Houston Commercial Property Owners Start Mitigating Up To $7B In Derecho Damage
When the derecho finished whipping its 100-mph winds through the city of Houston, the damage to commercial buildings didn’t stop.
The storm toppled trees and transmission towers, sent debris flying through the air and damaged windows, walls and roofs. Numerous buildings with exposed, wet interiors sat in 90-plus-degree heat over the weekend, allowing them to bake in the sun and grow mold.
Now, property owners are facing billions in damages, a mountain of cleanup and a timely reminder that hurricane season is right around the corner.
“A lot of people in town are still out of power,” said Jim Cooper, a partner at Reed Smith law firm who represents insurance policyholders. “The problems have not completely subsided.”
More than 2,500 windows shattered in Downtown Houston buildings during the storm that brought winds equivalent to a Category 2 hurricane, according to a survey of 17 property owners or managers. The storm, which is responsible for killing eight people, could have an economic toll of between $5B and $7B, according to an AccuWeather estimate.
Some Downtown streets remained closed today as glass continued to fall. More than 100,000 people were still without power Tuesday afternoon, down significantly from the almost 1 million people who were without it Thursday.
Lots of damage out here by the Hyatt Regency in downtown Houston. An unhoused man told me that he held onto a pole after the extreme winds literally swept him off his feet.
— Lucio Vasquez (@luciov120) May 17, 2024
“It made me wake up,” he said. “I almost died out here tonight.”@HoustonPubMedia pic.twitter.com/KNNxjvxweZ
At least two Downtown towers have agreed to remain closed until May 28 to allow for cleanup and repairs, according to Mayor John Whitmire, the Houston Chronicle reported.
TotalEnergies Tower, a 35-story building at 1201 Louisiana St., was one of the Downtown buildings that sustained a “notable amount” of window damage, Brookfield Properties previously told Bisnow. Other damaged buildings included Wells Fargo Plaza, Enterprise Plaza and the Kinder Morgan Building.
Hines, which owns 61 buildings in the Houston area, said in a statement that a few of its Downtown buildings experienced various degrees of damage, adding it had begun pertinent repairs.
Jason Schemmel, general manager of Paul Davis Restoration of the Space Coast in Florida, was one of many out-of-town commercial restoration experts who descended on Houston following Thursday’s storm. Paul Davis and other companies are offering restoration services that are in more demand than local companies can supply, Schemmel said.
While the cleanup and repair of commercial buildings like the high-rise towers downtown are expected to take months, restoration and insurance experts say property managers and owners need to act now.
“It’s everybody’s duty to mitigate their property from further damage when a storm like this happens,” Schemmel said, adding that often insurance contracts require it.
There are also common law obligations to minimize losses, Reed Smith partner Dominic Rupprecht said. Mitigation can include boarding up windows, checking for structural stability and drying interiors. That could require specialized equipment including desiccant dryers, big dehumidifiers and commercial-grade generators, Schemmel said.
The full impact of the storm may not yet be measured, Rupprecht said, with repairs and loss of electricity still interrupting business. But it is important to let insurance carriers, not just brokers, know as soon as possible of any experienced losses, he said. This, as well as getting a lawyer involved to consult early in the process, can help prevent later disputes with insurance companies, attorneys told Bisnow.
“Insurance companies, in our experience, don’t like paying claims, period,” Cooper said. “There are always ways in which there can be escape from that.”
Some insurance policies have anti-concurrent causation clauses, meaning they won’t cover damages that came separately from wind and flooding in the same claim, he said.
“The devil is in the exclusion supplements, and there are lots of those in these policies,” Rupprecht said.
It’s important to assign a loss to the policy in which owners have the greatest coverage possible and to not speculate about the cause of a loss until it is confirmed, he said. Once a cause of damage is in an insurance record it’s very difficult to undo.
Mitigation of further damage to large commercial properties will take up to a month, and Downtown will likely take three months to get back to normal, Schemmel said.
“There’s no way they’ll get back to normal anytime soon,” he said.
Schemmel is familiar with big commercial cleanup jobs, traveling around the country to tackle them. The last time he was in Houston was during the 2021 winter storm, but he has also responded to tornadoes in Nashville and Oklahoma, he said.
Schemmel has seen a definite increase in severe weather events in recent years, he said.
“We had two derechos within seven days, which is unheard of,” Schemmel said.
Houston is also in for another hot summer and a potentially active hurricane season, which starts June 1, meteorologists say.
While it’s impossible to say whether climate change contributed to a certain weather event, last week’s derecho was “the kind of thing you can expect because of climate change,” Space City Weather Managing Editor and Meteorologist Matt Lanza told Texas Monthly.
“In recent years we’ve seen extreme rains, extreme heat, extreme drought, and now extreme thunderstorms. None of that falls outside the bounds of what’s to be expected in a warming climate,” Lanza said in a Q&A with the magazine.
With winds clocked at 80 to 100 mph within city limits, Thursday’s derecho was the worst wind event that Houston has experienced since Hurricane Ike in 2008.
The storm needs to serve as a wake-up call to those who are unprepared for hurricane season, Lanza said.
