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Why CRE Should Want The Wall (No, Not THAT One)

The deadliest hurricane to ever hit New England occurred in 1938 and caused nearly $4.7B in damage. To prevent that level of destruction in the future, three smaller cities impacted by the hurricane built protective storm barriers in the 1960s for less than $20M each to protect low-lying areas from storm surges.

Increasingly powerful hurricanes have three U.S. markets exploring storm barriers of their own in 2017, but each proposal costs more than the smaller 1960s models. Tens of billions more.

Why CRE Should Want The Wall (No, Not THAT One)
A portion of the Netherlands' Delta Works, a series of barriers and other structures built to protect the country's coastal areas from the sea

“This project won’t go ahead unless the economic benefits far exceed the cost of the project,” Paul Kirshen, a civil engineer and professor at the University of Massachusetts Boston School for the Environment, said about a proposed Boston storm wall. “There is not a cost estimate yet, but it is expensive. It’s billions of dollars. It’s a very expensive project.” 

Higher sea levels and storm surges will leave $80B of Boston real estate vulnerable in the coming decades. The city’s Climate Ready Boston report explores the feasibility of constructing a four-mile protective storm barrier from the Winthrop, Massachusetts, peninsula north of Boston’s Logan International Airport across Boston Harbor, to Hull, Massachusetts. The potential storm barrier, unlike a dam, would have openings large enough for ships to pass through but with gates that could close ahead of a storm with a threatening surge.

“Something has to be done,” Kirshen said. “Whether it’s this or more small-scale solutions, Boston has to come up with a strategy to protect itself against increased coastal flooding.”

One of Kirshen’s colleagues adds finding a solution could be economically imperative.

“We’re asking ourselves what are the broad impacts on business, particularly if the city gets a reputation for being vulnerable,” David Levy, a professor of management at UMass Boston, said of the Boston barrier.

Why CRE Should Want The Wall (No, Not THAT One)
Low-lying areas like Boston's Seaport District are particularly vulnerable to storm surges and rising sea levels.

New England’s largest city is not the only one. Even before Hurricane Sandy caused an estimated $42B in damage to New York, SUNY Stony Brook School of Marine & Atmospheric Sciences professor of oceanography Malcolm Bowman had proposed a significant storm barrier similar to ones in Russia and the Netherlands to protect New York City. For it to be effective, he said there actually needs to be two: one at the mouth of Lower New York Bay between Sandy Hook, New Jersey and Far Rockaway, New York, and the second on the upper portion of the East River northeast of Manhattan.

Two barriers are needed because there were two Sandy surges when the storm hit in 2012, Bowman said. At 14 feet, the storm surge in western Long Island was even greater than the nine and a half foot one that impacted lower Manhattan. Luckily, the second surge happened after it would have caused the most damage.

Why CRE Should Want The Wall (No, Not THAT One)
An overview of a proposed storm surge barrier system in New York and New Jersey

“If the Long Island Sound surge had happened three hours earlier, there would have been even greater flooding from the East River and the two surges would have met,” Bowman said.

Costly Insurance

The proposed barriers are significantly more expensive than the sub-$20M versions built in the 1960s in Stamford, Connecticut, Providence, Rhode Island, and New Bedford, Massachusetts. The cities were all damaged from the 1938 New England Hurricane as well as Hurricane Carol in 1954.

Although each of the experts Bisnow spoke with recognized the modern storm barriers would have to be a public works project as opposed to a privatized initiative, businesses with skin in the game have helped in the past, and they could do so again. 

“Local elected officials and local business associations got together and got the barrier funded,” National Institute for Coastal and Harbor Infrastructure Executive Director William Golden said of the one in New Bedford. “In the case of New Bedford, the city contributed, the state contributed and businesses contributed. Today, it puts out more fish product in dollar value than any other port in the U.S. That wouldn’t be the case without that barrier.” 

Those cities remained safe in Sandy, and Bowman said the entire region is now more aware of Mother Nature’s potentially brutal impact on human lives and expensive real estate. But New York is in no way prepared, he said.

“If one of these hurricanes this year struck us, it suddenly turns into Hurricane Sandy, Part 2,” he said. “The whole region is almost as exposed as it once was.”

Why CRE Should Want The Wall (No, Not THAT One)
Providence's Fox Point Hurricane Barrier

The potential solution is just as financially enormous in New York as it is in Boston. A dual-barrier system could cost tens of billions of dollars. Considering two barrier systems of this scale are being studied in the Northeast as well as one near Galveston, Texas, known as the Ike Dike, it is hard to imagine a single source of funding.

“At the end of the day, it’s going to come down to cost,” Galveston Bay Foundation President Bob Stokes said in regard to the Ike Dike. “There is a platinum version, and maybe we aren’t able to afford that, but we could build something more modest that protects the most vulnerable portion of the bay.” 

But others say surge barriers and protection against rising sea levels should be the new wave of visionary U.S. public works projects, and the platinum version is exactly what is needed to protect an enormous sum of real estate and human life.

“We need funding on the level of the interstate highway system,” Golden said. “If we make strategic investment, not only do we avoid the downside of death and devastation, we also provide opportunity for communities with economic development.”

Nine of the 10 costliest storms in U.S. history have occurred since 2004, and Golden says the half a trillion dollars in damage caused in those 13 years is why a layered, comprehensive plan to combat increasingly powerful storms requires at least $1 trillion. 

More damage is to be expected. The National Academy of Sciences reports once-in-500-year storms could now occur once every 24 years. When Bisnow asked Golden to rank the barriers in order of necessity, he said it is too late for that.

Why CRE Should Want The Wall (No, Not THAT One)
A submerged truck in the Brooklyn-Battery Tunnel after Hurricane Sandy's surge flooded Lower Manhattan

“I don’t think we have the luxury of declaring priorities,” Golden said. “Texas saw horrible deaths with Hurricane Ike and even more since. After this, we’ll be looking at Florida. All of these disasters have been treated as local when they’re actually symptomatic of a national, in fact, global new reality.”

NICHI hosted a May conference in New York regarding the city’s urgent need for a protective storm barrier. The Port Authority of New York and New Jersey was a sponsor of the event and leading real estate groups like Chelsea Piers, Waterside Plaza and Howard Hughes Corp. now support the barrier measure, Golden said.  

“From a real estate perspective, we can provide a system that is strong, safe and secure,” Bowman said. “We can give them the confidence to build from bringing the infrastructure to areas that otherwise would be too risky.”

Avoiding Infrastructure Hangover

Massive infrastructure projects can often go over budget. Boston has a lingering hangover from the $24.3B Big Dig highway project (the costliest in U.S. history) that was originally projected to cost $2.8B. And a Center for an Urban Future study estimated New York needed to spend $47.3B just to bring deteriorating existing infrastructure into a state of good repair.

Why CRE Should Want The Wall (No, Not THAT One)
The New York MTA South Ferry station was heavily flooded after Hurricane Sandy struck the region.

Storm barrier experts see it as apples and oranges. 

“Given the value of the assets, whether they’re private like real estate or public like infrastructure, this project would prevent tremendous losses from large floods,” Kirshen said. “I think the mandate for this project would be clearer than the Big Dig in terms of pure economics.”

While some have budget misgivings, Golden is quick to point to a $3.8B sewage treatment upgrade under construction in Boston at the same time as the Big Dig that arrived on-time and on-budget. It should be seen as the model for the barrier systems, he said.

The sewage treatment facility was part of Golden’s effort to clean up Boston Harbor after he filed a lawsuit in 1982 as the Solicitor General of Quincy, Massachusetts. Years later, he is proud to see the billions of dollars in waterfront development around Boston Harbor that would have been impossible without his initial effort. 

He views his new cause as crucial to keeping that real estate above water for the foreseeable future. But he recognizes it will take enormous political will and capital just like his prior environmental fight.

“When we started out, we were told this is going nowhere, but we did it,” Golden said. “People came from everywhere and it happened. That’s the value in speaking truths to power.”