The New Chill Around Climate Transparency in Real Estate

• Risk retreat: Zillow’s climate-risk rollback shows how charged hazard data has become and why transparency is now a strategic choice.

• Portfolio medicine: As traditional office markets sputter, medical office buildings are emerging as a reliable and growing sector.

• Fed flags fly: The Federal Reserve is flagging potential risks in bank commercial real estate portfolios.

• This week’s webinar: Smart buildings are evolving as AI and connected systems redefine how properties think, adapt, and perform. Sign up

Editor’s Pick

The New Chill Around Climate Transparency in Real Estate

Zillow has removed climate-risk scores from more than a million home listings after sustained pushback from broker groups and MLS partners who argued that the models were confusing, unreliable or damaging to marketability. The ratings, supplied by First Street Foundation, flagged risks like wildfire, flooding, wind, and extreme heat. Some MLSs warned that displaying probabilistic climate-risk forecasts could depress values or unfairly stigmatize neighborhoods. After initially promoting the scores as a tool for transparency, Zillow quietly reversed course, scrubbing the risk layers from public listings and triggering a wider debate about how (or whether) climate data should be presented to homebuyers.

This isn’t the first sign of retrenchment. Companies across real estate have started stepping back from once-public climate commitments, either softening their disclosures or dropping them entirely. Large office owners that issued splashy net-zero pledges five years ago now highlight only “efficiency progress,” while some REITs have reduced the detail in their sustainability reporting, offering broad statements instead of building-level metrics. The tech sector is doing its own recalibration. Google recently shifted how it displays flood and wildfire estimates in Maps, labeling them as experimental and burying them behind more clicks. Even MSCI, a cornerstone of ESG indexing, has repeatedly adjusted how it categorizes and labels climate exposure in response to political scrutiny.

The political pressure explains much of this. Climate modeling has become a flash point in statehouses, insurance hearings, and even NAR-affiliated MLS boards. Companies know that one map suggesting “future flood risk” can trigger outrage from local officials, nervous investors, or homeowners worried about resale value. That creates a chilling effect on how firms talk about risk at all. When the political conversation punishes transparency, a lot of companies decide silence is safer.

But not everyone is ducking for cover. Several institutional investors continue to treat climate risk as a core underwriting input, not a PR liability. Major pension-fund advisors are leaning harder into geospatial hazard data, adjusting acquisition models based on projected heat-stress days, insurance volatility and infrastructure vulnerability. Analytics providers like Jupiter Intelligence and ClimateCheck are still expanding, not contracting, their CRE-focused tools. Even some brokerages now market “resilience-ready” assets as part of their value proposition, betting that buyers will reward foresight as risk costs climb.

Zillow’s move is a reminder that transparency isn’t just a technological challenge, it’s a cultural and political one. Climate-risk data is becoming more accurate and more accessible, but its public presentation is becoming more fraught. The companies that treat this moment as an opportunity, rather than a liability, may gain an edge in markets where insurance premiums, lending standards, and regulatory responses are already tied to climate exposure. Those who retreat may buy themselves peace today, but fewer tools to navigate when administrations change and political winds shift again.

Overheard

The Rise of Medical Office as a Core Real Estate Asset

With office vacancy and uncertainty mounting, medical office buildings are quietly turning into one of the most sought-after property types in commercial real estate. The shift to outpatient care, boosted by demographic pressure from an aging population, is fuelling demand for these buildings in suburban and community settings. That steady demand, paired with long leases and highly profitable tenants, is drawing attention from institutional investors hungry for stability.

Medical offices are no longer niche assets. As of mid-2025, occupancy across the top U.S. markets has climbed to roughly 93.5 percent, with a subset of 42 markets reporting occupancy at or above 95 percent. Rental growth is also ticking up, and new development remains constrained by the high costs and complexity of building for medical use—factors that limit supply even as demand increases. These supply-side constraints, combined with favorable fundamentals, make medical offices buildings more resilient than typical office or retail assets.

For the broader real estate industry, the rise of medical office buildings signals a structural recalibration. As capital shifts away from traditional offices, MOBs may become a core building block for diversified real estate portfolios. That could accelerate repurposing of underused office and retail properties into medical use, change underwriting assumptions for lenders, and steer developers toward healthcare-ready design. The strong performance of medical offices have investors looking at them both a refuge and a new growth frontier in unpredictable times.

Fed Warns Banks That Office Space Risk Could Ripple Through Credit Market

This week, the Fed quietly signaled unease with banks’ exposure to office properties, warning that steep declines in commercial real estate values, high interest rates, and tighter lending standards have created stress in loan portfolios. Community and regional banks are now under extra scrutiny: examiners will closely watch their capital planning, credit reserves and underwriting practices to see if borrowers can refinance or repay when values and rents are declining.

The backdrop isn’t new. Office vacancy and distress have been rising sharply in recent years as remote-and-hybrid work becomes normalized and many tenants leave older or B-/C-class buildings for lower-cost alternatives. Even before the Fed notice, several reports warned that a meaningful portion of office loans, especially for aging assets, face rising loan-to-value ratios, ballooning debt service burdens, or looming maturities.

For the real estate investors industry, this warns of a broader recalibration. Underwriting that once assumed office values would bounce back is now being tested and lenders may tighten terms or retreat from riskier office deals. That means more conservatism in new CRE financing, pressure on prices for distressed offices, and a reinvestment shift toward asset types with steadier cash flow. The Fed’s move underscores that office space oversupply is no longer just a CRE headache, it’s a potential systemic stress factor for credit markets.

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.