COVER STORY, NOVEMBER 2004

HURRICANE BOUNCE-BACK
How two companies got back to business as usual after the string of Florida hurricanes.
Susan Fishman

No one could have been prepared for the surge of storms that clobbered the state of Florida and much of the Southeast throughout August and September. But with a little pre-planning and fast reaction, a couple of commercial real estate companies recovered quite quickly.

Atlanta-based Hardin Construction, which has projects all across Florida, from Sarasota and Tampa to Daytona Beach, Orlando and the Panhandle, fared considerably well.

Baldwin

“The damage was pretty mild, all things considered,” notes Rob Baldwin, vice president of operations for the company’s Central Florida market. “There was some flying debris and roof shingles, and a bit of damage to interior drywall, but for the most part, it was pretty minor.”

Charlie Dorr, vice president – business development for Hardin, says there are two reasons the company fared so well.

“A lot of it is attributed to the new building code,” he says. “It’s stringent, but it’s really paying off in terms of protecting these completed structures. The other thing is preparedness. We have to be good neighbors in all of this. We bring scaffolding down as these hurricanes come along, and we take all the loose material off the site and secure it or put it indoors. It’s just as bad to have something blow off our site and do damage to somebody else’s.”

Dorr

Hardin, like many companies, has an emergency response plan that covers just about every kind of emergency situation. Within that plan is a hurricane preparedness piece that can be tailored to a specific job and a specific client. For example, the company is working on a project on the University of Central Florida campus, which has its own hurricane preparedness plan, so Hardin coordinates with the University in the event of a hurricane. In Destin, the company is working on an active resort, which also has its own hurricane preparedness plan, so Hardin has married its plan to the overall property plan.

“Due to a combination of the long-range forecast capability and the unpredictable nature of hurricanes, we have a lot of advanced warning, and so we end up kicking into gear at least 4 or 5 days before a storm hits, and that has had somewhat of an impact on all the projects we’ve been doing,” says Baldwin. “Fortunately, since we’ve had minor damage, we’ve been able to bounce right back and just revise schedules to incorporate those lost days. It stops mostly exterior work, but we haven’t had any long-range schedule issues as a result.”

Inland Real Estate, a large commercial developer in Florida, had at least 50 properties, out of a total of 75, that were touched by the surge of storms. With mostly grocery-anchored shopping centers, primarily along the coastal areas and on up the East Coast to the central part of the state, Inland sustained most of its damage from Hurricane Charley, which split right through the middle of the company’s Orlando projects. Inland also has a good grouping of projects in Tampa and the Panhandle, including one in Santa Rosa Beach, which was the last area for Ivan to go through.

With roughly $5,000 to $10,000 in damage per property, miraculously Inland’s properties did not sustain any serious damage.

Guinsler

“The biggest part of our problems were landscape-related with trees down, some tenant signage and roof leaks,” says Dan Guinsler, who heads up property management for the company’s Florida properties. “Fortunately, because of our plan to have people in place and get to the centers and react, we were able to take care of the problems quickly, so it didn’t cause any real hardships for any tenants.”

Though both companies say there’s a limit to how much planning can be done with such unpredictable storms, there are a few pre- and post-hurricane tips they can offer:

1. Make sure you’re properly insured.

2. Educate tenants. Prepare them for what they need to protect themselves.

3. Plan ahead. In terms of landscaping, pull some of the larger planting materials away from the building perimeter. Remove or tie down trashcans and anything else that could potentially move around. From a construction perspective, engage consultants and contractors that have the resources to commit to projects in such an emergency.

4. Have a cleanup plan. Step one in post-hurricane cleanup is to get everything secured. When assessing damage, it may help to have an aerial photographer on standby to get tight shots for a quick assessment.

5. Be prepared for communication problems. If phone lines aren’t working, have a team of people ready to dispatch to each location to assess the damage and make sure everyone is safe. If possible, set up a meeting place for all team members to gather and report their findings.

6. Have a backup for your backup plan. Because of the unpredictable nature of hurricanes, you can never be overly prepared.

So what effect will these recent storms have on the future of Florida real estate?

“I’ve lived in Florida for 40 years, and I think this is a weather anomaly,” says Dorr. “Things will get back to normal and, over time, people will remember how it used to be. So the stigma of the hurricanes will subside.”

With year-round warm weather, a multitude of beaches, no income tax and all the other desirables Florida has to offer, it will always be a resort destination, adds Dorr.

“The other side of it is that Florida is a retirement community, so the institutional and healthcare needs will be here, and the universities aren’t going anywhere. And those are all thriving businesses.”

What may happen, says Dorr, is that businesses relocating to Florida may look at sites inland. “The resorts will still skirt the coast, but we’re seeing more inland resorts around the theme parks and things of that nature.”

Though it’s unclear how the insurance companies will react at this point, the changes put into effect after Hurricane Andrew in 1992 may be somewhat of an indicator.

“Certainly after Andrew, there were a lot of changes that happened,” notes Baldwin. “There were carriers that became more stringent, and there was a pretty major change in a lot of the building codes. But I think you reach a point of diminishing returns, where the costs to incorporate high stringent wind-load requirements would, at some point, become impractical.”

“I think from an investment and development standpoint, there won’t be any serious repercussions,” says Guinsler. “Florida has had storms for years (maybe not three in 1 month), but it’s still some of the hottest real estate in the country, and that’s not going to change. I think whatever was destroyed will be built back stronger.”

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