Hurricane Matthew Is Putting Expensive Commercial Property At Risk
As Hurricane Matthew’s fierce winds sweep much of Florida, inciting the largest mass evacuation in years, businesses are taking a big hit and economists are projecting billions in economic losses.
This afternoon, the Category 3 storm’s winds are blowing 120 mph at its center with an 11-foot wall of water that had yet to cross into land.
“The reality is that it has been some time since there has been a large-scale catastrophe or natural disaster in the US. The last one we had was really Superstorm Sandy,” BDO forensic insurance and recovery practice leader Clark Schweers tells Bisnow. “Now we don’t know whether Hurricane Matthew will have a landfall but clearly it’s having devastating impacts throughout Southeast Florida.”
The storm is stretching along the eastern coast from Florida to South Carolina, requiring more than 2 million residents to move inland—leaving homes, businesses, shopping centers and tourist attractions barren until the state of emergency is called off. Florida in particular could face landfall, resulting in the destruction of very expensive commercial property, including Donald Trump’s Mar-a-Lago Club in Palm Beach.
USA Today reports that economic losses could reach tens of billions of dollars, rivaling the $70B of damage that followed Hurricane Sandy. The storm potentially puts 1.4 million residential properties worth roughly $287B throughout Florida, Georgia and South Carolina at risk, according to real estate firm CoreLogic.
REITs are growing increasingly wary of natural disasters—97% of the 100 top publicly traded REITs have expressed concerns regarding business interruptions caused by these disasters, as outlined in a recent BDO RiskFactor report.
“Demand is high on the coasts and REITs are meeting that demand. But with that comes increased risk and exposure to natural disasters,” Clark says.