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Milton Brought Up To $50B In Destruction. The Damage For CRE Could’ve Been Much Worse

National Sustainability and Climate
National Sustainability
October 11, 2024 Matthew Wasielewski and Taylor Driscoll

Hurricane Milton ripped across Florida this week, causing tens of billions in property damage, blowing the roof off an MLB stadium and sending a crane plummeting into an office building. 

From Tampa to Orlando, Jacksonville to just north of Palm Beach, Milton cast a wide field of destruction, leaving at least 14 dead and more than 2 million without power. Fitch Ratings estimates that Milton caused up to $50B in insured property losses, and it came just two weeks after Hurricane Helene made landfall on Florida’s Big Bend as the first major storm of what had been predicted to be an especially active hurricane season.

Despite the havoc, many in Florida’s commercial real estate industry were feeling relieved as the clouds cleared Thursday and Friday, mindful that things could have been much worse.  

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X/Tampa Police Department
The Tampa Police Department's high-water rescue team helps a family after Milton passed by the city.

In the days leading up to the storm, models forecast that Milton — which ultimately made landfall as a Category 3 storm with 120 mph winds — was headed directly for Tampa. It threatened to inundate the city’s urban core with up to 15 feet of storm surge and more than a foot of rain, forecasts predicted less than 48 hours before the storm struck Florida. 

But the storm turned east in the hours before it smashed into the coast, shifting its path and ultimately tearing into the suburban pocket that stretches between Tampa and Fort Myers, sparing both cities the worst impacts. 

“We've been on pins and needles for the past few days. Today, we're breathing a sigh of relief,” Jay Caplin, co-founder of investment firm Square2, an owner of several properties in Naples and Fort Myers, said Thursday. 

The shift in path led the storm to suck water out of Tampa Bay rather than push it ashore, but the area still faced destructive winds and a deluge of rain. The roof of the Tampa Bay Rays’ Tropicana Field was shorn off as the storm passed.

Florida Gov. Ron DeSantis had said earlier this week that the ballpark could serve as a base camp for some first responders, but a spokesperson for the team told Bisnow in an email that there was a limited number of essential staff present during the incident.  

“We are fortunate and grateful that no one was hurt by the damage to our ballpark,” the team posted on the platform X, adding that staff would assess the damage to the stadium over the coming days and weeks. 

Houston-based Hines entered into a partnership with the Tampa Bay Rays to build the team a new ballpark in September 2023 as part of its 86-acre site where Tropicana Field sits. The company hasn't broken ground on its nearly 8M SF Historic Gas Plant District mixed-use project but said it would continue to support its partner as it assesses the damages to the stadium. 

“We are devoted to the community and to supporting recovery efforts during this challenging time,” a Hines spokesperson wrote in a statement to Bisnow. Hines has two other projects in the area: a 300-acre master-planned community that is more inland and a 308-unit development in St. Petersburg.

Less than a mile east of Tropicana Field in St. Petersburg, high winds led to a partial crane collapse at 400 Central, a luxury condo tower being built by New York-based Red Apple Real Estate. 

A crane cab and the upper section of the crane mast plummeted from the 46-story tower, with a large section tearing through an office building across the street at 490 First Ave. S., which serves as the headquarters of the Tampa Bay Times. 

“We are grateful that no one was injured in the area, and that the only damage was to bricks and not to people,” John Catsimatidis, founder of Red Apple Real Estate, said in a statement Thursday afternoon. 

St. Petersburg officials had warned Tuesday in a public safety advisory that it wasn't feasible to move the cranes ahead of the expected heavy winds and storm surge from Milton. Officials recommended that anyone near the 400 Central site, along with three other construction sites with cranes, relocate if possible. 

Castimatidis said his project team, which includes general contractor Suffolk Construction, was working with city officials to clear debris left from the collapse. The 415-foot-tall 400 Central tower wasn't damaged in the collapse, he said, and the team was working to restart construction as soon as possible ahead of the project’s scheduled delivery next summer. 

Lincoln Property Co., which owns and handles leasing at the eight-story office building, said it was still assessing the overall damage from the accident. 

“Our primary focus is on ensuring the existing building situation is contained, its operating systems are operable, and the structure poses no risk to surrounding streets or buildings,” the company said in a statement. “Due to the mandatory evacuation order in place at the time, the building was vacant at the time of the incident and there were no injuries.” 

In Downtown Tampa, water crept into the first floors of some of the office buildings overseen by Patty Nooney, the head of Avison Young’s Florida property management operations. 

The buildings, located inside what had been a mandatory evacuation zone, and others in Nooney’s portfolio also suffered roof damage. But none of the damage was severe enough to keep the properties from reopening, she said, provided the power comes back. Only 60% of her buildings had power by midday Friday.

“We've done our initial inspections of properties, but you can't start taking remediation action until such time as you get power. That's the biggest challenge now,” she said.

Tampa Mayor Jane Castor sounded a similar note of relief Thursday. Speaking after surveying the city from a police helicopter, she told the gathered press that Tampa is in “overall pretty good shape” and that “we don’t have extensive damage in our community.”  

Just south of St. Petersburg and Tampa, SVN Commercial Partners Managing Partner Ashley Bloom said the commercial real estate community in Sarasota has also fared better, and the city has largely already gotten power up and running. 

“There was some wind. You see trees down and you see some signs, but there's no devastation,” Bloom said. “The people I've talked to on Siesta Key said it was another big water event. In some regards it's lucky that folks had just prepared, right?”

His firm is marketing and leasing the Fishermen's Village resort in Punta Gorda, which saw more damage from being on the marina. He said its retail component has stayed fairly undamaged, but the firm was still picking up the pieces from Hurricane Helene, which caused them to lose 47 air conditioning units on the property.

“Once we saw this storm coming, we didn't put them in,” Bloom said. “Had we put them in, they would have just been ruined again.” 

In Fort Myers and Naples, cities south of Tampa that were ravaged by Hurricane Ian in 2022, property owners assessing damage after the storm were similarly sanguine. 

Milton’s late pivot south had raised fears that the area would endure a direct hit like with Ian, which caused $109B in damage across Florida, the most in state history. Instead, the storm stayed north of the region, sparing it from potentially devastating damage. 

“The Tampa Bay and St. Petersburg area is one of, if not the, biggest storm surge-prone metro areas in the whole U.S. coast,” Jeff Waters, director of North Atlantic hurricane models at Moody’s, told Bisnow Friday. “Had it taken a different path, there would be a completely different story to talk about here.”

Caplin said his firm's properties in Fort Myers and Naples were barely impacted by the storm, with a few palm fronds littering his properties and his biggest issue being a lack of power. 

“I'm not ready to call victory by any stretch of the imagination. I can only speak to our little pocket of space, but we're happy with the outcome,” he said.

Milton also deluged Orlando as it made its way through Florida before eventually exiting the state near Cape Canaveral before heading out into the Atlantic, and the central Florida city was still managing some flooding brought by the storm Friday. 

Impassable roads have kept Avison Young’s Nooney from being able to deploy staff to some of the industrial properties her team manages, but she said the overall impacts she was seeing across the city were minimal. Roughly 85% of her properties had their power restored before Friday afternoon.

Many companies reported that they made it through the storm with operations mostly unaffected. 

LM Funding America announced it transitioned its workforce to fully remote ahead of the storm, with its bitcoin mining operations continuing. Piedmont Office Realty Trust reported “virtually no damage” to its Orlando portfolio.

UMH Properties said Friday its manufactured housing communities sustained “minor damage” that it is working to repair, but it won't have a material financial impact.

Sunstone Hotel Investors provided updates on its Renaissance Orlando at SeaWorld and Oceans Edge Resort & Marina in Key West, both of which remained open and operational throughout the storm. 

“While both hotels have experienced cancellations, a portion of the lost group business at the Company's hotel in Orlando has been offset by incremental transient demand as a result of the storm,” the update says.  

Milton’s impacts stretched well outside the storm’s direct path and into central Florida’s eastern coast. Hours before Milton made landfall Wednesday night, a cluster of strong thunderstorms that were part of the storm’s weather system kicked off an outbreak of tornadoes in St. Lucie County, north of Palm Beach. 

More than 120 tornado warnings were issued across the state ahead of Milton’s landfall, mostly along the eastern coast, more than a hundred miles from the hurricane’s eye. Six of the storm’s casualties have been attributed to a tornado that tore through a community of modular homes in Fort Pierce, an hour north of Palm Beach.  

Lovie Jones, vice president of Asenta Development and a Tampa resident, said her firm and partners haven't been able to assess all of the damage in the area. But she is concerned about the impact Milton and Helene will have on the construction deadlines and insurance rates on the properties she is working on.

“There's uncertainty right now because we know we already had issues in the homeowners insurance market here, and they hadn't even finished calculating the loss for Helene,” Jones said Thursday afternoon. “Milton is going to be bigger than I think a lot of people realize.”

Like most of the other commercial real estate professionals Bisnow spoke to, Jones was relieved that the impact of the storm wasn't as intense as she anticipated. But she said that as the dust clears and the damage becomes more noticeable, the same frustration and emotions from Helene are setting in. 

“It's going to be tough for us right now,” Jones said. “I don't want people to think because it wasn't a Category 5 that hit that we are not affected by it. Here in Tampa, we are very much affected by it.”

At an apartment complex in Clearwater, hundreds of residents were stranded, leading to a rescue operation that saved more than 500 people. The apartment building wasn't in a mandatory evacuation zone, so many residents stayed put. However, in the early morning hours on Wednesday, many experienced flooding that created chest-deep and, in some spots, neck-deep flooding, the Tampa Bay Times reported. 

The property manager, Infinity BH Property Management, wrote in a letter to residents on Thursday morning that the property would need to be evacuated for the next 24 to 48 hours, but many were skeptical that they would be able to enter their apartments after that time frame, the Tampa Bay Times reported. The complex has seen similar flooding, most recently from Hurricane Helene, after which residents reported 2 feet of flooding from an adjacent retention pond.

Helene brought widespread damage to rural communities along that part of the Florida coast but spared the state’s population centers. It had destructive impacts farther inland, drenching parts of the South that had been seen as protected from climate calamities.  

Helene killed more than 130 people as it tore through Georgia, Tennessee and the Carolinas, devastating towns like Asheville. It is a fate that just days ago Tampa was staring down, but the city was largely spared by what meteorologists call a wobble — the tendency for storms to shift paths as they begin to interact with land before coming ashore.

“In this particular case, the wobble that Milton took was one of those sharper turns to the right, a sharper turn eastward,” Waters said. “That allowed it to be much more clear of a direct landfall in the Tampa Bay area.”

Contact Matt Wasielewski at matthew.wasielewski@bisnow.com
Related Topics: Hines, Avison Young, Moody's, John Catsimatidis, Lincoln Property Co, Major League Baseball, Red Apple Group, Tampa Bay Rays, Fitch Ratings, Downtown St. Petersburg, Jane Castor, Gov. Ron DeSantis, SVN Commercial Partners, Hurricane Helene, Patty Nooney, Hurricane Milton, Jeff Waters, Jay Caplin, Square2, LM Funding America, Lovie Jones, Asenta Development