Rebuilding after Irma Billions of dollars in destruction will amount to a challenging recovery effort, but without post-Andrew regulations, it would have been far worse
The storm surged along North Fort Lauderdale Beach Boulevard on Sept. 10.
Hurricane Irma has moved on. The winds have died down. The waters have receded. The lights are back on.
Barreling through the Caribbean as a Category 5 monster — resulting in 42 storm-related deaths — Irma also knocked out power for millions and did billions of dollars’ worth of damage to Florida on September 10.
Just one week after the hurricane’s rampage through the state, storm-related insurance claims filed had already reached an estimated $2 billion in losses, according to Florida’s Office of Insurance Regulation. The final totals will likely range from $20 to $40 billion, according to an estimate from catastrophe modeling firm AIR Worldwide. The company estimated that exposure value in counties running along the Gulf Coast up to Tampa — the area hit hardest in the U.S. — would reach $1 trillion.
The estimates do not include losses to uninsured properties, infrastructure or pleasure boats, or losses that would be paid out by the National Flood Insurance Program.
About 25 percent of homes in the Florida Keys were destroyed after Hurricane Irma barreled through the islands, according to estimates by the Federal Emergency Management Agency.
In the wake of the storm, Gov. Rick Scott signed an emergency order that gives homeowners insurance policyholders an additional 90 days to supply information to their insurance companies and file claims.
While the cost of devastation to the area is huge, experts from across the real estate world told The Real Deal that building codes enacted after Hurricane Andrew in 1992 allowed the 6 million people in metro Miami to weather the storm in relative safety.
Even in its weakened state, Hurricane Irma highlighted how far South Florida has come in preparing for natural disasters in the last 25 years while also revealing how much more needs to be done in the future.
“It’s fair to say that Miami did not see the maximum wind speed that we have designed for,” Jean-Pierre Bardet, the dean of engineering at the University of Miami, said. “So my question is: Have we seen a real test of our code and practices? Maybe not.”
Assessing Irma’s impact
Just under $40 billion of CMBS debt was exposed to the wrath of Hurricane Irma in Florida, $6.41 billion of which was concentrated in Miami, according to an analysis from Morningstar Credit Ratings.
Stunning pictures captured the severe flooding in Brickell and Coconut Grove, two neighborhoods that have seen major development this real estate cycle.
“The areas that flooded we expect to flood, and most of the buildings are sort of built to accommodate that. The recovery from it is very rapid because of that,” Jeremy Calleros Gauger, deputy director of Miami Planning and Zoning, said.
Some developers stayed in place to keep watch over their properties. Carlos Melo, co-founder and principal of the Melo Group — which has developed 12 condo and apartment towers in Miami’s Edgewater, Little Havana and Allapattah neighborhoods — said he weathered Irma at his corporate office at 425 Northeast 22nd Street.
“We had about 1 foot of water at ground level,” Melo said. “It only affected the parking area, but it never reached the building. And about an hour and a half after the hurricane passed, the water had receded.”
Miami architect Kobi Karp left for New York City before the storm, flying back to Miami on a 6 a.m. American Airlines flight on Tuesday, Sept. 12. In the meantime, he arranged for his Biscayne Boulevard office to be back up and running with a generator and air conditioning.
“We’re pretty well cultured in hurricanes and tropical storms at this point, and we try not to have any downtime,” Karp said. By Thursday, he said, most of his staff of 85 was back in the office.
Some of the construction cranes that help power the metro area’s building boom did not fare as well. Irma took one out at Property Markets Group’s 300 Biscayne Boulevard development in downtown Miami, and another crane collapsed at the Related Group’s Gran Paraiso condo tower at 480 Northeast 31st Street. A third crane fell at Related’s Auberge Beach Residences and Spa in Fort Lauderdale.
The collapses expose a gap in oversight, Gauger said. “The cranes are basically only regulated by OSHA, which is to say only regulated for worker safety, not for structural integrity or anything else,” he said. “They are completely self-regulated by law, not by any lack of attempts by the state or county or the city to regulate them in the past. They are treated the same way as scaffolding or a wheelbarrow.”
Recovery and rebuilding
Cleanup and rebuilding efforts have already begun. FEMA has declared 37 counties in Florida eligible for federal disaster assistance, with Miami-Dade, Broward and Palm Beach among them.
The biggest problem that will arise in the rebuilding effort, according to the Florida Home Builders Association (FHBA), is a lack of qualified workers to do the fixing.
“Talk to any builder or any tradesman across the United States right now, and they will tell you that there’s a workforce issue,” said Jeremy Stewart, president of the FHBA. “This is going to get compounded with the storm and the availability of actually getting boots on the ground to get things cleaned up.”
Miami-based developer Lennar Corporation announced after the storm that 700 home deliveries in Florida, Georgia and South Carolina would be delayed from its fiscal fourth quarter to the next fiscal year.
“It will impact new starts; there’s no ifs, ands or buts about it,” Stewart told TRD.
But there will be pockets of real estate activity in the short term, experts said. Nancy Klock Corey, Coldwell Banker’s regional vice president for the Southeast Florida region, said that some sectors of the market will see a boost after the storm. “Short-term rentals will be pretty hot,” she said. “As properties are renovated and restored, there will be very high demand for these types of rentals.”
And while the recovery efforts could cause a spike in construction, total economic recovery will take much longer. The fallout from Harvey and Irma combined could reduce U.S. economic growth in the third quarter to an annual rate of 1.8 percent, down from the 2.8 percent growth projection, the Wall Street Journal reported.
Debris remained scattered on Brickell Avenue on Sept. 11.
For some small businesses, however, there will be no recovery. Epicure Gourmet Market Café in Miami Beach, for instance, announced its closure a week after the storm, citing Hurricane Irma, “problems with storm insurance” and declining sales.
The rewards of precaution
But, of course, Florida knows how much worse it could have been. Twenty-five years ago, Hurricane Andrew decimated the area. Making landfall as a Category 5 storm, Andrew destroyed 25,000 homes in the state, damaging 100,000 more and creating $26.5 billion in economic losses. Hurricane Andrew’s lasting effect, however, is evidenced in the massive upgrades that were made to the building上海千花网