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CRE Assesses Impact Of Hurricane Ian

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Gretchen Smith Friday morning Fort MyersFlorida, walked her sister’s dog and watched the aftermath Hurricane Ian.

Smith, director of Cushman & Wakefield Commercial Property Southwest Florida, was called to check on properties her company manages the day after a Category 4 storm, but she had to use her car to do so. It meant not.

“They wanted me to drive over and look at the property, but I can’t do that. There are no gas stations,” Smith said. Bissnow during her walk. “I don’t waste gas on it. Sorry.”

Airmen of the Florida National Guard’s 202nd Red Horse Squadron overlook a debris-covered road in Fort Myers Beach, Florida, after Hurricane Ian.

Cushman & Wakefield is one of many owners and managers of Southwest Florida real estate and appreciates how their properties have been valued. One of the strongest hurricanes ever to hit the United States.

However, as search and rescue operations for the deadly storm are still underway, it will take time to confirm the extent of the damage caused by the storm. At least 48 as of Sunday evening.

“My biggest message to people out of town is: They are nervous because they can’t get in touch with their property managers today,” said Lauri Albion, Senior Advisor at SVN Commercial Partners. said. Tampa“But that’s because people are still securing their homes and assessing the personal damage, and many don’t have cell phone service. There are no gas stations. Also, driving is dangerous.” is.”

After the storm, Albion took to the streets to investigate the damage to family property and the property she represented.she saw the aerial footage Fort Myers At the beach, I didn’t recognize it anymore.

“I am a little shocked,” she said.

Her house suffered nearly universal roof damage in the area as 150 mph winds blew down the southwestern coast of Florida, hitting Fort Myers, Cape Coral and Sanibel Island.sanibel island completely cut off from the mainland After its only bridge collapsed.

Local people we talked to Bissnow We described an uplifting scene of neighbors helping their neighbors, but there were widespread cellphone, internet and power outages, with helicopters hovering overhead incessantly to survey the damage.

“There were a lot of traffic lights hanging,” said Albion. “The windshield will fly off if you’re not careful.”

A handful of commercial real estate firms contacted by Bissnow At a facility in the worst-hit area of ​​Florida’s southwest coast — Mainly Charlotte, Desota, Hardy and Lee Counties — could not comment on their holdings, saying they were still gathering information as of Friday.

“We have just entered recovery mode and are mainly trying to assess the damage to our clients and see where they are. Zahra Antaramian, principal of developer company ADG4, said: “We are trying to assess how far back things are and what clients have to expect when it comes to claims.”

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Courtesy of Otero Construction/Tomas Otero

Hurricane Ian swept a Mercedes Benz into the water next to a boat in Naples.

For now, the damage price tag remains a game of estimation. Both residential and commercial wind losses could reach $32 billion. According to analysis by CoreLogicLosses due to storm surges could reach an additional $15 billion.

TreppKeep track of values ​​bound by . CMBS loanthe total potential liability exposure to assets is Ian’s Journey Could Be $52 Billion.

Ian’s damage seems to occur randomly. Many buildings were completely destroyed. Most of it he built over 20 years ago, before the building code was updated, but the rest of the building was mostly intact. At Smith’s house, the roof was damaged and her garage was flooded three inches, while her one at her colleague’s house was “completely swept away,” she said.

Mercato Shops, an open-air retail center at 455K SF in Naples, said it had power on Friday, while supermarkets and Rocco’s Tacos and Tequila Bar remained open. Tim PerryManaging Partner North American propertiesowns the center.

“We were very lucky that the damage was minimal. Not even a tree was down,” Perry said. “We haven’t had much luck, but I know there are a lot of residents who need to get tacos and groceries.”

While the damage caused by Ian is expected to be historic, the storm appears to have demonstrated the power of modern Florida building codes. Hurricane Andrew The Florida legislator who ravaged the state in 1992 adopted stricter statewide building codesrequires new developments to withstand hurricane force winds with features such as impact-resistant glass and storm shutters.

“During hurricanes and other storms, buildings built to the new rules have consistently performed better than older homes,” said Nicholas Rajkovic, an associate professor in the University of Buffalo School of Architectural Planning. told the Washington Post.

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Hurricane Ian made landfall in southwestern Florida.

However, he said those codes would only support new buildings as storms continue to intensify with climate change. Rich SorkinCEO jupiter intelligenceinsurance and real estate companies with weather modeling data.

“One- to two-story homes in the path of a storm surge weren’t helped by building codes,” says Sorkin. “But with his 20-story building in the path of the stormy winds, building codes will make a big difference.”

most people with Bissnow We hope that the area will eventually recover and residents will proceed with cleanup and rebuilding. Antaramian was concerned that many of the people who moved to Florida in recent years would be scared away by the first Florida hurricane.

“It’s hard to believe this storm didn’t scare the new Floridians,” said Antalamian. This will scare some people. It’s almost traumatic and scary to watch. I grew up in Naples and I have never seen a mailbox covered with water. ”

Florida has been one of the fastest growing states in the country in recent years, with a state population of increased by nearly 6% Between 2018 and 2022 — and the regions Ian hit directly: migration, jumping, Between 7% and 9% over the same periodFort Myers and Northport, Florida were among the 15 fastest growing cities in the US early in the pandemic. To the U.S. Census Bureau.

Developments to accommodate the influx of people have made the area more susceptible to climate change and a higher price tag when storms hit. Florida had her five hottest commercial real estate markets in the country in the first quarter of 2022 — Orlando, Miami, palm beach, fort lauderdale and Fort Myers — according to National Real Estate AssociationCommercial Real Estate Metro Market Condition Report.

Tomas Otero, general contractor and founder of Otero Construction in Naples, said: “This is just adding fuel to the fire.”

With chronic supply chain constraints continuing, rebuilding may take longer and cost more than previous storms. labor shortageWhen inflation that federal reserve system not yet reduced higher interest ratessaid Otello.

“This is going to take a long time to repair,” he said.

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Courtesy of Gretchen Smith

A boat washes up on the southwest coast of Florida following the landfall of Hurricane Ian.

Six Florida insurers have gone bankrupt so far this year, raising questions about insurance’s ability to cover losses. Orlando Sentinel reportedJesse Shemesh, president of investment firm Point Acquisitions, said he expects premium rates to surge in the near term as companies deal with a surge in claims.

“Insurance premiums have nearly doubled in the last few years,” said Shemesh, who owns a portfolio of single-family rental homes and warehouses in southwest Florida.

Sorkin said this is a typical pattern for insurers after a catastrophe. Short-term interest rate spikes, then lower interest rates after state and federal disaster relief teams flow in, markets return to normal, and insurance markets become competitive.

“Their pricing model is very short-term oriented,” says Sorkin. “In the short term, I think we will see a fair amount of confusion in insurance coverage.”

In the aftermath of another historic storm, more questions will be asked about the risks of investing in properties that are highly vulnerable to both storm surges and storm surges. sea ​​level riseInvestors have yet to factor climate change risk into their pricing and pricing. capitalization ratesaid Sorkin.

The far-reaching impacts of climate change may force lenders to increase loan costs to offset the threat of worsening weather events. And while building codes along many coastal cities have tightened in recent decades, the intensity of the hurricanes will make those codes inadequate to protect structures in the next 20 or 30 years. It is possible that

“This is a bad time to bet on climate change, which is what everyone has really been doing,” Sorkin said. “At the moment, this is not a sustainable economic model.”

Those active in the real estate industry still disagree. carroll organization President David Perez said his company has been buying apartments in the coastal market since 2017, during which it survived Hurricanes Harvey, Michael and Florence. you won’t let it.

“If you ask any Floridian, it’s just part of life,” Perez said. “Usually we don’t buy on the water. It’s easier to recover from those situations.”

Albion said he is now helping investors from the Northeast buy office buildings in Naples as a way to generate income for retirement. Hurricane Ian Albion said he wasn’t deterred from signing the deal even though he wasn’t sure about the fate of the house he was building on Sanibel Island.

“People want to be here, but they don’t have long memories,” she said. “There are properties that change ownership from people who retire and don’t want to rebuild. But it’s an opportunity for someone else to join.”

Otero visited the client’s property over the weekend to assess the damage. In the ground floor condo, he said the water line was three feet high and had debris stuck to the walls. Despite the pain of rebuilding, he had no hesitation in doing business on Florida’s southwest coast.

“It’s so beautiful here, 99 percent of the time people don’t want to leave. It’s beautiful. It’s paradise,” said Otello. “This is where I die. Florida, I love this place.”

Alex Gratereaux contributed reporting for this article.

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