{"id":11541,"date":"2016-11-04T13:23:35","date_gmt":"2016-11-04T17:23:35","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/real-estate-development-in-post-sandy-hoboken\/"},"modified":"2016-11-04T15:39:45","modified_gmt":"2016-11-04T19:39:45","slug":"real-estate-development-in-post-sandy-hoboken","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/real-estate-development-in-post-sandy-hoboken\/","title":{"rendered":"Real Estate Development in Post-Sandy Hoboken"},"content":{"rendered":"

Introduction<\/strong><\/p>\n

Would you pursue an\u00a0ambitious real estate project in Hoboken just 4 years after Hurricane Sandy? \u00a0LCOR, a Pennsylvania-based real estate development and investment firm, is doing just that, moving forward with a massive 65 acre\u00a0project at Hoboken Terminal and Rail Yard.<\/p>\n

Context<\/strong><\/p>\n

LCOR was selected by NJ Transit\u00a0as the developer for the project in 2005 and has yet to break ground as a result of political pressure, Hurricane Sandy, and subsequent debates regarding appropriate storm-water management systems (5). Following Sandy, Hoboken has taken innovative steps to address climate change challenges, including allocating $230 million from HUD funding to build a flood resistance program (6). However, the flood resistance program only provides protection against a 100-year flood (rather than a 500-year flood as was originally intended) (1). The LCOR NJ Transit project remains in flux.<\/p>\n

Hot Real Estate Market or Ticking Climate Time-Bomb?<\/strong><\/p>\n

Using Trulia data, we can see that Hoboken real estate prices fell precipitously after Hurricane Sandy but have climbed steadily as Hoboken has become a hot real estate market for commuting families (6). LCOR must determine whether these real estate trends are sustainable in the near term and over the life of the project.<\/p>\n

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How Will LCOR Be Impacted By Climate Change?<\/strong><\/p>\n

LCOR\u2019s property base includes developments in the DC area and NY\/NJ (2). If sea levels rise by six feet then DC would see some significant effects, including the tarmac at the region\u2019s primary airport being underwater. However, NY\/NJ is a high-risk area, and LCOR\u2019s properties in Brooklyn and Hoboken have a high risk of being flooded.<\/p>\n

LCOR Steps Taken to Mitigate Climate Risk<\/strong><\/p>\n

LCOR has taken steps to address climate risk. First, LCOR has developed the capability of building LEED Gold-certified structures including 1 property in New York and 1 property in Bethesda, MD. These properties prioritize energy efficiency and thus help \u201cdo their part\u201d in minimizing greenhouse gas emissions. In some respects if everyone built these type of buildings then it would truly begin to mitigate climate risk by decreasing emissions. Regardless, LCOR has long recognized that climate change is an important aspect of the real estate business and increasingly effects consumer choices in residential selection. We see how branding can affect LCOR\u2019s pivot towards LEED buildings in 2007 when, in describing a LEED-certified project in New York, LCOR Senior Vice President David Sigman said, \u201cGreen is never going to replace location, location, location, but it gives you a marketing advantage\u201d (4). In the specific Hoboken Terminal and Rail Yard Project, LCOR adjusted their proposal in 2013 to mitigate the effects of climate change, including a permanent flood barrier (at a cost of $15 million), raising the ground floor by a few feet, and building a drainage system to divert rainwater (1).<\/p>\n

Proposed Future Steps to Adapt to Climate Risk<\/strong><\/p>\n

LCOR has important decisions ahead in terms of how it manages existing project risks, how it prioritizes the sustainability of future buildings, and to what extent sea level rise would affect project location selection.<\/p>\n