Sandy Hits CRE via Power Outages, Flooding
- Nov 02, 2012
Hurricane Sandy may have visited the tri-state area for only a span of one day, but the aftermath of damage cleanup will last for weeks, according to some.
The biggest natural disaster to hit the East Coast, coined by journalists as ‘Frankenstorm’ is estimated to have caused the economy up to $50 billion, almost double than what was initially estimated, according to various news sources.
Nevertheless, the storm’s impact on commercial properties per se is said to have been “limited to canopies, facades and roofs,” for the most part, not counting properties in Staten Island, which have not been estimated yet, according to Jason Lail, manager of Real Estate Research at SNL Financial L.C.
In New York City specifically, most major post-hurricane impact involved loss of power and major flooding, causing water damage to commercial real estate primarily below 34th Street, according to the Real Estate Board of New York
“Owners are still assessing the damage caused, while at the same time, taking steps to get their buildings back on-line,” said Steven Spinola, president of the Real Estate Board of New York. “Early indications are that newer construction – both commercial and residential – is in a better position to handle the adverse consequences that historic weather events, like Sandy, can create.”
Commercial giant SL Green, who holds just about all of its office assets in the New York metropolitan area, mentioned that one property incurred heavy flooding, and that that the remainder of properties sustained minimal damage. The company also mentions four other assets in the area as being without power as of a couple days ago.
Another commercial heavyweight CBRE, which has “double-figure” amount of office properties in the greater New York region that it manages, said that its corporate offices remained closed for the first two days of the storm storm, during which time its employees worked mobile.
“We’ve been working with all of our clients to get their facilities up to speed. We have a very strong business continuity management culture for our own operations and for working with our clients,” said Robert McGrath, sr. director of CBRE Corporate Communications. “What our folks are doing in each of the facilities is working as if there were still water there, getting that out, then assessing what needs to be done so that each facility can operate first safely, and then look at the efficiency.”
Jones Lang LaSalle saw some positive results of the storm on its hospitality sector, expecting short-term drop in travel to hotels in the storm path, activities related to clean-up efforts and infrastructure recovery to lead to incremental demand for hotel accommodations that would otherwise not have been seen.
“Residents whose homes were destroyed or damaged will seek accommodation in extended-stay hotels, which will generate demand for these hotel owners,” said JLL in a statement release.
As far as JLL’s retail sector, in addition to property damage, the ‘superstorm’ is stalling about 70 percent of East Coast’s oil refineries, putting upward pressure on gasoline prices that could impact consumers over the next month or so, as people are gearing up for the holiday season.
“Store closures mean lost wages and sales, which will have a short-term hit to commerce that reverberates throughout the region,” according to JLL.
Cushman & Wakefield did not return phone calls for this story.
“In the long run, this should not have a significant impact on the industry as a whole, but I won’t really have more details from specific companies until those that own assets in areas of exposure disclose what damage they incurred from the storm,” Lail of SNL Financial added.