Landlords, retailers and consumers are recovering from the summer’s disastrous series of hurricanes in the U.S. Southeast. On the consumer side, economic growth will increase in the short term, according to John Chang, first vice president of research services for Marcus & Millichap. “We will see a burst of retail consumption in Houston and parts of Florida as people repair the damaged facilities,” Chang said in a conference call. “Likewise, it creates a lot of construction jobs.”
Chang says developers and builders nationally will feel the impact over the next eight to 16 months as the areas affected by the storm continue to draw workers and materials. Chang also says he expects a short-term rise in gas prices caused by the refinery shutdowns, which could temper disposable income somewhat.
In Houston landlords, insurers and tenants are working together to get flood-damaged properties fixed, says Alan L. Pontius, Marcus & Millichap’s senior vice president and national director of specialty divisions. Sometimes there is disagreement as to which party bears responsibility for certain fixes, but often owners brought in their own crews to ensure proper work was done, Pontius says. “It is playing out positively,” he said. “There has been a wonderful spirit of cooperation.”
In Florida the damage was more wind-related and less significant. “We are anticipating a tightening of vacancy rates in Southeast Florida in the 4 to 5 percent range,” said Chang.
“We are anticipating a tightening of vacancy rates in Southeast Florida in the 4 to 5 percent range”
Credit ratings and underwriting for loans could also tighten for some centers in the affected regions, Pontius said, even if they were not damaged.
Meanwhile in the Caribbean, DDR and Kimco were two of the U.S. REITs most affected by Hurricane Maria’s devastation.
San Juan’s popular Plaza Las Américas mall opened within days of Hurricane Maria, but some properties outside the capital were without power and water for longer. Kimco Realty Corp. has seven Puerto Rico assets. Two in the southern part of the island were less affected, but five properties in the northern region sustained more significant damage. Kimco maintains comprehensive property and business-interruption insurance on its Puerto Rico assets, and the company said it expects that all damage will be insured under existing policies, with building coverage subject to a collective deductible of $1.2 million.
Beechwood, Ohio–based DDR Corp. worked feverishly to reopen its 12 properties. DDR maintains insurance on its assets in Puerto Rico with policy limits in excess of $350 million for property damage, along with coverage for business interruption. These policies remain subject to various terms and conditions, including a deductible of approximately $6 million.
By Brannon Boswell