Rising water levels are profoundly impacting commercial real estate valuations in the Carolinas, not only on the coast but also in mountains.
In commercial real estate, flood resilience measures are not just a contingency plan; they’re becoming an increasingly important strategic investment that can enhance the value of all types of commercial real estate.
Think about it. By implementing flood resistance measures, not only do you protect your property from potential flood damage—you ensure its continuous operation and productivity even during extreme weather events
…And extreme weather is far more common than you think.
Recently, Bojangles, one of the Charlotte Region’s best-known brands, moved its headquarters out of its home for 20+ years into a new 60,000 SF building, primarily because Sugar Creek kept leaving its banks and flooding the Bojangles office. So, Bojangles executives asked themselves, isn’t it time we view flood resilience not just as an extra expense but as an intelligent business move?
Business and government are taking action. Take the city of Miami, for example. The city has experienced frequent “king tide” events in recent years, leading to repeated flooding even on sunny days.
So Miami embarked on an ambitious $400 million project known as the Miami Forever Bond, aimed at making it more resilient to the effects of flooding. Note that it’s not not the effects of “Global Warming” if you want to get legislation passed in The Sunshine State.
But even with state-of-the-art infrastructure and advanced flood resilience measures, Miami may well face a future of chronic inundation that could render large tracts of the city uninhabitable – despite the “Forever Bond”. For many real estate investors, insurers, and lenders this paints a dystopian picture of a once-vibrant city left deserted and slowly drowning under the encroaching Atlantic.
And then there’s New York.
Manhattan was not built for Miami weather. Last week I was in New York when it rained over 3 inches in an hour in Central Park. It felt like a tropical storm—the kind that sends waterfalls through Brooklyn subway ceilings, floods basements, and buoys cars in the streets like rubber ducks.
And with the city constructed mainly on a coastal plain, it’s highly vulnerable to storm surges and sea-level rise.
I asked the CRE investors I met about this vulnerability. I learned that after the devastating aftermath of Hurricane Sandy in 2012, which caused over $19 billion in damages to the Big Apple’s core, the real estate impact lingers heavily in longtime New York City investors’ memories.
A recent analysis found that one in nine residents in the United States is at significant risk of storms that will bring at least 50 percent more water than their local infrastructure can handle—overwhelming the pipes, channels, and culverts that might have met the rainfall records of the past.
Rising water levels are quite literally sending waves through the commercial real estate sector along the coastal areas.
But some of the Carolina region’s biggest flood threats are in the mountains
Surprised? Let’s dive into the deep end of this puddle.
Asheville, though nestled in the heart of the Blue Ridge Mountains and removed from coastal flooding, is not immune to the threat of flood events.
In fact, it is rated on the list of the American Flood Coalition’s cities to watch and is the only one not located near the coast. Asheville’s geography, along with the French Broad River that runs through it and the numerous streams branching off, makes it susceptible to riverine and flash flooding.
Anyone who knows the history of Asheville knows that living near the French Broad has its risks. And with the city’s recent urban growth, there will be devastating flooding in the not-too-distant future.
From the bustling Atlantic coastline to the majestic Appalachian mountains, the Carolinas share more than just a state line. They also share a knack for attracting wet and windy guests.
Last year, Hurricane Ian hit the Carolinas hard. And let’s remember his predecessors: Hurricanes Hugo, Matthew, Florence, and Tropical Storm Fred. We all know that the Carolinas are no strangers to the damp destruction and lives lost due to flooding, not to mention the following hefty cleanup bill.
As far as Government action goes, 2023 was a game-changer. Both North and South Carolina legislators helped CRE owners by investing in infrastructure during the legislative sessions and investing millions in flood resilience measures.
And our client, The American Flood Coalition,(AFC) was an active advisor in both States’ legislatures.
The American Flood Coalition is a non-partisan group of cities, elected officials, military leaders, businesses, and civic groups that have come together to drive adaptation to the reality of higher seas, stronger storms, and increased flooding.
AFC is at the forefront of the fight against flood risks, pushing for practical policies, advocating for increased funding, and offering valuable advice to communities nationwide.
AFC is busy and growing, so they expanded their Washington, DC, office. But they didn’t do it solo, oh no. They enlisted the services of Cardinal Partners.
At Cardinal, we take the position that in commercial real estate, flood resilience measures are not just a contingency plan; they’re a strategic investment that can significantly enhance the value and longevity of your real estate assets.
So, it is good to see our state legislatures taking the issue of flooding seriously. Let’s talk specifics about what the NC/SC legislatures did.
North Carolina’s budget plans to use previous funding to escape the pricey loop of disaster spending. A cool $30 million will go towards fortifying our roads, bridges, and culverts against intense rainfall and paving evacuation routes.
A key part of North Carolina’s flood defenses is the Flood Resiliency Blueprint, which lays out a long-term vision. It pinpoints the state’s watersheds most in need and plans for projects and funding accordingly.
Meanwhile, the South Carolina legislature has been busy. The flood mitigation highlight of their year? The debut of their Strategic Statewide Resilience and Risk Reduction Plan. This plan outlines major flood risks and advises local governments on boosting resilience and adapting to flooding and sea level rise.
Another feather in South Carolina’s cap is its $250K commitment to establishing a data coordination office, which the American Flood Coalition strongly supports, not to mention the whopping $200 million dedicated to land conservation. Who’s a fan of wetland conservation, land buy-back programs, and land preservation with the bonus of reducing flooding? We are!
If you’re interested in bolstering your commercial real estate against the threat of flooding, the team at Cardinal Partners is at your service. Our extensive contacts, knowledge, and resources can provide reliable guidance in enhancing the resilience of your assets.
We can help connect you with the right individuals and organizations, including those at the forefront of flood resilience, like the American Flood Coalition.
Feel free to reach out if you want to safeguard your investments and ensure sustainable operations even in the face of rising water levels. Click the link below to contact us to talk about a plan for your real estate needs.