Posted on June 17, 2020 by Kevin Murray
Successful real estate developers and development attorneys must effectively anticipate and manage risk. Management of visible and known risks seem simple; what separates the great from the good is the ability to anticipate, plan for, and develop contingencies for unknown risk scenarios. I have previously written about the importance of resilient development planning for extreme weather conditions and regional/national disasters. It is clear that extreme weather events affect the way we live and must be taken into consideration if we are to plan and develop our environmentally sustainable and resilient communities. Pandemic planning now finds itself a critical part of disaster planning and is likely to have a profound and lasting influence on environmental resiliency.
These environmental conditions affect physical, transactional, and legal aspects of real estate. Physical impacts appear as structural, corporeal, or earthly damages or modifications. Physical impacts present very real safety risks to site occupants such as failing structures and, exposure to life- threatening elements and hazardous substances. The recent pandemic has highlighted what was a subset of physical impacts, that is the health of the occupants as they live, work and occupy spaces.
Over the course of recent decades, mixed use developments became extremely popular with developers, municipal jurisdictions, and users. The notion of sustainable walkable communities has seen a proliferation of “self-contained communities” to support the growing desire for a more compact lifestyle where living, work and recreation coexist. The COVID Pandemic will result in the development of new regulation and a fresh look at development as a whole, but clearly with self-contained walkable communities and mixed use. Especially where users live on top of the commercial, retail, restaurant and recreational spaces they frequent.
Energy efficiency through sealed buildings had already begun to fade, air flow and fresh sources of filtered air will see increased interest and likely regulatory focus. The need to regulate how people congregate and the general flow through space may take on a regulatory aspect. Occupancy limits already exist for general safety, perhaps viral exposure may now factor into those calculations, and the imposition of formal requirements for table and general distancing in floor space. A demand for (and likely regulatory requirements), may extend into amenities that feature no touch surfaces, doors, toilets, sinks, retail checkout, retail goods selection, shelving, clothing racks, elevators, windows. Internet orders and drive up pickup may see a continued demand for convenience and safety. Ever-present hand sanitizer and disinfecting wipes will become required and as common place as a box of tissue.
The importance of all this however is to note that management of risk means mitigation. The traditional legal defenses like force majeure and impractability continue to erode in favor of reasonable foreseeability of extreme events. Successful developers and their attorneys will plan for these contingencies both to protect their uses and themselves in an ever changing regulatory environment. Proper engineering and design are necessary to protect the people that live and work in these communities and the companies and contractors that establish them. Resilient real estate development must adapt and engineer buildings and communities sustainable under foreseeable extreme conditions.