Flooding in Texas and Louisiana impacted almost one-fifth of U.S. oil-refining capacity, sending gas rates higher and raising concerns for future supply.
As the flood waters finally begin to decline in Texas and Louisiana, authorities warn the storm waters continue to present risks to life and property. Nevertheless, the area is moving into healing mode and beginning to take a full step of the unmatched destruction brought by Typhoon Harvey.
A CoStar Group, Inc. assessment of the possible impact of the legendary storm on the Houston commercial realty market reveals that 27% of the market’s gross leasable location, representing approximately $55 billion in home worth, was likely affected by flooding.
Included in the approximated is 175 million square feet of industrial area located within the Houston metro’s 100-year flood zone that appears to have actually been inundated by the epic floodwaters, consisting of some 72,000 apartment or condo units and 20 million square feet of office. Another 225 million square feet sits in the broader 500-year floodplain as well as appears to have been impacted by flooding.
Harvey, which initially made landfall at Rockport, TX, as a Classification 4 hurricane early Aug. 26 then stalled over the Texas coast, broke all records to become the wettest hurricane in the adjoining United States, and the greatest in regards to wind speed to strike the nation given that Cyclone Charley in 2004. Weather specialists have approximated that through Wednesday, the storms had disposed an approximated 20 to 25 trillion gallons of water on Texas and Louisiana.
” Unfortunately, the variety of displaced locals might be far bigger than current media reports show,” CoStar Group creator and CEO Andrew Florance stated. “Our property-by-property review of the possessions in the flood plain reveals an outsized share includes low- to moderate-income families, including those in southwest Houston, where the bayous overflowed.”
Editor’s note: Click here to see CoStar’s microsite on Harvey’s impact on Houston business residential or commercial property, consisting of a map, charts and a list of possibly affected homes.
Greater Houston ranks as the sixth-largest U.S. metro location in the United States by total CRE space at 1.6 billion square feet. An overall of 12,000 residential or commercial properties with 400 million square feet of area are within the Federal Emergency situation Management Administration (FEMA) designated 500-year flood plain zone. Only 9 million square feet of that area, consisting of 4,000 apartments, is located within a designated floodway.
Inning accordance with CoStar data, $16 billion of the $55 billion in property at risk is comprised of apartment within the 100-year flood zone. The key question for all CRE owners, investors, tenants and analysts is now what does it cost? of that home has or will sustain damage due to water incursion.
CoStar is planning to conduct an air survey to more totally examine the damage as soon as it is authorized to do so.
The densely inhabited Southwest Houston submarket, the home of more than 66,000 house systems, is most likely to be the district most affected by flooding. Almost 30% of the submarket’s apartment systems are estimated to be impacted, with the Braeburn, Greater Fondren and Sharpstown communities having the largest variety of units within the 100-year flood zone.
Each of those communities borders Brays Bayou, among the river ways that snakes through southwest Houston and has actually overflowed because of the historic torrential rains.Click to Broaden. Story Continues Listed below
An extra 5 million square feet of space is under building within the floodplain, including 3,144 apartment or condo systems, representing about one-fifth of the 25 million square feet of CRE under building and construction in Houston, including more than 12,000 apartment units.
The Greenspoint district, which has had elevated jobs following the departure of ExxonMobil in late 2015, is the metro’s most affected office submarket, with some 3.5 million square feet falling within the 100-year floodplain.
Couple of Definitive Damage Reports Yet Offered
Numerous CRE owners and supervisors had actually not yet had the ability to access their properties as of mid-week, not to mention make a comprehensive price quote of losses from Harvey, which has discarded practically 52 inches of rain in parts of southeastern Texas. At least 37 deaths had been reported as of early Thursday.
Pure Multi-Family REIT LP, a Vancouver-based multifamily REIT, reported that its 216-unit Boulevard at Deer Park residential or commercial property in the suburb of Deer Park southeast of Houston was positioned under an evacuation order due to flooding in the immediate area. The business did not right away have an evaluation of potential damages.
The business’s second Houston home, the 352-unit Broadstone Walker Commons in League City south of Houston, Texas, was not materially impacted by the storm, though they will continue to keep an eye on the property. 10 residential or commercial properties in Dallas Fort Worth, 4 residential or commercial properties in San Antonio, and one property in Austin
Pure Multi-Family REIT, which owns 10 properties in Dallas/Fort Worth, 4 homes in San Antonio, and one home in Austin, stated it will make comprehensive evaluations in coming days and weeks to examine the extent of any damage.
” We prepare for that it may take weeks to adequately assess the damage, if any, at our two homes in the Houston location,” stated Pure Multi-Family CEO Steve Evans. “As a regular course of company, Pure Multi-Family has insurance coverage in effect at all of our apartment homes.”
” It is going to spend some time for the extent of the damage in the higher Houston location to be completely understood,” Evans stated.
A variety of REITs and other CRE owners issued statements offering update on their Houston-area properties and efforts to help personnel and occupants, with companies reporting they have adequate property and casualty insurance coverage in location, which wind and rain was hindering damage assessments, including single-family home rental firm American Houses 4 Rent, which owns about 3,200 rental houses in the Houston market location.
” Our evaluation will be ongoing for numerous days,” stated American Residences 4 Rent CEO David Singelyn.Oil, Gas Line Damages to Increase Gas Costs Walter Kemmsies, a managing director, economist and chief strategist for JLL’s U.S. Ports, Airports and International Facilities Group, tells CoStar that direct and indirect damage from the disaster, while not yet understood, will definitely have an effect that ripples throughout the country. Damage to oil and gas pipelines
will cause supply issues that will lead to increased fuel costs throughout the United States, a process that has actually already started. With more than a dozen refineries closed due to flooding, the nationwide average hit$ 2.43 per gallon as of mid-afternoon Wednesday, up 7 cents from a week back, inning accordance with consumer details site GasBuddy.com. From the point of view of impact to U.S. seaports, Harvey is similar in magnitude and impact to cyclones Katrina and Sandy, while farmers will have to assess agricultural damage to crops that were entering into the late-summer harvesting season. JLL Managing Director Walter Kemmsies stated seaports such as Port Houston could feel the sting of Cyclone Harvey economic effects. “All this taking place prior to the cresting of the flood waters,” Kemmsies stated.
” Which water still has to drain (prior to the extent of the problems is known). We’re all simply biting our nails. “As a result of the Panama Canal expansion and increased downstream demand in current
years, port volumes and industrial real estate demand are higher than ever in Gulf Coast ports, Kemmsies kept in mind. At Port Houston, for instance, 20-foot equivalent system (TEU )volumes increased from 4.6% to 5.2 %of overall U.S. TEU volumes from 2010 to 2017, he stated. Under contingency plans that enter into impact at the first warning of a typhoon, cargo slated for export would have been
rerouted to other upland ports, and Port Houston could see decreased shipping volumes because Typhoon Harvey will likely disrupt railway connections as far as a few hundred miles away, Kemmsies added. CoStar Senior News Editor Mark Heschmeyer added to this report.