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PHOENIX-Building owners have become more security conscious, tenants have reassessed their expansion options and lenders have started to require terrorist insurance on large projects in the year following the terrorists attacks on the World Trade Center and Pentagon.

“Sept. 11 was the icing on the cake in solidifying this cautious approach,” Stein Koss, with Phoenix’s Lee & Associates Arizona, tells GlobeSt.com, referring to the effects the attacks have had on the region’s real estate market. For what’s happening in Manhattan, click here

Koss says both buyers and sellers have become more cautious about real estate investing since the twin disasters even as mortgage prices dropped to new lows. “Sept. 11 created a lot of doubt in the investment arena,” he adds. “Owners are cautious about selling because they don’t know where to put their money. And the stock market, coupled with Sept. 11, has created a wait-and-see attitude among tenants. If there’s any risk involved, many are opting to remain in their existing location” rather than expand operations.

In a move occurring in cities throughout the nation, buildings and large public venues have revamped security and evacuation plans to better deal with disasters. “I think everyone has got a much higher focus on security than we did a year ago,” Jim Mertz, director of asset services for Cushman and Wakefield of Texas Inc. in Dallas, says to GlobeSt.com.

In Dallas, the city’s largest building, the Bank of America, was evacuated following the attacks. Mertz says building owners have since reassessed their security options and developed plans better suited to deal with the risks.

“The reality is, if you’re a building owner, how can you prevent an airplane from flying into your building? You can’t,” says Mertz. “But you can take the threats you can do something about and build a security program around those threats and make sure your evacuation plans are up to date and ready.”

Evaluating a building’s security plans differs with each structure, he says. Larger government buildings, arenas and public facilities require greater scrutiny while smaller properties may simply need to update existing security measures.

The terrorist threat also has created a need for terrorist insurance for larger projects, Mertz emphasizes. Lenders now require many builders to take out the specialty insurance before they can get a loan at rates that Mertz estimates could add 20% to 30% to a builder’s insurance premium.

On smaller projects, security is a concern as well. Jackque Chilton, a property manager with CB Richard Ellis Inc. in Phoenix, tells GlobeSt.com that the effects of the terrorists’ attacks coupled with a tumbling economy have created an acute awareness of security among tenants who have seen a spike in burglaries and robberies. “What we’re seeing is that tenants have become more aware of their surroundings,” she says. “Now, if they see something suspicious, they will call” the police or the property manager.

One positive effect of the disaster, however, has been that tenants are now working together to solve common problems, Chilton says. “There’s been a community effect,” she notes. “Tenants are communicating more than they used to.”

But with the anniversary of the attacks, there remains some apprehension among owners and tenants. “Like everyone else, we’re just holding our breath as we go through this first anniversary and hoping we go through it without incident,” Mertz concludes.

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