'Catastrophic' Hurricane Helene Threatens $426B Of Commercial Property

Hurricane Helene is bearing down on Florida’s southwest coast, expected to strengthen into a sprawling Category 4 storm when it makes landfall Thursday night and have a devastating impact on a wide swath of the Southeastern United States.

Evacuation orders have been issued for several Florida counties, with the eye of the storm projected to slam into Florida's Big Bend region as it begins to carve a path north through Georgia, Tennessee and the Carolinas.

Helene is projected to cause between $3B and $6B in insured losses, according to a post from Gallagher Re, a provider of reinsurance. Moody’s estimates that 161,849 commercial buildings with an estimated value of $426B are in the storm’s path.

This year’s hurricane season started with dire predictions of more dangerous storms than usual, but then no hurricanes formed for two months, leaving some to question the forecast. But meteorologists have been warning that the U.S. was not yet out of the woods, and Helene is expected to cause catastrophic flooding and an "unsurvivable" storm surge, according to the National Hurricane Center.

The storm’s impact could surpass that of all this season’s previous storms, Chris Lafakis, a climate economist for Moody's, said in a statement. 

“Helene has the potential to be the most severe storm in an otherwise quiet hurricane season, surpassing the economic impact of Francine, Beryl and Debby on the merits of its intensity and the projected location of where it will make landfall,” Lafakis said.  

The NHC is warning that storm surge could reach higher than 20 feet in the Big Bend, which stretches north from Tampa to just east of Tallahassee. In the Tampa Bay metro area, where more than 3 million people live, storm surge could reach up to 8 feet, which would inundate many coastal communities. 

Helene is taking a similar track to Hurricane Idalia, which struck Florida’s Gulf Coast last August as a Category 3. Idalia brought 4 feet of storm surge to Pinellas County, which includes Clearwater and St. Petersburg, flooding 1,500 homes. 

But Helene is a larger hurricane that’s expected to impact a broader area that could include Nashville and Atlanta as it punches inland. 

Moody’s estimates that retail buildings are the commercial assets most exposed to Helene’s drenching rains and peak winds expected to exceed 100 miles per hour. 

The research firm counted 61,451 retail properties in the storm’s path along with 35,179 office buildings, 33,606 apartment properties, 28,703 industrial assets and 2,910 hotels. 

“While we are not in the summer peak tourism season anymore, the storm has the potential to upset the Big Bend Coast’s tourism industry,” Lafakis said.

The storm could upend an already vulnerable insurance market that has seen rapidly increasing costs, in some cases doubling in recent years. 

Developers and brokers in South Florida have recently told Bisnow that rates were beginning to stabilize compared to recent years in the state where residential rates lead the nation. But a powerful storm with heavy property losses would likely upset the precarious property insurance industry nationwide, which the Urban Land Institute said has already put rates at "crisis levels."

The cost of insurance today has already scuttled CRE deals, and an uptick in prices could erase much of the benefit to the commercial real estate industry from the Federal Reserve's interest rate cuts.

Helene’s eye is currently traveling west of Tampa, where it’s expected to continue to strengthen as it feeds off the unusually warm waters in the Gulf of Mexico. The worst impacts to the Tampa Bay region are expected to begin this afternoon as the storm passes by ahead of its expected landfall east of Tallahassee as a major hurricane this evening. 

The weather system is expected to track northward through Georgia, passing over Atlanta as a tropical storm before its remnants linger over the Nashville area. 

Florida Gov. Ron DeSantis has declared a state of emergency across 61 of the state’s 67 counties ahead of the hurricane's landfall. Tropical storm wind conditions are already lashing Miami, which wasn’t included in the governor’s declaration, and tropical storm warnings stretch through Florida, Georgia and South Carolina.

Meteorologists are also sounding the alarm about possible landslides in the southern Appalachian mountains, affecting cities like Asheville, North Carolina. 

“This has the potential to be an extremely rare event with catastrophic flash-flooding that hasn't been seen in the modern era, with major to record-breaking flooding likely,” the National Weather Service in Greenville-Spartanburg, South Carolina wrote. “Numerous landslides are expected in the mountains, with a few large, damaging landslides/slope failures.”

School districts across Florida and Georgia closed on Thursday and Friday, and many roads across the Southeast were already flooded early Thursday afternoon. Helene could also create tornadoes, with Savannah and the South Carolina coast the areas most at risk of cyclones, The Washington Post reported.

DeSantis has activated the Florida National Guard and state officials are helping to coordinate the pre-positioning of around 18,000 utility workers to be deployed against what are likely to be widespread power outages.

Several communities along the western Florida coast are under mandatory evacuation orders, with Wakulla, Franklin, Taylor and Leon counties, which includes Tallahassee, ordering all residents to leave ahead of landfall. 

“This is a very big storm. You're going to have impacts that are far outside of what a spaghetti model would have or what a cone would have,” DeSantis said at a Wednesday press conference in Tampa, the local NBC affiliate reported.

This is a developing story.