Although flood recovery is just beginning in the Greater Houston area, the economic effects of Hurricane Harvey are expected to linger for several months, according to a report from CBRE, a commercial real estate services and investment firm.
“The outlook for recovery is optimistic, but short-term disruptions are to be expected,” CBRE Head of Research Spencer Levy said. “Available space to house displaced companies, stores and residents—as well as relief workers—is likely to become scarce in certain Houston submarkets, and the rebuilding effort will temporarily fuel a rise in retail sales and additional demand for warehouses in the area from building supply companies.”
According to CBRE, residential real estate was most affected by flooding. However, flooding also affected the commercial real estate market as residents seek temporary housing and materials with which to rebuild homes.
Here are a few ways storm damage affected Houston’s real estate market:
- Flooding affected fewer than 40 of the city’s 1,200 office buildings.
- Distribution of construction materials and retail items is expected to increase while residents seek to rebuild homes and replace damaged household goods, triggering a greater demand for industrial real estate properties.
- Although flooding of retail properties was mostly confined to strip centers in the Kingwood, Cypress and west Houston areas, limited leasing space may hinder new retailers from finding space in the Houston area. However, local retail sales are expected to increase in Harris, Montgomery and Fort Bend counties.
- Nearly 1 in 6 multifamily units were flooded during the storm. As a result of demand for temporary housing, apartment occupancy rates in west, northwest and northeast Houston are expected to increase.
- Hotels across the state could receive $430 million in additional revenue this year as a result of increased demand for temporary housing by displaced residents, emergency personnel, construction workers and staff of federal agencies.
After the storm
Many areas of the Greater Houston area sustained major flooding after Hurricane Harvey made landfall Aug. 25.
- Hurricane Harvey caused between $81 billion and $108 billion in property damage and economic loss for the Greater Houston area.
- Only Hurricane Katrina exceeds Hurricane Harvey as the costliest natural disaster in the U.S. Damages totaled $160 billion after Hurricane Katrina.
- Between 30,000 and 40,000 homes are estimated to have been destroyed in Houston.
- About 105,000 apartments were damaged in the Houston area as a result of flooding.
- About 196,000 single-family homes sustained storm damage in the Houston area.
Source: CBRE/Community Impact Newspaper