CoStar: 27 Percent of Houston’s Commercial Real Estate May Be Flooded
HOUSTON — CoStar Group Inc. has assessed the potential impact Hurricane Harvey could have on the Houston commercial real estate market, with findings reported that 27 percent of the gross leasable area may be flooded. This represents $55 billion in property value.
The commercial real estate analytics firm reports that roughly 72,000 apartment units sit within the 100-year floodplain and are likely to be flooded. A 100-year flood is a flood event that has a 1 percent probability of occurring in any given year. The area of inundation is mapped and referred to as a “100-year floodplain.”
In total, CoStar reports there are 12,000 properties with 400 million square feet of space that fall within the 500-year floodplain. This zone has a .2 percent chance of flooding each year. Only 9 million square feet of space, including 4,000 apartments, are within a designated floodway and most are probably inundated with floodwaters today.
However, 175 million square feet located in the 100-year floodplain, including 72,000 apartment units and 20 million square feet of office space, are likely seeing water incursion today. Another 225 million square feet sits in the 500-year floodplain and is also at some risk of flooding, according to the report.
“Unfortunately, the number of displaced residents could be far larger than current media reports indicate,” says Andrew Florance, CEO of CoStar. “Our property-by-property review of the apartment buildings in the floodplain reveals an outsized share are low to moderate income households, including those in southwest Houston where the bayous have overflowed.”
Of the $55 billion in property value at risk, $16 billion consists of apartment buildings in the 100-year floodplain, says Florance.
Southwest Houston is likely to be the submarket most affected. This highly dense section of Houston is home to more than 66,000 apartment units, of which CoStar estimates that nearly 30 percent is impacted. Within southwest Houston, the Braeburn, Greater Fondren and Sharpstown neighborhoods have the highest number of units that are in the 100-year floodplain.
An additional 5 million square feet of space is under construction within the floodplain, including 3,144 apartment units. This represents about one-fifth of the 25 million square feet of commercial real estate under construction in Houston, which includes more than 12,000 apartment units, according to CoStar. Most of the apartment buildings (comprising 1,170 units) under construction within the 100-year floodplain are concentrated near the Texas Medical Center.
The most impacted office submarket is Greenspoint, which has elevated vacancies after the departure of Exxon Mobil in late 2015. Here, roughly 3.5 million square feet falls within the 100-year floodplain.
Click here to view the map or list of potentially affected properties.
In response to the storm, commercial real estate organizations such as the International Council of Shopping Centers (ICSC) have unveiled plans to help with relief efforts. ICSC aims to raise at least $1 million to help rebuild the communities impacted by the storm. The ICSC Foundation, the charitable arm of ICSC, will match the first $500,000 contributed by ICSC members to the American Red Cross Hurricane Harvey relief effort.
— Kristin Hiller