As you see the images of destruction left in the wake of Hurricane Irma, it’s hard to imagine that life will get back to normal, or in some cases, a new normal. But it will, just as it did in 2004 when hurricanes Charley, Frances, Ivan and Jeanne battered Florida in unprecedented succession during a six-week period.
Our thoughts and prayers go out to those who have suffered permanent loss. As power is restored and infrastructure is repaired, Floridians and the businesses that call the Sunshine State home will begin to pick themselves back up and return to their daily rhythms.
That means commercial real estate activity will also kick back into gear. This disastrous event – like many before it – will, by necessity, lead to a new economic landscape, not only in commercial real estate but across several sectors.
Structures that were well-past their lifespans and – hopefully – properly insured will have an opportunity to rebuild with upgraded features and infrastructures that provide owners greater success than they had before. A certain percentage of commercial real estate is now removed from the market, whether permanently or temporarily. Any vacancy will be consumed quickly at higher sale and lease rates – because, of course, a smaller supply makes the demand much greater.
Same with residential. In many areas of the market, there will be greater demand than supply. This increased demand for real estate will last longer because we suffered through two major storms this year in Florida and Texas. Both states are competing for the same resources. It will take years to fulfill those needs.
Another beneficiary will be the labor market. The unemployment rate will be virtually zero. And a solid labor force creates strong sales for businesses in these markets.
Like we saw in 2004, a lot of money is going to flow into damaged areas in a very significant manner. It will provide an opportunity for many industries — from roofing companies and building contractors to suppliers of general merchandise. That rising tide will lift all economic boats for quite some time and breed a whole new level of entrepreneurism. Entrepreneurs will enter these markets to provide the needs of their communities.
You may think events of this magnitude would drive away investors, but that’s not the case. Forward-thinking investors will be drawn to these areas to play roles in rebuilding and revitalizing these markets — helping these regions regain their economic vibrancy.
Simply put, a storm creates opportunity in addition to destruction. There is no doubt that while you’re in it and suffering through it, there can be a lot of heartache and we’d all greatly prefer it had never happened. But once the skies clear and restoration begins, opportunities associated with becoming involved in the recovery are endless. We can’t change what happened, but we can play a role in what happens after the storm.
Michael Carro, CCIM left – Jerry Anderson, CCIM right