily real estate investment, builds on this definition. He emphasizes that resilience is not a static concept but an adaptive capability. "It's about how well you, as a company, can anticipate and adapt to changes," Tom notes. "This includes measuring building performance, aligning with capital plans, and educating staff."
Both experts agree that resilience extends beyond merely withstanding physical threats; it's about positioning assets for future viability in a rapidly changing market. Lauren highlights the importance of considering social resilience within communities, while Tom stresses the need for a continuous process that supports the business plan of every asset and portfolio.
A holistic approach to resilience that encompasses physical infrastructure, regulatory preparedness, market adaptability, and community readiness is essential for long-term value creation in real estate. The firms leading the way are those that view adaptation not as a burden, but as an opportunity to create more valuable and sustainable assets.
Resilience as a Smart Investment Strategy
Resilience is rapidly evolving from an ESG "extra" to a core component of protecting asset value and NOI. At the heart of this shift is the recognition that planning for adaptation is simply smart investing.
As Lauren points out, integrating resilience means "moving closer to the core of what it means to be good investors." This involves understanding the risks to business continuity inherent in a building's physical attributes, as well as factors that shape where people want to live and their expectations for quality of life.
This shift is manifesting in both resilience and transition risk becoming key inputs for capital expenditure planning and underwriting. Tom explains, "The people who make up asset management are starting to get it and really become engaged. They understand how the price, availability, and reliability of energy will impact underwriting and the performance of our investments over time."
A prime example is the growing influence of insurance premiums. As Tom notes, "We’ve got mechanisms and standards to measure the existing resilience to climate hazards and the capital required to improve it. This information can be brought to insurance brokers to negotiate better coverage and rates."
By integrating resilience into investment planning, firms are positioning assets for long-term viability in a rapidly changing market. Resilience should be a core element of real estate investment strategy, not a secondary consideration.
Turning Resilience into Action
As the business case for resilience has become more defensible, real estate investors are moving beyond conceptual discussions and taking tangible steps to integrate resilience considerations into their acquisition and asset management processes. Drawing on insights from our discussion, Lauren and Tom have been on the frontlines and offer practical actions firms should consider:
- Include resilience assessments in property condition assessments (PCAs) during acquisition.
- Quantify physical and transition risks using models to align insurance, capital expenditure, and exposure.
- Prioritize resilience and high-ROI decarbonization upgrades in capital planning to protect asset values and net operating income.
Emerging trends suggest that a proactive resilience strategy can translate to better insurance access and more favorable premium negotiations. As Lauren shared, "The stories we're telling about our resilience investments are getting our foot in the door with insurers, allowing us to secure better rates, even if the full impact is still anecdotal."
Internal Alignment & Overcoming Barriers: Bridging the Gap to Resilience
Real estate investors may now recognize resilience as critical to their strategy, but several challenges stand in the way of establishing internal buy-in. Two major hurdles include a lack of standardized metrics and difficulty in translating complex data into actionable insights. Without clear, shared frameworks for measuring resilience, it is challenging to communicate its value and integrate it into investment decisions.
Considerations for building internal alignment and overcoming barriers include:
- Standardized Measurement & Language – Resilience lacks the same industry standards that exist for energy audits. As Lauren explains, "There are no industry-standard tools for analysis, and it’s difficult to demonstrate improvements in resilience." This absence of shared frameworks makes it difficult for investors to effectively quantify and communicate the value of resilience efforts.
- Translating Risk Data – Sustainability leaders often act as translators across departments. Clear communication is key to getting buy-in from stakeholders who may not be familiar with resilience metrics but who are critical to shaping investment strategy.
- Quick Wins to Build Trust – Building trust within teams is crucial. Starting with straightforward initiatives can provide immediate savings and help position resilience investments as practical, value-driving opportunities. This approach helps demonstrate resilience as a value protection strategy, not just an ESG initiative.
- Quarterly – A data-driven approach to transition risk, such as scoring assets on a regular basis, helps stakeholders stay engaged. By providing updates on energy use, carbon intensity, and waste production, firms can align operational strategies with financial and capital investment decisions, highlighting where risk and opportunity overlap.
Overcoming the challenges of standardized metrics and translating risk data is crucial for real estate investors to successfully embed resilience into their strategies. By developing clear communication channels and leveraging data-driven tools, investors can demonstrate the tangible value of resilience initiatives, positioning them as integral to long-term asset performance and risk mitigation.
The Decarb–Resilience Intersection
As the drive toward decarbonization accelerates, integrating resilience into real estate investments is a critical factor for future-proofing assets. At the intersection of these two objectives lies a powerful opportunity: using energy solutions to both reduce carbon emissions and bolster resilience against physical and market risks.
Battery-backed solar is one example of how decarbonization and resilience can align. By pairing renewable energy sources with storage, properties reduce their carbon footprint while ensuring backup power in the event of an emergency, improving overall resilience. This approach demonstrates value protection over basic sustainability cost.
Another key opportunity is electrification. Transitioning from gas-powered systems to electric solutions like heat pumps can reduce emissions while making properties more adaptable to changing regulations. As Lauren points out, “simple upgrades—like enhancing building insulation and sealing windows—are a cost-effective way to improve passive survivability and energy efficiency.”
Ultimately, resilience and decarbonization are intertwined strategies that deliver long-term value. By addressing both environmental impact and climate risks, real estate portfolios become more adaptable and secure in an evolving market.
Advice for the Next Generation
Tom advises future professionals to stay adaptable and collaborate. “Sustainability in real estate is uniquely collaborative. My peers are always willing to share their experience and expertise if you’re open to asking for help.” He emphasizes the need for humility and agility, constantly adapting to market changes. “It’s about staying agile and being able to take on new information.”
Lauren adds that understanding stakeholder incentives is key. “Sustainability professionals often act as translators between groups with different perspectives and goals. It’s crucial to understand what each business group is trying to achieve and how we can support those outcomes.” She encourages aspiring leaders to embrace diverse perspectives, noting, “Innovation comes from bringing people with different backgrounds together, not just from hard tech. Be curious and open to new ideas.”
Moving Forward with Resilience
As real estate investors continue to adapt to the dual challenges of decarbonization and resilience, integrating both into investment strategies has never been more crucial. The path forward requires technical solutions as well as a shift in mindset, recognizing resilience as a critical component of value protection and long-term asset viability.
For more insights from Tom and Lauren on navigating resilience in real estate investing, check out the full webinar here.
If you’re ready to take the next step in building a more resilient portfolio, reach out to Audette to explore how our solutions can help you measure, execute, and drive real, sustainable value.
