Hurricane Harvey Did A Number On Houston. Property Owners Advise You Get Flood Insurance, Take Steps To Prepare

Hurricane season officially started June 1. However, hurricane preparation begins months in advance and is an ongoing consideration for commercial property owners, even those previously unconcerned with flooding — historic rainfall and flooding in new areas in Houston has left no one feeling exempt.

“Hurricane Harvey changed Houston,” Moody Rambin Senior Vice President Bradley Kovach said. 

Regardless of the property type or whether it is in a flood zone, property owners must consider financial and physical protections against extreme weather conditions. Preventing human loss and minimizing physical damage are critical requirements toward the ultimate goal of approving tenants to go back into the building as soon as possible. Here is how Houston landlords and property managers have been shoring up against any storms this year.

Step 1: Prepare The Team 

Property owners and landlords will assemble a ride-out team, which includes property managers, property engineers, security officers and janitorial staff, Parkway Managing Director Matthew Kent said. The size of the team varies with the size of the property.

The coordination for the ride-out team should include nearby lodging, food and water, Wright said. Brookfield, which owns 12.3M SF of office and retail space across 11 buildings in Downtown Houston, requires a minimum of 12 employees to stay on-site per property. 

Some properties have a hurricane room, said Mark Wright, Brookfield Properties' director of security and safety in Houston. Recovery tools to have on deck include emergency pumping machines, sandbags, plywood, generators and fuel and refueling services. Some buildings are equipped with floodgates and doors. These emergency response tools should be checked regularly.  

“You don’t want to find out something is not working as the water is coming into your facility,” Kent said. 

Another good lesson from previous hurricane seasons is to have a restoration contractor that specializes in water recovery, cleanup and water damage repair on hand, Wright said. A contract in place before a storm can lock in cost, which can skyrocket due to increased demand after a storm. 

“By practice, we plan for the very worst scenario,” Wright said.  

Step 2: Secure Property Finances 

Property owners or landlords should work with a qualified commercial insurance broker and/or a risk manager to build an insurance policy that covers not only hurricane and wind damage but also flooding, Kovach said. A broad spectrum of insurance such as property, casualty and flooding protections are recommended across all property types.

Combining the policies, along with the appropriate written language, will expedite the ability to receive funds for restoration, cleanup and repair services to return the property to its former state, he said. 

“Almost all hurricanes in our area carry the risk of rising waters,” Kovach said. “You cannot wait until there is a hurricane in the Gulf of Mexico to purchase flood insurance.”

Even before Hurricane Harvey devastated as much as 600M SF of commercial real estate, or 38% of the total gross leasable area, in August 2017, the flooding risk patterns were beginning to change in Houston. Previous major storms like the Tax Day Flood in 2016 foreshadowed a growing number of flood-prone areas, Kovach said. 

The Category 4 storm was the wake-up call: Areas that had not previously flooded were submerged at record-high flood levels. According to CoStar, of the nearly 600M SF impacted by Harvey, 25% was outside of the 100-year and 500-year flood plain. Many commercial properties that were not in a flood plain didn't have flood insurance, Kovach said.  

Hurricane Harvey had a total cost of $125B — second only to Hurricane Katrina, which topped $161B, according to the National Oceanic and Atmospheric Administration. 

Moody Rambin saw the writing on the wall. Even before Hurricane Harvey, the company noted the increasing range of flood-prone areas in Houston and began to advise property owners outside of the designated flood zones to purchase flood insurance.

Through the Moody Rambin master insurance policy, the flood protection was cost-effective based on the amount of additional protection. At this time, Kovach advises every client to secure flood insurance, regardless of location. As Houston becomes more densified, street and drainage flooding becomes more frequent.

The precautionary plan worked out. The insurance company paid out more than $10M in funds to buildings that never flooded before and were not in a flood zone, according to Kovach. Moody Rambin didn't provide the amount reimbursed for properties in flood zone areas.

“They could have lost their entire asset and not had the money to repair it,” Kovach said.

Step 3: Prepare The Tenants And The Building

Property owners, landlords and management companies should communicate with the tenants the emergency response plan, which outlines the realistic expectations, Wright said. In most cases, a scale down of office occupancy will be required. 

Companies should be prepared to lose access to the building for an allotted time. Larger companies usually have internal emergency response plans, which can include back-up servers or alternative work locations. Property owners also host additional emergency preparation classes for the workplace and at home. 

As a storm bears down, property owners should remove patio furniture, plants and other free-standing items from roofs, balconies and other open areas. Facilities will be evacuated except for the predetermined ride-out team.

Step 4: Recovery After The Storm 

Once the weather calms, the ride-out team evaluates the property’s damage. The safety checklist includes walking each floor, checking for physical damage such as broken windows, recertifying the elevators and examining flooding and water damage. 

“Water can be a big problem for high-rise buildings,” Wright said. “Once water gets into a structure, it can migrate down and cause significant damage.” 

Falling glass in a highly densified, high-rise district like Downtown Houston is also a concern. Police and other emergency response personnel often block off streets or suggest avoiding hazardous areas. 

While the news and weather teams will provide updates on the storm's path and the roadways, the ride-out team is responsible for requesting the appropriate post-storm care, verifying the safety of the building and alerting the tenants of the building's status. A multilevel mass communication approach is appropriate, such as a text-based message system and a toll-free phone number, Kent said. 

“As a landlord, we want to get people back into their space as soon as possible,” Wright said.