Get Ready for More Climate-Related Storms
How multifamily property owners and managers are bracing for extreme weather events.
As extreme weather events become more widespread, multifamily property owners and managers say preparation, teamwork and communication are keys to mitigating impacts and protecting their properties and residents.
That’s more important than ever because price tags for climate-related incidents are increasing. Last year, there were 28 disasters with losses exceeding $1 billion each and totaling $92.9 billion, according to the NOAA National Centers for Environmental Information. As of early June, NCEI reported 11 confirmed billion-dollar weather/climate events. Adding to concerns, the National Hurricane Center is expecting an active hurricane season through the fall.
Weather-related impacts are straining operating expenses as companies pay higher insurance costs and put resources into resiliency and mitigation, noted Alex Eveland, vice president, government affairs, at the National Multifamily Housing Council.
NMHC and 23 other organizations wrote federal policymakers in June with proposals addressing insurance premiums. Recommendations included coordinating insurance requirements for loans across agencies like HUD, FHA and Fannie Mae and Freddie Mac as well as expanding existing programs to cover resiliency investments.
“Increased insurance is probably the single largest cost putting pressure on affordability right now and that’s not just affordable housing, that’s across all housing,” said Sadie McKeown, president of Community Preservation Corp., a New York-based non-profit affordable housing and community revitalization finance company.
But there is good news. Property insurance capacity improved because reinsurance capacity came down and additional carriers are vying for business, noted Alex Glickman, Gallagher senior managing director and global practice leader, real estate and hospitality. Carriers that returned to markets like Florida following 2022’s category 5 Hurricane Ian relieved upward pressure on premiums.
Shanna Berrien, senior vice president of insurance & risk management at RPM Living, which manages more than 226,000 units nationally, said they saw a 30 percent decrease in the 2024 renewal for property coverage although capacity was flat to a slight increase.
In a growing trend, Glickman said some larger multifamily organizations are taking on a piece of the risk themselves by starting captive insurance companies.
“After year two or three, it’s a very efficient way to manage costs and risk,” she said.
Be Prepared
Property managers prepare customized checklists for their teams. They visit properties several times checking capital projects and assessing future needs. Others, like RPM Living, run tabletop exercises before major storms.
Some owners are installing smart building controls like Runwise, a wireless control, sensor and software platform for heating systems. Leaks can be detected quicker and property managers can respond to problems remotely, said Lee Hoffman, co-founder and president.
Glickman said insurance companies are looking closely at older roofs and windows.
“Don’t be cheap when it comes to protecting the asset,” she cautioned.
Chris Posluszny, vice president, asset management, at FCP, which has a national portfolio of approximately 26,000 apartments, said one of the biggest lessons he and his firm have learned is “control what you can.”
While the portfolio goes as far north as Philadelphia and west to Arizona, Posluszny oversees FCP’s properties in the Carolinas and Florida, where they have assets on both coasts in Tampa and Fort Lauderdale. Hurricanes and flooding pose the biggest threats to their portfolio, he said.
For properties it develops, FCP works with envelope structural consultants to ensure buildings are watertight and can withstand the wind risk of a particular area, Posluszny said.
Some of the main items on his preparedness checklist include ensuring that storm drains and gutters are clear of debris; securing all loose furniture equipment; stocking up on emergency supplies like batteries, flashlights, non-perishable food, bottled water and testing emergency equipment such as generators or sump pumps to make sure they are working effectively.
Posluszny said they frequently use drones for roof evaluations, particularly in Florida or Colorado, to assess hail damage.
“It’s really important to have your contractors on standby ahead of a major storm because they’re going to be in high demand,” he added.
Dan Armendariz, director of asset management at DB Capital Management, which owns 2,134 units in Texas, Utah, Colorado and Nevada, said their Texas properties in Austin and San Antonio have experienced more frequent hailstorms so they also look for roof, windows, siding or property damage with at least three inspections a year.
“We try and predict where we might have issues in the future and then get ahead of that as well by adding in protection or doing preemptive repairs,” he said.
At RPM Living, part of their planning for extreme weather events involves putting more boots on the ground, said Berrien. She noted RPM positioned people from Texas in Florida ahead of Hurricane Ian in 2022. They also have multiple vendors ready during inclement weather.
“We will have up to 10 to 20 third-party vendors ready to go assist depending on the needs,” Berrien shared.
Cerwin Thompson, vice president of facilities at RPM Living, said they begin winter preparations months earlier in places like Texas, which had power outages in February 2021 when severe winter storms caused a deep freeze across the state. By September, they start insulating pipes, stocking ice melt, making sure heaters are working and handling other cold-weather maintenance issues.
Another recent weather change in Texas, especially this year, Thompson noted, has been frequent tornadoes.
“We had a stretch of tornados, which normally don’t hit those areas, I would say within a three-week span,” he said.
The RPM Living teams make sure there are battery backups available for residents and staff to get in and out of buildings should the power go out, and they keep the gates open for vehicles, Thompson said.
While RPM Living and FCP are used to preparing for hurricanes at their Southeast U.S properties, this is the first hurricane season for Universe Holdings, a Los Angeles-based multifamily investment firm that bought a Tampa, Fla., asset in January.
Scott Kurzban, COO of Universe’s property management arm, Global Integrity Realty Corp., said they’re ready and have been planning for wind and rain risks at the site with the team at the 250-unit, Class A Pearce at Pavilion community.
Universe also acquired Mariners Cove, a 226-unit waterfront townhome community in Toms River, N.J., in June 2021. Kurzban said they are spending $1 million rebuilding the bulkheads at the property, located off Barnegat Bay in an area of the Jersey Shore that was hit hard by Super Storm Sandy in the fall of 2012.
On the West Coast, he said wildfire and rainstorms risks have heightened in California. On-site teams and landscapers clear brush and fire-intensive trees for a buffer zone. For Nantucket Creek, which backs up to open space in Chatsworth, Calif., that Universe doesn’t control, Kurzban said they work closely with city officials to be sure those areas are properly maintained.
The rainstorms have created new concerns including making sure roofs are watertight, clearing parking garage drains and grading the property properly so water drains away from the buildings.
Kurzban said they may bring rooftop solar to some properties for resiliency and backup power.
“We have some properties that are very large with a lot of roof space and a lot of parking lot space. With that comes a lot of opportunity to generate power,” he said.
Joanna Frank, president & CEO of Fitwel and the Center for Active Design, said breaking up large, open parking lots with solar roofs generates energy and provides shade as way to mitigate extreme localized heat.
Frank said the real estate industry is beginning to understand the growing risks of climate change to physical properties, including flood, temperature and fire risks.
“What makes it more complicated as an industry is that you can’t just have a one-size-fits-all solution because every asset is going to have a different exposure to flood risk or extreme heat, wind, drought etc.,” she said. “So, we really have to look at it asset by asset.”
Talking Communication
Communicating with team members and residents is important before, during and after extreme weather events, said Berrien. She said links and communication systems are usually specific to each property, but they do have the ability to blast e-mail communications out by region, by property or by state.
After every event, Thompson and Berrian said, they will meet with the different departments to see what went well and what they can improve.
“I’ve been doing this for a long time, and it doesn’t matter,” Berrian said. “I learn something new from every single event. So, it’s ever changing.”
DB Capital, Armendariz said, uses its property management software to send out automated e-mail blasts as well as mass text messages via Key Texting. He said they also call residents, particularly to check on post-storm damage.
Glickman said proper communication is important to the property’s insurance carrier.
“The insurance industry, particularly with multifamily, is highly focused on what type of training are the owners giving to tenants,” she noted. “It’s constant education and the asset management is really responsible for interacting with the on-site property managers. So, the more active that is, the better the outcomes tend to be.”
Emergency preparedness is also good for mental health and is an important part of Fitwel certification for buildings, Frank said.
“If you have that emergency preparedness plan and you’re sharing it with folks and talking about it, it really helps to reinforce trust between tenants and owners of buildings,” she said. “Then obviously trust goes a long way toward brand and perception.”
