Hurricane Ian Threatens More Than 1M Residential Buildings on Florida’s Gulf Coast

As Puerto Rico, still largely without power, continues trying to dig out from Hurricane Fiona, Florida braces for now-Category 4 Hurricane Ian, expected to roar ashore this afternoon. A name that ironically means “God is gracious.”

With graciousness like this, who needs disaster/? The state faces a potential 12-foot peak surge, according to NBC. Anyone familiar with Florida’s geography and its highest point being 400 feet above sea level knows that translates into potentially massive and widespread flooding.

CoreLogic had the type of analysis that is beyond dour. Even with 10-foot surges and the presumption of Category 4 severity on landfall, the company said 1,044,412 single-family and multifamily homes along the Gulf Coast that would be in the path of the storm.

The estimated reconstruction costs to completely rebuild buildings would run $258.3 billion. Chances are that damages will be less. Many buildings will be left standing. But still, the costs are likely to be astoundingly high, as the number doesn’t include infrastructure damage or losses to business buildings and company operations.

“Due to Hurricane Ian’s slower speed and rapid intensification in the eastern Gulf of Mexico, the threat of a widening wind field bringing damaging storm surge increases each day,” the company quoted its senior hazard scientist, Dr. Tom Jeffery. “Many homes along Florida’s western coast are at risk of storm surge inundation regardless of where the storm makes landfall, and even more homeowners will contend with heavy rainfall and hurricane-force winds throughout midweek.”

As CoreLogic explained, high winds and low pressure cause a hurricane to suck up water like an unruly child who then turns around and spits it out. Only this would be no tasteless dampening. Instead, it supplies a “powerful rush” of water that engulfs the land in front. That will combine with rain and sewer systems incapable of handling the onslaught.

Property owners in Florida (and likely beyond), not only of residential buildings but all manner of CRE type, should be readying themselves to present insurance claims, pulling together latest valuations and inspections, “before” documentation, and so forth. It might also be wise to recognize that tenants will likely have to do the same thing, which will cause disruption.

But beyond that, people in the industry should consider how long they can operate as though climate change were a temporary situation that maybe wasn’t real. The issue has already moved into CRE underwriting. Insurance rates are almost guaranteed to have to increase after a massive storm, given the costs to carriers and re-insurers. The SEC will eventually ratify CRE disclosure rules that could have businesses reconsider where they will locate because of financial and investor relations risk. At some point, building in areas that are hot for marketing but also for climate change may become something financially unsupportable.