Shifting Sails–Navigating CRE Risk in the Era of Uncertainty–Holly Neber on Climate Risk, Insurance Shocks & Resilience

What does it take to make a property—and a team—resilient in today’s volatile CRE landscape? Holly Neber, Chief Resilience Officer at AEI Consultants, joins the LightBox team to unpack the rising urgency around climate risk, insurance hurdles, and resilience planning. A 30-year environmental veteran and chair of the ASTM task group behind the industry’s first Property Resilience Assessment (PRA) guide, Holly breaks down how stakeholders are turning climate risk into actionable insight—before it derails deals or distorts value. 

From PRAs and insurance blow-ups to investor ‘walk-aways’ and model fatigue, Holly gives a masterclass in what CRE pros need to know now. She explains why resilience isn’t just physical—it’s cultural—and why the next wave of opportunity will belong to those who can identify risk and adapt. 

Don’t miss her insight on lender vs. investor expectations, how climate risk is already showing up in property pricing, and the mindset shift she sees among the next generation of consultants. This one’s packed with clarity, candor, and a forward-looking vision CRE needs right now. 

01:15 Understanding Property Resilience

04:54 Climate Risk and Insurance Challenges

05:32 The ASTM Property Resilience Assessment Guide

09:37 Investor and Lender Perspectives on Climate Risk

14:37 Holly Neber's Journey and Leadership

16:13 Impact of Climate Risk on Property Valuation

26:50 Managing and Inspiring Teams

29:58 The Evolution of Environmental Site Assessments

Have questions for the pod team? Send them to Podcast@LightBoxRE.com. 

www.lightboxre.com

Transcript

The CRE Weekly Digest by LightBox

Episode 51: Shifting Sails–Navigating CRE Risk in the Era of Uncertainty–Holly Neber on Climate Risk, Insurance Shocks & Resilience

June 20, 2025

Martha Coacher: This is the CRE Weekly Digest by LightBox, a firm transforming the commercial real estate landscape by connecting every step of the CRE process with comprehensive tools and data. I'm Martha Coacher with our experts Manus Clancy and Dianne Crocker.

Martha Coacher: Today we're diving into property resilience and CRE risk, and our guest is Holly Neber, one of the most respected voices in environmental due diligence. Holly served as president and CEO of AEI, consultants for over a decade and just recently stepped into a newly created role, Chief Resilience Officer. We're going to talk about what property resilience means today. Diving into insurance hurdles, investor due diligence, and policy changes. Holly brings a unique blend of leadership, technical knowledge, and future thinking from leading AEI's growth in environmental due diligence valuation, site remediation and climate risk services to helping develop the industry's first property resilience assessment guide for commercial properties. Holly, that's an impressive list of accomplishments. Welcome to the podcast. 

Holly Neber: Thank you so much. It's great to be here.

Martha Coacher: First of all, congratulations on your new role, Chief Resilience Officer. Explain how this role spans external property resilience services and the internal strategic management of your organization. 

Holly Neber: Well, it is really the absolute coolest job. It's combining two of my greatest passions, the people of AEI and our relationship with the planet.

Holly Neber: And so on the people side, I'm ensuring that our culture supports everyone at AEI to step into their full potential, which I would argue is more important now than ever in this rapidly evolving business environment. And on the planet side of things, really addressing the changing climate, increasing frequency and severity of hazard events by working on services that improve the sustainability and resilience of our built environment.

Holly Neber: So if you could kind of, Dianne knows I love a good tree vision. I love to talk about trees. And one visual that I would give you on my role is if AEI was a tree, it would be a tree with very deep roots. It would be able to blow in the wind, but it would remain standing. And so that's the kind of strength that we're looking for both in how we build our culture and also the services that we offer. You know, I have been through a couple of economic downturns and the pandemic and all those experiences have taught us just how important it's to remain nimble, to stay curious, to keep your north star and your core values, and then to step forward into uncertainty.

Holly Neber: And so resilience is really a cool concept because whether you're talking about buildings or organizations or people, resilience is this beautiful balance of strength and flexibility and understanding that conditions change and being prepared for what comes, which we need now more than ever. And I get to work with such an amazing team of people. They're really doing the great work and I'm just their cheerleader and hopefully kind of a Yoda figure that helps people see their potential and step into that power and strength, which has been something that so many people have done for me over the years.

Holly Neber: But just before I leave the answer here, I wanted to mention Dianne, one of the key economic principles I've learned from you over the years is that the market wants certainty. And I heard on some of the recent pods where Manus is talking about the volatility of the headlines being kind of exhausting. And while I agree that uncertainty is tough, I really think that one of my key learnings anyway over the last few years is that certainty was always an illusion. You know, it's just so clear now that anything can happen at any time, and there are so many things outside of our control. So when I think about resilience, whether for our people or our company or our clients, it's being able to thrive in uncertainty, utilizing it as a catalyst for innovation and growth, and predicting the challenges that may come and getting prepared for those and those are the people that step up during a crisis. Those are the people that create the innovation. And in the same way, like a building that is resilient can serve as a safe place to shelter during a natural disaster. So those are the things I'm focusing on, and I'm really super excited to be here with you today.

Dianne Crocker: I love that. Welcome, Holly. You gave us a lot to sink our teeth into there. I do want to jump in and start with climate risk because you've played a really unique leadership role in this area. You just mentioned the frequency of storms and the severity of climate related hazards has grown really exponentially in recent years. And so what happens then? Insurance rates are skyrocketing and suddenly that's a cost of doing business that investors and lenders can't ignore. And so that's what really drove what you just alluded to, the need to understand a property's resilience profile as it relates to climate risk. That's become a very urgent need. And I watched as you bravely stepped into the role as task group chair, the task group at ASTM wrote the first guide for outlining a process for assessing a commercial property's resilience. So I know it was a long road for you at the helm of the task group and the standard just came out last October. So I'd like to first ask you to walk our listeners through how that new ASTM guide helps stakeholders move from climate risk awareness as kind of an abstract concept to one that's an assessment with actionable site specific information. And how do you see the guide supporting more consistent underwriting, especially in climate sensitive areas?

Holly Neber: It was quite a journey we had at the beginning, over 180 different members of the task group from lending institutions to developers and builders to climate risk modeling companies, engineers, and architects. And we were all just driven to come to ASTM and say, we need a common approach that is defined by ASTM and that consensus based approach so that we can all come together as an industry and have a consistent way of answering these questions because the demand for determining the level of physical risk just continues to grow.

Holly Neber: And I would argue it still kind of is a little bit of a wild west of possible approaches, but the ASTM PRA does provide a common language and a common starting place for people to have conversations, to update their scopes of work and to make sure they're clear what their expectations on what they need from their service providers and vendors.

Holly Neber: So I think it's very common today for commercial real estate investors to obtain a desktop only screening of the natural hazard and climate risks at their properties. Many people are doing this as an opportunistic way of looking at, hey, where do I want to be when the music stops? Or is the music going to stop in this particular area? Where might I want to move my chess pieces? You know? So it is about risk, but it's also about opportunity and it is becoming more common, even on the residential side, for people to have access to that screening data through Zillow or realtor.com. So it's really out there. What the PRA does is it provides that, what's next piece of it? So if you identify a property, let's say it's a coastal property, it's subject to hurricane risk, flood risk, and so on. You can see that in the screening tool, but what do you do about that and how do you make a decision? So the PRA includes an engineer or an architect physically visiting the site and making some assessments about what the potential damage could be, which can be plugged into underwriting formulas. And it also can provide cost estimates, ranges of costs for resilience measures that could be employed. It can also, importantly, kind of counteract a high risk that's identified on a screening tool. So you could have something that shows really high risk, but it was, you know, elevated by the developer.

Holly Neber: In fact, we just worked on a project where the site was in Texas, hospitality type of property. You might think that this builder probably doesn't talk about climate risk a lot, let's say in Texas. Okay? But this builder, he was so aware, he had lived through multiple hurricanes. He was prepared, he had elevated all of the buildings way beyond what the code required. Wind resistance measures were in place, super strong roofs, super strong windows. So I think it's important too, when we talk about climate risk, hazard resilience is something that humans have been doing since we started building buildings. So it's on the one hand, kind of new, on the other hand, it's a lot of best practices out there. And what the PRA does is just pull that all together in a single document so that it can be part of underwriting and due diligence.

Dianne Crocker: I want to ask you individually how you see investors versus lenders responding. So let's talk about investors first. You just alluded to it a little bit, but I want to dive a little bit deeper. In terms of how investors are managing climate risk, is it a transactional consideration? Are they looking holistically at properties in their portfolios to kind of measure each one in terms of its exposure to client risk? What are you seeing? 

Holly Neber: I think it's a combination of both. I think for investors, a lot of it depends on, you know, they say follow the money, right? So where's the money coming from? If you have a lot of money coming from Europe, you're getting a lot of questions about what is the climate risk in your portfolio, and that would be both the physical risk and the transition risk.

Holly Neber: So people are integrating that into their due diligence now. They're doing some type of a PRA in their due diligence, and also looking at the energy use, and are there energy benchmarking laws in place. And is the property ready to meet those requirements? Right? So they'll do it on a deal by deal basis. They'll also be looking at their portfolio and in some cases they're trying to demonstrate progress towards reducing risk, right? So it kind of depends on where the money's coming from and what those drivers are. But I think one thing, there's some common themes across all the investors we see in this community, which is that, that on the portfolio level, a few assets may be driving most of the risk. So if you can really narrow it down, you might do a portfolio wide screening of the physical risk, and then you would find a third of them perhaps are subject to elevated risk of some kind. Then you could take the next steps of doing an onsite with the PRA to confirm or deny what you see in that screening report. So it's not all things for all properties. And then when they start doing acquisitions, it's looking at is this area, this region, subject to an elevated risk and how does that apply back to my property type? Right? So if your logistics, you're thinking about any disruption to not only the building itself, but the transportation systems around the property. Your data centers, you know, data centers have been doing this type of work forever, right? Because any downtime is really bad. The same for hospitality, hotels. They want to make sure not only is the property safe, but can guests get to and from the property. So it really, it can, the lens can vary depending on what type of assets you're talking about.

Dianne Crocker: Let's talk about the debt capital side. Are you seeing lenders requiring a climate risk assessment as part of their due diligence? And then the flip side, if you're a borrower, you know, are you thinking about resilience if you say have to prepare for a refi or an acquisition over the next 12 months? 

Holly Neber: So I think on the bank lending side, there are some efforts underway to really just focus on the credit risk piece, which is, is the property insurable and is it subject to any compliance concerns relative to energy benchmarking laws? And what would be the cost of compliance? So it's a very narrow focus just on credit risk. I would say the life insurance companies that lend, they're much more proactive about wanting to understand long-term what might be going on with the asset on the physical risk side. So they're incorporating PRAs into their PCA scope of work, for example. And the other thing I'm seeing with bank lenders is that they're facing challenges with the insurability of the assets. So another project in Texas involved a site that the lender was being asked to waive their insurance requirements. And the property owner, were they to buy the insurance that the lender required, it would've completely blown up the deal. So they did a lot of modeling to understand what would be the actual potential damages given the building attributes, given the resilience measures in place, and were able to argue not only for better insurance pricing, but also convince the lender that they could waive some of their insurance requirements. So everybody I think is trying to take on a little bit more risk at this point to bring those costs down. So for borrowers looking to refinance, thinking about your insurability risk is an important piece. The banks probably aren't going to be asking you for much proactive on the physical risk side, but if you're having trouble getting insurance, this might be a good time to take a look at that.

Manus Clancy: So Holly I'm just kind of blown away by the level of detail you have on everything that's going on right now. Also, a big admirer of what you said in the beginning, the team you've built, the deep roots and everything you said in the open. My question is kind of a big picture one. How did you get here? How did you get to be an environmental expert? How did you get to be the leader of an environmental firm as big as yours? And tell us a little bit about the journey. 

Holly Neber: Well, thanks Manus. Yeah, it's been a great ride. I started out as an environmental site assessment person doing projects and really, Dianne knows this story that I was sort of a tree hugger. Still am. I love my trees. But yes, environmental was my passion. I got into the market to doing Phase 1s and over time through people like Dianne, through LightBox and other resources, really got to see how interesting commercial real estate is as an industry. Joined Crew Network as well, commercial real estate women and just fell in love with commercial real estate and the thrill of the deal and making things come together. And I think that my exposure and connections within commercial real estate are why I was asked to lead the task group for the Property Resilience Assessment Guide, and that has just been one of the highlights of my career to get to know all the people involved in property resilience and climate risk. So yeah, here I am. It's been a great experience to evolve and pivot my career as I learn more. I'm a lifelong learner, so I just love learning new things. 

Martha Coacher: Holly, let's talk a little bit about pricing. We talk about this every week on the podcast where we're seeing repricing across commercial assets. What are you seeing from your vantage point? Are you seeing a tipping point in how risk is priced? 

Holly Neber: Yes. I think our valuation team tells me that because insurance pricing effects net operating income, it does affect property value. So we are already seeing, you know, people ask, is climate risk affecting property value? Yes, it already is because insurance is going up. Of course, insurance pricing is composed of many different things, not just climate risk. So it is hard to pull apart all the different forces at work there. But I would say absolutely people are realizing that certain markets are more problematic from an insurability standpoint, and that is affecting property values. People are also looking at what are the long-term ongoing costs of capital involved in this property. So you might have an investor that's looking at an asset. Back in the day, they would get a PCA and they would say, oh, these are immediate repairs that I need to have and these are the ongoing costs that I'm going to have to budget for. Now they're integrating the climate risk into that piece and saying, well, right away I'm going to need to invest in flood prevention measures or drought prevention or you know, other types of resilience measures. And at the same time, they're looking at long-term. When we upgrade our roof, we're going to need to invest in a more wind resilient roof. Or when we upgrade our HVAC, we're going to need to account for higher heat in the area. So it's present day costs and it's long-term cost of capital and cost of maintenance there. 

Manus Clancy: During our prep, Holly, you made the remark that the market continues to be very buoyant, that you hadn't seen a lot of slow down inactivity, even with the economic uncertainty that we've seen since April 2nd. Why do you think that is? Why do you think that the market continues to soldier on, even with higher insurance costs, tariffs, economic uncertainty, now war in the Middle East? What is the thing that keeps it going? 

Holly Neber: Well, I think to return to our theme of resilience, the CRE industry is very resilient and one person's loss might be another person's gain, right? So if the market resets, there are people waiting on the sidelines ready to take advantage of that. So for those of us that serve the industry and the transactions, we're just seeing a lot of continued activity. It might be different players, but people who have been on the sidelines are now jumping in, and so there's still a lot going on.

Dianne Crocker: So we talked about the impact of climate risk on insurance rates and changing really kind of the calculus behind a properties financials. Here's the million dollar question for you, Holly. Are you, as you're out and about talking to investor clients, are you actually seeing them walk away from a deal expressly because of climate risk or because of what's coming out of having had a PRA conducted?

Holly Neber: We see people using the PRA information or the climate risk information as one element within the larger risk management picture. So we haven't seen people walk from a deal because of climate risk, but if a deal is already borderline, that might be something that pushes their decision towards the no. 

Dianne Crocker: So we're getting there little by little. What about in terms of industry leaders? You know, we're still kind of low on the climate risk assessment learning curve. What are you seeing in terms of best practices, in terms of a very proactive investor versus one that maybe isn't going in with their eyes wide open?

Holly Neber: I think for best practices, what I really recommend is that people understand their current risk management program and just utilize that, leverage that. Climate risk is one lens of risk within your existing risk management program. So instead of inventing a whole new workflow, take your current risk management program and add the climate risk element to it. I think that's really important. Secondly, I would say begin with the end in mind. Don't just start collecting a bunch of risk information if you don't know what you're going to do with it. So you need to understand your risk appetite, your risk thresholds, your resilience expectations, and this again plays back to what kind of properties are we talking about. Assisted living, skilled nursing is going to have different needs than self storage. So each investor, each type of property owner needs to think about what is their risk appetite and what's material to you before you start obtaining these assessments so that you know what to do with them. 

Manus Clancy: So Holly. You talk about understanding the risk appetite, I get that, that's the important phase but for a lot of tourists in an environmental risk, you're looking at a white piece of paper when you start. Once you've determined that risk, if you are a CEO at a bank or a development firm or a PE firm, what's day two? Is it model development? Is it resourcing other people's models? Is it getting multiple models? What is the day two, once you've adapted to, or at least identified your risk appetite? 

Holly Neber: I think what a lot of decision makers are doing is starting out by determining what climate risk model they want to use and there are so many to vet out. And there are pros and cons with many of them. There are some that come from the reinsurance area, there are some that are purely climate, some that also incorporate natural catastrophe models. So you have to really give that some time. There's actually a tip sheet on our website that explains how do you vet out these different models and identify one that's a good fit for you. But that's often the first step because these are typically a subscription and you really do want to pick one and stick with it I would say. I've seen people try to you know, just receive property resilience assessments from many different, kind of utilizing many different models, and then you're really comparing apples to oranges. So I think one of the first important steps is pick the model you want to use so you can have consistent findings across your portfolio. 

Dianne Crocker: Holly, I want to switch gears now because I do want to get your thoughts on the state of the market. We've been talking on this podcast about the mix of soft data, you know, the sentiment, the confidence, and the hard data in terms of transactions and lending and deal making at this time of extreme volatility, to say the least. So AEI has clients really at the highest levels of investment and lending, so I'm wondering how you would describe their sentiment now compared to other times and other market cycles. 

Holly Neber: Well, Dianne, I think it's great that AEI's performance generally tracks with your LightBox Activity Index. And that's one reason I always share it with our team because I want them to see like we're part of a bigger community, these trends affect us as a company and they affect our clients too. But I would say our clients are cautiously optimistic. You know, there are a lot of good deals out there as the market resets and there are also, Manus I've heard you talk about people with pride of ownership and they're figuring out a way forward on some of those properties that have been troubled. So I think there's a lot of good news, but on the other hand the universe of risk is expanding. You know, there is the climate risk, the insurability piece, just geopolitical and other types of things that are making everyone realize that a property within the boundaries, yes, it's important to understand that property and those boundaries and that building itself, but there's so many other things that influence whether that property is successful. So thinking about trade, thinking about insurability and climate, they all play into making good decisions in this time of uncertainty. Overall in our client base, we're seeing a lot of strength in the agency. The Fannie and Freddie markets, our HUD Group mentions that things are changing there. There has been a loss of staff at HUD, which may lead to limitations, kind of in the institutional knowledge, you know, on how to get deals closed. But on the upside, they are removing some of the red tape and creating additional financial incentives. So HUD is kind of, bittersweet situation, but it looks like there's a very strong future there. And then also a lot of our renewable energy clients are anxiously watching the federal headlines about the investment tax credit. So yeah, lots of things to look for. Green shoots and tough things, as well as people scan the horizon for risk and opportunity. 

Manus Clancy: There's a really happy paradox right now going on. I'm looking at a headline that really only came out about 20 minutes ago on CNBC, Homebuilder sentiment nears pandemic low as economic uncertainty plagues consumers. Yet the happy part of the paradox is it seems like CRE, CRE lenders, CRE buyers, even people at the riskiest parts of the curve, people that are putting shovels in the ground, people that are looking to convert offices to residential and so forth really have just not shown any pause at all that is consistent with what we're seeing with home builders. For both of you, Holly and Dianne, you've both been through several cycles as Holly said before. What do you chalk this up to? Why is it so resilient this time? It seemed like the world was going to end after April 2nd, yet CRE just really shrugged it off. 

Holly Neber: Well, doesn't the thing like April 2nd, doesn't that show like CRE is so desirable because it's a real asset. It's a tangible thing. It's dirt and a building with bricks. You know, it's something that people can understand and I really, that's one reason why I love commercial real estate. I love the thrill of the deal. I love hearing about the deals that you guys talk about on this show because these are real assets that are trading. I think it's really an exciting time right now. 

Dianne Crocker: And I think also Manus, the fact that the tariff announcement came after the market was really in limbo for the past two years, so all this momentum had already built up, and I feel like it was more inclined to process the tariff announcement and then deal with the reality that uncertainty is always there, but there's intention to place capital where the calculus makes sense.

Dianne Crocker: So Holly, for all the things that you've articulated here, it brings us back to the need to manage an employee base and to train them to be resilient. So I sit here getting ready for tomorrow's graduation for the sixth class of mentees in the LightBox Developing Leaders Program. You are not only an early mentor in the program, but you might remember you were our keynote speaker at the EBA Conference in Phoenix when we had our graduation there. And I've known you for many years long enough to know that you're too humble to say that you've been an inspiration to so many young consultants, and especially women in commercial real estate, and I know how passionate you are about managing people. I'm excited about the internal staff management element of your new role in these strange and interesting times. I guess I'm sitting here wondering how you view managing a team of consultants at AEI and what you plan to do to help them stay grounded and stay resilient in these times. 

Holly Neber: Thank you for your kind words, Dianne. It's been such a pleasure to watch the mentor program take off and to see the people that whose lives you've changed. So thank you for everything you've done on that.

Holly Neber: I'll give you another visual when we talk about staff resilience and that is that of a sailboat. I used to live on a boat and I can't claim that I sail that often anymore, but I just love sailboats and I love the idea of sailing because in sailing, the conditions change frequently, and what you need to do as a sailor is identify how you're going to trim your sails to get to where you want to go. So my goal with our team is making sure everyone understands how to take their boat where they want their boat to go. So things like the LightBox CRE Weekly Digest, like hearing from you, gives you the context of, where are we? What conditions are we operating in? Which direction is the wind blowing today? Is it sunny, is it rainy? That's the kind of context. And then get to know your clients. So understand your crew, like who's on this boat with you and where are you all trying to get together? What kind of a transaction are they trying to close and how can you help them? Connecting with clients has been one of the most rewarding things of my career, and I remember back in the day when client was just like this weird word of a person with no face. And then as I got to know people, I realized how important my work is because it affects someone's life on the other side. So I think that's super important. And also just no matter what you're doing, finding a way to connect to what gives you joy like you, Dianne, with your mentorship program.

Holly Neber: I think just seeing the next generation step into their confidence, no matter their title today, but step into their confidence. Find ways to spread joy and excellence and community and pride. No matter what your job is today, you can find a way to tap into who you are as a person, as a sailor, and set your sails and follow your course and reach your goals.

Martha Coacher: Holly, you may not know this, but knowing how technical you are, you probably do know that LightBox EDR just passed a milestone of supporting its 8 millionth Phase 1 Environmental Site Assessment since the early 1990s. Now you've been through many cycles, a lot of change, a lot of uncertainty. What big change or key turning point sticks in your mind in the industry since the early days?

Holly Neber: Congratulations to LightBox for passing this milestone. That's really exciting. It is incredible to me how powerful the Phase I ESA standard has been since it was launched. And thank you to LightBox EDR for being a part of that journey. If you think back about what was happening before phase ones were being done as a standard part of transactions, there were so many environmental conditions that were unseen, unknown, and a buyer would buy that and not be aware of that liability and that cost. So now the Phase I ESA, because it's in place has identified so many environmental hazards across the US, which has helped our communities be safer. It's helped investors make better decisions. It's helped landlords make safer properties. So the Phase I ESA, yes, it is a deliverable and a transaction due diligence, but it's also really powerful at scale that it's helped identify these issues so they can be addressed. 

Manus Clancy: Holly, you've really given a masterclass today on environmental. It's been a pleasure having you on today. I do know that we have a lot of young listeners out there, early professionals you could do a lot worse than having somebody like Holly mentor you and or employ you, and we really appreciate all the insights today. Really learned a lot. Thank you. 

Martha Coacher: And on that note, thank you, Holly, for joining us today on the CRE Weekly Digest.

Martha Coacher: Thanks to our producer Josh Bruyning. Please join us every week as our LightBox team shares news and data in context. Please subscribe on your favorite podcast app and send us your questions or feedback to podcast@LightBoxre.com. Thank you for listening and have a great week. 

Manus Clancy: Let's go.