When Stephen Ross, chairman and founder of Related Companies, spoke this week about his firm’s latest investment in Florida, a 25-storey office tower in West Palm Beach, he centred his comments on occupational growth. His focus on demand migrating from New York to the US Sunbelt state following the coronavirus pandemic made sense – from a property ‘fundamentals’ perspective, certainly.

“We saw where things were going, so we put together a programme and capitalised on it,” Ross said. “Right now, the trend of growth is really more in Florida than in New York.”

Related Companies has long backed this commitment to the state with capital; 515 Fern will add to an already sizeable Florida contingent of offices, hotels, malls and other properties within the firm’s $60 billion of assets under management. Related is not alone, Starwood Capital being another institutional-level household name with notable appetite for the state.

Whether such a conviction could be challenged by greater universal appreciation of climate risk in asset valuations is a question that must be answered sooner rather than later.

There is plenty of positive momentum in the field of climate risk measurement. A report published this week by Chicago-based manager LaSalle Investment Management and sector research and network firm Urban Land Institute demonstrates how myriad climate analytics data, software and consulting services have responded to notable shifts in policy frameworks, regulation and a broadening focus on environmental, social and governance issues. They offer a wide range of commercialised scientific applications expected to provide asset owners the means to identify, measure and describe physical risks. This should help them calculate value and, thus, formulate investment strategies.

But the same report also demonstrates a glaring factor: that institutional organisations have almost countless applications to use and the differences in modelling approaches and data pose challenges for knowing what and when to buy and sell. “The important takeaway here is that the size of differences between risk scores for the same building can range from small to great orders of magnitude,” the report said.

The report underscored the importance for institutional-level organisations to articulate outcomes to internal and external stakeholders, as well as regulators. It attempts to offer near-term guidance to the issue by suggesting questions that can be universally asked to give organisations the best shot at integrating physical risk into capital expense budgets in the absence of a consensus method between currently available applications.

But without a consensually agreed and universally administered set of science-based and financially translatable metrics, such an approach keeps many institutional portfolios subject to an even bigger risk: managerial ambivalence. Real estate’s fundamentals: things like asset supply, tenant demand, rental levels and costs of capital will remain untampered by climate risks until measurement comparables become unequivocal.

It is not hard to find climate risk rankings placing Florida at, or near, the top. One we found this week, by insurance comparison platform Policygenius, placed Miami second, Tampa third, Jacksonville fourth and Orlando fifth. “Though all four cities are in different corners of the state, the story is largely the same throughout: there is going to be heat, there is going to be water and there is going to be wind,” the report said.

That Related, Starwood, and other buyers in supposedly climate-threatened markets like these, are not equipped to understand the real valuation implications of these threats in a uniformed manner is an issue institutional real estate still needs solving.