For the commercial real estate (CRE) sector, climate change is already posing tangible risks to property.
Rather than a distant, potential sustainability issue, extreme heat and intense rainfall are creating new challenges for both office landlords and occupiers.
The question for owners is simple: how can existing stock be adapted to remain resilient, functional, and comfortable against a changing climate?
Aged assets and an increase in extreme weather
Office buildings were largely designed for the climate of yesterday.
With 55% of UK office (opens a new window) floorspace constructed before 1993 – and nearly a quarter originally built before 1950 – much of the UK's office stock predates the extreme weather which buildings are increasingly expected to withstand. As historical weather patterns no longer offer a reliable guide to future climate conditions, many CRE assets may be ill-equipped to deal with the evolving environmental pressures they face.
The summer of 2026 was the UK's hottest since records began (opens a new window), according to the Met Office. This prolonged spell of heat followed a winter that ranked “among the wettest on record (opens a new window)”, with some areas of the UK enduring 55 consecutive days (opens a new window) of rain between January and February.
As extreme weather becomes more common, buildings may struggle to reliably perform as they did under past climate conditions. Beyond physical damage to assets, wider consequences from severe weather can drive up energy costs, affect employee wellbeing, disrupt building availability, and, ultimately, threaten business continuity.
How overheating invites business-continuity risk
When an office heats up, poor insulation, extensive glazing, and inefficient ventilation can cause internal temperatures to rise quickly and prevent heat from being efficiently removed. These issues can be exacerbated by aged HVAC systems struggling when demand peaks.
Cooling systems operating continuously during a heatwave can substantially increase energy consumption and place additional strain on mechanical equipment. If a system fails when external temperatures are at their highest, restoring acceptable conditions may not be straightforward. In extreme circumstances, parts of a building may become temporarily unusable.
If offices are inoperable, organisations may need to reduce operations or temporarily close affected premises – bringing business interruption risk sharply into focus. For landlords, this can result in loss of rental income, increased maintenance costs, and potential reputational damage that undermines the long-term commercial appeal of their asset.
A workforce consideration as well as a property issue
High temperatures can make offices uncomfortable for employees – making concentration more difficult, increasing discomfort and fatigue, and ultimately impairing output from workers.
For example, during the UK heatwave in July 2026, failure of an air conditioning system in Hogan Lovells and Cadwalader’s office resulted in internal temperatures rising to 36°C (opens a new window). Consequently, staff moves into the building were postponed, and all other employees were given the option to work remotely for around two weeks while the issue was resolved.
Incidents like this underline why it is important to continuously assess resilience. A building that meet today's requirements may still be poorly prepared for the conditions of 10 or 20 years’ time.
This is particularly relevant for employers as office attendance rates in 2026 rise to their highest rates since before the Covid-19 pandemic. As such, there is a growing onus on employers to provide office environments conducive for employee collaboration, hosting clients, and boosting productivity. For tenants, failure to do so could make retaining and attracting staff much more challenging.
If asset owners are unable to provide a resilient, comfortable office, occupants could either break leases or decline renewals. Ensuing reputational harm will also make it difficult to replace vacating tenants.
The impact beyond the building
An office does not need to suffer physical damage to experience disruption. Understanding the distinction between physical impacts and wider business interruption is increasingly important for all stakeholders.
Commercial buildings rely on a much wider network of infrastructure to function. Employees need reliable transport connections, businesses depend on electricity and telecommunications, and buildings require functioning water and drainage systems.
Flooding can prevent employees and visitors from reaching an office, while damage to transport infrastructure can affect commuting and deliveries. At the same time, extreme heat can cause demand for electricity to surge as businesses and households amplify their use of air conditioning. This can place additional strain on power grids – increasing the risk of outages and potentially crippling business operations. Repeated disruption to transport, power, water, or telecommunications can make offices less attractive to tenants and complicate lease renewals.
Preparing offices for a different climate
For the CRE industry, climate resilience has become part of a broader question about the quality and functionality of the workplace.
The challenge for the office sector is therefore not simply responding to individual heatwaves or extreme weather events. It is considering whether existing buildings and infrastructure remain appropriate as the underlying climate changes.
Occupiers may also start asking different questions when choosing a workplace. Is the building easy to cool? How reliable is the surrounding infrastructure? What happens if extreme weather prevents people from getting there?
As assumptions about how buildings will perform under relatively predictable environmental conditions become less certain, climate resilience becomes an integral part of managing, investing in, and occupying commercial office space.
For landlords, this could also influence how buildings are maintained and upgraded. However, changing climate conditions do not necessitate wholesale redevelopment. Targeted improvements to insulation, shading, ventilation, cooling, and drainage can help existing stock remain functional.
How Lockton can help
Although insurance cannot prevent every loss, the right coverage can help protect assets and rental income when extreme weather strikes.
Property insurance may cover damage caused by insured weather events. For landlords, loss-of-rent cover can also help replace rental income when damage leaves a property unfit for occupation, subject to the policy terms.
However, insurance is only part of the picture. Identifying vulnerabilities and addressing them early can help reduce the impact of severe weather. Depending on the property, improving flood defences, upgrading ventilation and cooling systems, or refining drainage infrastructure can all improve the resilience of an asset.
Lockton works with landlords to review their insurance needs and identify practical ways to manage property risks. By bringing these two areas together, we help clients prepare for weather-related disruption and make more informed decisions about protecting their buildings and income.
For more information, reach out to a member of our Office sector team here (opens a new window).
To find out more, read our latest thematic report: Global heating: navigating a new business reality (opens a new window), which explores how a hotter world is reshaping exposures, insurability, and risk financing.