September 5, 2019
Although Florida escaped from the brunt of Hurricane Dorian, North Carolina, South Carolina and coastal Georgia are bracing for damaging winds and potentially life-threatening storm surges over the next several days.
As of Thursday afternoon, Dorian had maximum sustained winds of 115 miles per hour, according to the National Hurricane Center. Its core was approximately 45 miles east-southeast of Charleston, and 135 miles south-southwest of Wilmington. As many as 222,000 homes and businesses were left without power in Florida, Georgia and South Carolina by late Thursday morning.
Across Florida, major cities were left relatively unscathed by the category 3 storm.
“In Central Florida, we did not see any direct impact from Hurricane Dorian, and we don’t expect further repercussions in the coming days,” said Jim Gray, managing director at CBRE in Orlando. “Our infrastructure is built under strict guidelines that aim to minimize hurricane impact to our community. At CBRE, our Property Management teams across the state worked day and night to ensure the safety of employees/tenants at the buildings they manage. Office buildings, for example, were locked down 24 hours before hurricane winds were expected to arrive. However, if an office building is in an area that the government has ordered to evacuate, we obey that order and start locking down the building earlier.”
If Dorian does cause damage in the Carolinas, the impact on CRE will likely be minimal, due to increased building standards after disastrous hurricanes like Andrew in Florida and Floyd in North Carolina.
Under-construction projects are also unlikely to be derailed by a hurricane.
“It would take a very catastrophic loss, combined with improper insurance coverage, an undercapitalized developer and unsympathetic capital source(s) to derail a project completely,” said Christian Oldenburg, managing director at Colliers International Northeast Florida. “Ultimately, it is in every stakeholder’s interest to see the project completed and in most cases, that is what you will see happen. The more typical impact of a hurricane would be construction delays and potentially additional labor and materials cost associated with any loss.”
In terms of existing buildings, gross impact can be very significant and sometimes there can be a 100% loss. But the net impact to property owners depends on their coverage for windstorm or flood events.
“Buildings that fare well should retain their value. Buildings that take on damage will need to be repaired,” said Oldenburg. “If the damage was due to poor building design or weak resiliency measures, those issues will need to be addressed as well. Depending on the owner’s capitalization, strategy and insurance coverage, these things can be addressed by the current owner, a new buyer or some combination of both. Obviously, the more that is passed on to a buyer, the lower the value of the property at the time of sale. Long term valuation should not be impacted, assuming the issues are addressed by someone.”
On the retail side, however, data analytics firm Planalytics reported that consumer spending is expected to decline as much as $1.5 billion as a result of the hurricane. Expected gains from home centers, grocery chains and convenience stores from consumers stocking up emergency items like flashlights, bottled water and canned goods were calculated in the report.
The losses are expected to come from the typical boost retailers see from shoppers on the tails of Labor Day weekend and the back to school season. Foot traffic at apparel stores could fall 25% and visits to outlet centers will decline 32%, according to Planalytics. Restaurant traffic is expected to decrease 14%.
Supermarket Publix has 831 stores in Florida, 190 in Georgia and 110 in the Carolinas, according to its website. As of Wednesday afternoon, the grocer had closed 115 stores. Walmart closed 46 of its stores at the same time due to the storm.
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