Hurricane Harvey’s Multifamily Impact

Industry experts weigh in on what the effects of the storm mean for Houston, its residents and the market as a whole.

Houston wind damageThe devastation of Hurricane Harvey has destroyed approximately 100,000 homes, with 15 percent of the multifamily stock being wiped out. With many families being displaced and in need of shelter, the multifamily community is working on assessing damage, beginning reconstruction and getting operations back in working order.

Assessing Damage

When dealing with a natural disaster of any kind, the first thing on any operators mind should be the safety of residents. In order to overcome natural disasters of this magnitude, multifamily operators need to remember one key element: speed. According to Michael Knight, vice president of operations for Better World Properties LLC, owners and managers need to act quickly in order to keep their properties running. “You have to get back up and running quickly. The longer you wait, the more your residents will move onto other communities, you’re going to stop making money and you will get left behind.”

Although situations like these need to be handled quickly, that doesn’t mean they should be handled sloppily. Knight explained that owners shouldn’t take the easy way out and pretend to fix problems, such as putting up sheetrock on walls before they are completely dry or not fixing apartments fully before residents come back. “You can’t just mop up the water and call it done. Some people don’t appreciate the magnitude of something like this and how much of a larger impact it presents.”

With 25,000 units scheduled to come online this year in Houston, many are skeptical as to if these communities will be completed or not. For families displaced due to the Hurricane, the housing shortage is the highest priority to deal with. According to Jeff Adler, vice president of Yardi Matrix, the struggle will mainly be at the lower end. “High-end single-family homes and luxury properties have sucked up all the availability, leaving the only options available at $1,300 to more than $2,000 per month. Most of the people impacted are those in the low economic scale, leaving them to double up with other families because there are no other housing options. Things are still chaotic. But the multifamily industry in Houston is strong, large and well run.”

Rebuilding

Once communities are fully assessed and the time has come to rebuild, there are several key elements that come into play. Susan Golden, partner at Venable, explained that in order to begin construction, federal recovery grants typically require public participation in the planning process, environmental and historic preservation review and consideration of future resilience and sustainability. Planning for rebuilding in a wide area requires extensive coordination across multiple levels of government and a long list of private stakeholders.

“The design of new coastal protection measures or rebuilding resilient water, power and telecommunications infrastructure has regional implications and is likely to involve both government and private owners. It is critical to establish a framework for diverse entities to work together,” said Golden. “At the hyper local level, consider the cumulative implications of construction workers and trucks descending on a single neighborhood in which many properties are being restored all at once. Coordinated logistics management would help avoid the otherwise inevitable congestion, delays and disputes.”

 Funds for Harvey

Several multifamily companies are coming together to provide relief during this difficult time. The Lennar Corp., along with its subsidiaries, pledged $1 million to the United Way of Greater Houston Flood Relief Fund. As of this week, the company also raised another $333,000 by associates and will be matched by Lennar.

Our hearts go out to people in communities across the Houston area who have been impacted by the severe flooding from Hurricane Harvey,” said Stuart Miller, CEO of Lennar, in a prepared statement. “Lennar associates across the country are eager to help and we will match their contributions dollar-for-dollar above and beyond the initial $1 million donation. It’s our hope that this pledge will help alleviate the stress so many are feeling and help them return to the safety and comfort of their homes.”

Berkadia is donating $250,000 and raising additional funds from team members at other offices across the country, for organizations like the Red Cross Hurricane Harvey Relief Fund. The company has spent time with affected families and has assisted in shelters and with donations.

“Personally, I spent several days last week helping evacuate flood victims via boats as well as my family members and other Berkadia employees working in shelters, donating clothing, food, etc., to provide a helping hand with even some of the most basic necessities,” said Tucker Knight, senior managing director for Berkadia in Houston.  “I am not alone here, it has been great to witness the city band together to help others through the largest natural disaster in U.S. history.  I just hope the city and its citizens can get back on their feet quickly but I feel it is going to be a long process.”

Waterton is donating $50,000 to the American Red Cross from its corporate office in Chicago. In addition to the donation, the property management teams at both of the company’s Houston-area properties–Haven at Eldridge and Villas at Hermann Park–are utilizing Message Center and social media on a daily basis to communicate area updates, warnings and conditions to residents and followers.

“Waterton has organized an opportunity for its Dallas properties, Parkside at Firewheel and South Side Flats, to donate clothing and household items to Houston-area victims, and is encouraging residents at their two Houston communities to use this time at home to gather items for donation,” said Lela Cirjakovic executive vice president of operations at Waterton. “The company sent out a list of more ways to help—best places to donate across a variety of causes, volunteering, fostering displaced animals and more.”

Although this disaster presents obstacles ahead, those in the industry share a positive outlook for Houston and the residents. Working as one has proven to move things along faster and relief is out there for those in need. Pushing forward is what keeps Houston strong and will continue to be a source of comfort for those involved. 

Images courtesy of Better World Properties LLC