A Year After Hurricane Ian: Green Chutes Appear
MyEListings' markets and economics editor and creates content about global macro events and their impact on US commercial real estate.
One year ago, on September 28, 2022, Hurricane Ian struck Southwestern Florida with unprecedented force, leaving a trail of devastation in its wake. As a mere Category 4 hurricane, Ian was nonetheless one of the most potent and destructive hurricanes ever to have hit the state.
Some quick stats on Hurricane Ian:
- Maximum sustained winds: 155 mph (250 km/h);
- Minimum central pressure: 940 mbar (27.76 inHg);
- Storm surge: Up to 13 feet (4 meters) in specific regions;
- Rainfall: Up to 25 inches (635 mm) in certain areas;
- Deaths: A tragic toll of at least 160, with the majority in Florida;
- Damage: An overwhelming $112 billion, etching its name as the costliest hurricane in Florida's history.
Ian's impact was not limited to the destruction of homes, businesses, and infrastructure. It also led to severe flooding and prolonged power outages. Lee County felt the hurricane's wrath the most, accounting for the highest death toll.
Impact Felt Strongly by Insurers
Post-Ian, insurers in Florida, particularly, faced immense challenges.
Greg Main-Baillie acts as an owner's representative and project consultant for condominium associations facing milestone inspections and structural repairs. He is a 20-year veteran in the construction and development industry and currently serves as the Executive Managing Director for the Florida Development Services Group at Colliers.
He shared insurers' laments: "Insurance is enough of an issue in the state of Florida that we're almost government insured. I mean, for most intents and purposes, we are at this point," referring to Florida's state-backed insurer, Citizens' Property Insurance Corporation.
The market was left reeling as insurers grappled with the astronomical cost of the damage, and as condo associations grappled with what to do next.
Creative Destruction Comes to Southwest Florida
Yet, amidst the devastation, South Florida also witnessed what economists term "creative destruction.” The hurricane, for all its destruction, presented residents, developers, and outsiders with an opportunity to build back stronger.
The majority of buildings in the danger zone could now be enhanced to adhere to Florida's code standards, recognized as the most robust worldwide. “Half of the Caribbean utilizes the Florida building code as their benchmark for construction in their own jurisdictions,” Main-Baillie said.
Previous Tragedy Had the Ball in Motion Already
A tragic reminder of the importance of such rigorous standards was the Champlain Towers collapse, which occurred in June of 2021. This catastrophe triggered the introduction of Senate Bill 154.
Main-Baillie elaborated, "That basically mandated for any condo building above three stories within three miles of the coast and 25 years of age to go through a structural certification with a structural engineer."
The monetary repercussions were felt widely, with Greg noting that buildings "are seeing an average assessment of somewhere in the range of $125k to $150k."
Condo Associations Could Hold the Key
As Florida paves its way forward, Condominium Associations could prove pivotal to the process of moving ahead. Some, as Greg points out, have stepped up for their residents by leveraging their borrowing credentials to seek out financing solutions, as well as other assistance.
He remarks, "You've got some educated board members that have realized exactly what you stated and gone to the capital markets on behalf of their residents." Yet, others have been less proactive, leading to scenarios where developers are the primary beneficiaries, often at residents' expense.
Longer-Term Implications
As South Florida reflects on the year since Hurricane Ian, the journey of rebuilding continues, guided and enforced by the most stringent of building codes.
While the character and old-world wooden structures of the past were quaint, the only constant continues to be change, and that change is stronger and safer, even if temporarily more sterile, by design.
By leveraging these new standards and with proactive engagement from condo associations, as well as other organizations, the region can not only continue to recover but also fortify itself literally against future challenges.
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