Commercial Assessments Begin In Hard-Hit Areas

[IMGCAP(1)]BATON ROUGE, LA-More than 24 hours after Hurricane Gustav came ashore at Houma, LA just southwest of New Orleans, developers and brokers along the Gulf Coast have begun to assess damages to either completed or under-construction assets. The review is mixed depending on when and where the hurricane hit, but insurance companies already are predicting damages will surpass $2 billion.

David Trusty, director of commercial real estate for Gully, Phelps McKey Real Estate in Baton Rouge, says the majority of the city is still without power and many mature trees were downed in the region. “We had 94 mph gusts coming through here and sustained winds in the low 70s, which lasted for two hours,” he tells GlobeSt.com. “You can imagine the impact on the city.”

[IMGCAP(2)]Trusty adds that his project in the Nicholson Corridor, a five-mile stretch on the city’s south side slated for a new urbanism development, took a massive hit with a number of trees falling on some structures. Nearby Downtown structures also were struck. “In the coming days, we’ll take some time to look at it and see how to begin to recuperate,” he says. “Right now, we haven’t been able to really get out and assess the situation.”

E. Renae Conley, president and CEO of Entergy Louisiana LLC and Entergy Gulf States Louisiana LLC, echoed Trusty’s comments in yesterday’s teleconference call, noting a majority of customers in Baton Rouge are without power. “This is the worst storm that’s ever come through Baton Rouge,” she says. Meanwhile, about 700,000 customers statewide are without power due to the storm, she adds.

New Orleans seemed to escape a lot of Gustav’s wrath. “We saw a lot of damage, a lot of trees down,” says Entergy’s Dennis Dawsey, vice president of distribution operations, “but not nearly the type of physical damage in New Orleans that we saw in Katrina. The winds that did come in were significant, not catastrophic.”

By the same token, commercial assets got away fairly lightly in comparison to Hurricane Katrina. In a press release yesterday, Las Vegas-based Pinnacle Entertainment Inc.’s management team says its Boomtown New Orleans property in the West Bank neighborhood and the L’Auberge du Lac Casino Resort in Lake Charles, LA, both sustained minor damage and should reopen later this week.

Matt Schwartz, a principal with New York City-based Domain Cos., says the Preserve, Crescent Club and Meridian in the New Orleans’ Tulane Corridor did fine. “We had absolutely no damage at all,” he reports, adding everything has been well-secured, including from a security standpoint. “Our own people were stopped numerous times by the national guard while they were trying to check properties,” he says. “I’m happy every time I hear about that, that things are tight in terms of control.”

Farther east in Biloxi MS, Drake Leddy, president of San Antonio-based Presidian Cos. Ltd., says the $200-million Ocean Club Biloxi also weathered out the storm. “No leaks, no broken glass, nothing going on with the roofs,” he says about the 120-unit first tower of the 18-acre development.

What helped in that endeavor, Leddy adds, is the tower contains glass windows that can withstand 135 mph winds while finished floors are 28 feet above mean high tide. “Building codes throughout the Gulf Coast have changed fairly significantly in the past three years with the advent of the stronger storms,” he stresses.

Catastrophic risk models from AIR Worldwide Corp. in Boston Risk Management Solutions of Newark, CA show the widespread devastation of the storms. In press releases yesterday, AIR figured onshore property loss at $2 billion to $4.5 billion while Risk Management Solutions estimated residential and commercial losses would be $3 billion to $7 billion. The estimates don’t take into account potential levee damage in New Orleans or potential flooding from additional rainfall.