ASTM International, a standards-setting organization, has released a new standard guide for assessing a property’s degree of resilience to physical climate hazards, thus marking a key milestone in the process of scaling up climate adaptation in real estate and the built environment.
As property losses and disruption from such hazards as storms, wildfires, and floods continue to rise, the new standard guide, ASTM E3429—the Property Resilience Assessment (PRA)—is designed to provide real estate owners, developers, investors, insurers, lenders, design teams, and regulators with a consistent means of determining how resilient a given property is and, potentially, what would be needed to better protect it.
Previous such standards from ASTM—ones for property condition assessments and Phase 1 Environmental Site Assessments, for example—have become ubiquitous across commercial real estate. The PRA is intended to be conducted alongside those standards and is anticipated to become similarly widespread.
Assuming that industry adoption accelerates, the PRA is expected to enhance due diligence, real estate investment decision-making, and risk management by providing a common language and conceptual framework for evaluating property resilience.
The potential impact of this standard guide is broad. “Physical climate risk and insurance risk is already on the minds of investors and lenders. Due diligence that is climate informed, where resilience is valued as a property attribute, could create a positive feedback loop for capital to support resilience investments in buildings, infrastructure, and communities,” notes Holly Neber, CEO of AEI Consultants and chair of the ASTM task group that developed the PRA.
What is in the Property Resilience Assessment standard guide?
The PRA is a standard guide that facilitates communication between the many stakeholders involved in real estate decisions. To that end, it systematizes three stages for the assessment process:
• Identify the hazards likely to affect a property. Although identifying potential exposure to hazards is becoming more common for real estate stakeholders, the types of hazard data used are not standardized. The PRA recommends the minimum acceptable level of hazard modeling and types of hazards under consideration. It also aims to determine how those hazards may evolve due to climate change.
• Conduct an on-site evaluation by a qualified professional to determine a property’s specific vulnerabilities for each likely hazard. Linking hazard data with building vulnerabilities is a critical component of the risk assessment process, as understanding physical climate risk at the asset level requires simultaneously identifying what hazards a building may be exposed to while also evaluating the design and construction of the building to determine whether it would be affected by the hazard at the identified intensity. Many past assessments in the industry have stopped at the hazard exposure assessment and have not linked that data with building vulnerability, according to Katie Wholey, associate, climate adaptation and resilience at Arup, and a task group leader.
• Determine conceptual resilience measures to enhance property performance against physical hazards, if needed. The PRA suggests types of measures that may be applicable and the types of information that stakeholders may want to include in their decision-making process, such as identifying synergies with other capital projects needed at the property. The PRA could also include developing preliminary cost estimates for resilience measures identified.
In the third stage, an instrument such as the ULI Developing Resilience Toolkit—an interactive, sortable matrix of almost 140 resilience measures against nine major hazards—can help surface a set of strategies for further evaluation and implementation by an engineer or architect.
Importantly, a PRA is not a certificate of resilience. Conducting a PRA does not attest that a given building can withstand hazards, according to Wholey, but instead that an assessment has been completed in an effort to better understand the building’s physical climate vulnerabilities and risks.
Likewise, a PRA does not recommend that a prescriptive set of procedures be followed. Doing so would dampen innovation in resilience, says Willy Accame, a task group leader, industry advisor at NSF National Center for Atmospheric Research, and former director of risk management at Panattoni Development Company. The PRA is a tool to understand potential hazard exposures, and to communicate a property’s vulnerabilities and conceptual resilience measures.
“A significant benefit of the guide is that it provides a transparent and customizable review process,” says Jessica Weyandt—part of the due diligence–engineering team with Revantage, a Blackstone portfolio company, and an ASTM task group leader. “The PRA allows an owner to work with building professionals to set certain thresholds and identify the risks that are material, providing both standardization and flexibility, and filling a gap in a common approach [to] assigning property risk.”
The PRA’s development, as part of ASTM’s consensus-based process, means it has been accepted by more than 180 stakeholders from across the real estate value chain, as well as by risk-modeling and climate science experts; and further refined by a ballot process from ASTM’s wider membership. The PRA will be subject to updates over time as practice evolves and feedback is collected on potential improvements.
Implications for commercial real estate stakeholders
The PRA is expected to raise awareness around the presence of physical risk and resilience at the asset level; to standardize definitions and create a common language around such concepts as exposure, vulnerability, and risk; and, perhaps most critically, to bring ASTM’s backing and transparency to the process of risk assessment.
“Having a standard is essential,” says Damian Wach—vice president with PGIM Real Estate, a leading figure in the PRA task group, and chair and vice chair of two ASTM committees on building performance and real estate assessment. “It gives legitimacy to those [risk] reports, so that everyone at the table can agree on the outcome. They might not necessarily like it, but they can’t argue with it.”
- Communicating risk management to insurers
Effects on insurance rates are likely to be top of mind for many owners and developers as premiums continue to rise, particularly in high-risk areas. For example, the recent devastating wildfires in Los Angeles will have major impacts on insurability, as have worsening hurricane seasons in such states as Louisiana and Florida.
Using PRA reporting, “the owners, the [insured], can proactively communicate that they’ve evaluated these hazards at the property level,” Neber says. “The PRA is not so much the thing that [achieves resilience] as it is the sign that there is a solid, proactive risk management plan in place, with the PRA as one of the tools within the plan.” Building owners who complete their assessment and enact risk mitigation measures may net savings from insurance premiums stabilizing year over year, or better coverage availability, thus freeing up insurance capacity in the market.
The PRA could help owners of resilient properties—such as these homes , which withstood the wildfires in Los Angeles—communicate the risk mitigation measures in place.
- Bolstering lenders’ role in scaling up risk management
Lenders can use the PRA to better understand levels of vulnerability and resilience across a set of potential transactions and better protect themselves from losses. “Lenders worry about their stakeholders,” notes Accame. “They worry about their collateral value. And they also worry about tenants and insurance; some tenants have very high standards that they want the building to meet.” He adds, “The lenders will start looking at [the PRA], and they’re probably going to require their borrowers to do it. We’re still way off from that [outcome], but I think that [it’s] coming.”
According to Wach, if lenders adopt the PRA as a requirement during due diligence, the impact could be transformative: “It’s amazing how much capital markets drive socially responsible investing in terms of the health and safety [for] occupants of commercial buildings. [Investing patterns are] driven primarily by capital markets.”
Historically, Wach notes, lender requirements for similar standards (e.g., Phase I Environmental Site Assessments) from such entities as Fannie Mae, Freddie Mac, or HUD have been responsible for hundreds of thousands of building upgrades to mitigate asbestos, soil contamination, radon, and other threats. That’s more than what the EPA or any state agency has achieved, he writes in a recent piece for the CRE Finance Council.
The Property Resilience Assessment could play the same role for climate risk, Wach writes: “a lender-driven resilience campaign, using commercial transactions as the staging for resilience improvement, could achieve the goal of U.S. commercial building herd resilience within 20 to 30 years.”
- Compliance with regulation and improving assessment and disclosure practices
Physical climate risk disclosure is rapidly becoming an investor requirement and regulatory reality for real estate, given such forces as the Sustainable Finance Disclosure Regulation (SFDR) in Europe, California’s climate disclosure laws, and previously proposed disclosure rules by the U.S. Securities and Exchange Commission.
The PRA is poised to facilitate compliance with these disclosures by providing an agreed-upon method for documenting levels of physical risk and resilience measures. More importantly, rather than getting caught flat-footed if investors or lenders find high-hazard exposures in a portfolio, having a sophisticated approach to using the results of PRAs to guide effective resilience investments can allow real estate to use disclosures to frame a positive, proactive narrative around identifying and reducing physical risk.
Finally, the PRA could drive important changes to transparency for risk analytics and insurance providers. Models of physical risk used by both groups, though different, are often complex and proprietary, and real estate firms can find them difficult to interpret or rely on, especially when significant value is at stake. The PRA could lower that barrier.
“The PRA recommends transparency,” Accame says. “There are a lot of firms out there performing climate risk assessments, but they’re not all disclosing the data or methods that they used, [or] the uncertainties involved with the modeling they are performing. We recommended it and said, ‘You should disclose that.’” This level of insight should help boost legitimacy around physical risk assessment processes, as well.
The outlook from here
The standard guide arrives as momentum and understanding of physical risk and resilience measures have grown over the past few years, according to Accame, and this release is just the beginning. “A lot of this [material] is new, and firms are investing in research and development, and [are] making great improvements to how assessments are done.”
Although refinement will be ongoing, Accame is confident that the PRA has landed at the right moment: “It’s kind of like a fine wine that wasn’t ready to be served,” he says. “But now, its time has come.”
Learn more about risk assessment and managing asset and portfolio risk at ULI’s Sixth Annual Resilience Summit on May 15, 2025, in Denver, Colorado, adjacent to ULI’s Spring Meeting.
If you are a commercial real estate owner/developer/investor, an insurer, or a lender, and you would like to learn more or get involved with the rollout of the Property Resilience Assessment or share your thoughts on its release with ULI, email [email protected].
