Hurricane Ian’s impact on Florida real estate
By Rodney Riley
As Southwest Florida starts to recover from Hurricane Ian, how will the storm impact a real estate development industry already challenged by inflation, labor shortages and supply chain issues?
The short answer: Projects around the state will still get done. But to be successful, they will need to be priced right while reflecting smart planning for continued cost increases.
Certainly, a storm of Ian’s magnitude will have short-term impacts as rebuilding efforts divert labor and material resources from other parts of the state.
But as RSR Capital Advisors prepares to launch development work in the Clearwater Marina District, we expect demand for quality residential and commercial projects to stay strong. It’s been shown over the years that people continue to move to Florida despite the annual threat of hurricane season.
In terms of residential demand, we are seeing a softening in the market due to higher interest rates, as lower- and mid-price buyers get turned off by the prospect of a higher mortgage payment. But we are not seeing that same level of impact at higher price points, where buyers are less rate-sensitive in their buying decisions.
It’s important to note that while the new home market overall is softening, we see no sign of a significant downturn. Here’s a way to look at it, based on our conversations with other industry professionals: Instead of 10 potential buyers waiting for a new home to be built, now there might be two or three, which is still a positive.
And if the new-home market stays in growth mode, the commercial real estate market can also be expected to keep growing, whether it’s more distribution centers for deliveries or new stores for shopping.
As developers plan new projects, they must account for continued cost increases, given that supply chain issues and inflation show no sign of going away anytime soon. Working with quality architects, planners and construction companies is essential, because budgeting has become more challenging than ever.
If there’s any overall good news as the state deals with one of its worst hurricanes in recent years, it would be this: Building standards are working. Again and again, we see photos of Hurricane Ian’s devastation where older structures were swept away while newer structures stood up to wind and flooding.
It’s essential that the state continue this trajectory, which over time will mean that more buildings are constructed to stand up to the worst a storm can offer.
~ Rodney Riley is Principal and CEO of RSR Capital Advisors and has over 30 years of industry experience. RSR is a full-service commercial real estate investment firm focused on investment and development with equity tranches of $5 to $50 million in the United States.