In a city already brought to its knees by a global pandemic and the resulting economic turmoil, climate scientists at the National Oceanic and Atmospheric Administration are predicting an especially active hurricane season. Warmer ocean surface temperatures and various wind conditions combined will increase the strength and frequency of storms. [1]
The real estate sector has already been disproportionately impaired by the pandemic. Bloomberg Businessweek estimates that 1 in 4 tenants in New York City have not paid rent since March. [2] Residential and retail tenants are struggling to pay rent, and in turn their landlords are struggling to pay mortgages. As companies have implemented work from home scenarios, office spaces have been left vacant.
The real estate sector of the economy also has much to lose from a potential hurricane. In a peer-reviewed study of housing markets, researchers from the First Street Foundation found that New York and New Jersey together have already lost $5.8 billion in relative property values from 2005-2017 due to tidal flooding. [3]
On June 29, First Street Foundation released additional data. They combined decades of peer-reviewed research to assign every property in the contiguous United States a score from 1 to 10 that reflects its flood risk. FEMA currently maintains that 8.7 million properties are at risk. The researchers at First Street found that the actual number of at-risk properties is 14.6 million, over 70% higher than the government numbers. The foundation asserts that “This discrepancy exists because the Foundation uses current climate data, maps precipitation as a stand-alone risk, and includes areas that FEMA has not mapped”. The implications are significant—millions of property owners are unaware of their risk, and many of them are located in the tri state area. This data has been given to top university researchers to further study the effects of flooding on housing markets, low income communities, and use of tax revenue. [4]
We are already seeing the effects of a busy storm season. New Jersey’s Route 287 was flooded on July 6, turning into a “mini river”. On July 10, Tropical Storm Fay pummeled the area with rain and 50 mile per hour winds.
Small businesses renting or managing property were not expecting Hurricane Sandy in 2012 or COVID-19 in 2020. These two extraordinary events show the importance of preparing for potential disaster. Hopefully the struggling economy, and especially the real estate sector, will not have to contend with major hurricanes that make it to the New York coasts this year. However, the likelihood of such an event this summer is certainly higher than the last. As a result, property owners should make sure they are prepared and properly insured.
[1] (May 2020) Busy Atlantic hurricane season predicted for 2020 from National Oceanic and Atmospheric Administration https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020 Accessed July 10 2020
[2] Gopal, P. (July 2020) NYC Rental Market Pushed to Breaking Point by Tenant Debts from Bloomberg Businessweek https://www.bloomberg.com/news/articles/2020-07-08/coronavirus-moves-nyc-affordable-housing-crisis-to-breaking-point Accessed July 10 2020
[3] (August 2019) State by State Analysis: Property Value Loss from Sea Level Rise from First Steet Foundation https://firststreet.org/press/property-value-loss-from-sea-level-rise-state-by-state-analysis/ Accessed July 10 2020
[4] (June 2020) First Street Foundation releases new data disclosing the flood risk of every home in the contiguous U.S. from First Street Foundation https://assets.firststreet.org/uploads/2020/06/FSF-FF-DATA-LAUNCH-FINAL.pdf Accessed July 10 2020