CBRE: Florida CRE ‘Resilient’ in Face of Hurricane Irma

Florida’s commercial real estate market benefited from long-term preparation when Hurricane Irma hit, reported CBRE, Los Angeles.

The Sunshine State strengthened its building codes after Hurricane Andrew in 1992. This made many buildings there able to withstanding Category 5 winds, CBRE said. Improvements to flood-drainage standards helped expel water from areas including Miami’s Brickell central business district.

“Florida significantly strengthened its defenses after hits from past major hurricanes, and those improvements were instrumental in helping the state weather this potentially devastating storm,” said CBRE Head of Research for The Americas Spencer Levy. “As a result, damage to Florida commercial real estate is relatively minor outside of the Keys.”

Levy said demand for apartments and industrial space will likely increase as the recovery effort progresses. “Hotels in all but the hardest-hit areas have reopened and the remainder aim to return to service before year-end,” he said.

Large office owners reported that major Florida markets experienced only “minimal” building damage, CBRE said. The real estate services firm’s Asset Services division reported 95 percent of the 240 Florida office buildings it manages returned to service 48 hours after the storm following power restoration and minor damage repair. The remaining 5 percent was operational within 72 hours.

The industrial sector saw little to no damage to major portfolios, based on assessments by CBRE and major real estate investment trusts. All major ports reopened within two days of the storm and industrial space availability could shrink as building-supply companies and relief agencies get established.

Looking at Florida’s retail sector, food and gas sales should see “dramatic” increases over next two months, CBRE said. Big-box stores, home goods, building supply, discount and sporting goods retailers could also see a boost.

“Damage to retail real estate was minor–felled trees, damaged signs, minor leakage–for areas other than Florida Keys and Jacksonville’s San Marco neighborhood,” the report said.

Apartment demand will likely increase “significantly”, given that most damage from Irma was to single-family residential neighborhoods, CBRE said: “Increased demand and construction-completion delays are likely to keep rent growth positive in Florida’s major markets.”

Most hotels in Jacksonville, St. Petersburg, Tampa, Fort Myers and most of Miami have reopened to accept guests, CBRE reported. Most Naples and Marco Island hotels remain closed while operators assess damage and make repairs. Officials hope to reopen hotels in the Florida Keys for the fall and winter seasons.

“Florida’s recovery effort will take time and short-term disruptions are to be expected,” Levy said. “But overall, Florida’s resilient economy and globally renowned tourism industry will help the state recover strongly.”