Climate Risk: Logistics & Industrial Global Outlook

RISK CLIMATE LOGISTICS& INDUSTRIAL

GLOBALOUTLOOK

PRESERVING ASSETVALUE

Case Study – Climate Risk Due Diligence

For a recent fundsmanagement client, Cushman &Wakefield completed a full climate risk and sustainability due diligence process on a newacquisition, including: • A scan of climate risks and broader sustainability metrics, such as renewable power, GRESB, or certifications. • A rolling 5-year capital and OpEx projection (2025, 2030, 2035, etc.). • Key risks were identified, and budgets created around OpEx or CapEx requirements. As needed, further investigative work on-site was completed to finalize design changes or cost projections. • These physical and financial metrics were built into the Investment Committee review process, allowing final assessment and review. • By providing this analysis upfront and in the required format, the client eliminated guesswork and was able to make an informed decision about the future of this asset.

Climate risk data are now readily available, allowing firms to forecast or analyze current and future-day impacts and translate these into financial metrics. Examples include:

Certain climate risks, such as heat or cold, can readily be translated into OpEx budgets—for example, higher temperatures lead to more air conditioning and higher utility usage. These changes can be calculated very accurately. OpEx The same example of hotter weather can also be used to forecast changes or increases in capital expenditure (CapEx), such as the need to install or upgrade air conditioning, as well as adjust maintenance schedules and costs. These costs become more significant in certain asset types, such as cold storage, manufacturing, or data centers. Understanding the quantum and phasing of capital costs, and the transition toward net zero, can improve capital planning processes. CapEx

Leaseability

Sustainability performance and climate risk are key factors in modern due diligence processes. A site that falls short on these parameters may see buyers or occupiers sit out of a transaction, while participation may be better when the asset has a stronger narrative around these topics. Actively managing climate risk and other factors can drive greater market depth, bringing knock-on benefits around valuations, loan availability, and debt covenants. Information is power, and tenants can now analyze the same data as landlords. An asset with greater exposure to climate risk cannot be hidden from tenants; conversely, a less risk-exposed site is more marketable. This has a direct bearing on speed of leasing, incentives, lease length, and, of course, rent. Market Liquidity

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