Rob Rosen and Peter Vilmos Quoted in Orlando Business Journal on Effects of Hurricane Ian and Real Estate Deals
Burr & Forman’s Robert T. Rosen and Peter C. Vilmos recently offered their insights to Orlando Business Journal for its article, Five ways Hurricane Ian's fallout could have a lingering effect on Orlando real estate deals.
The article discusses property damage from Hurricane Ian in Seminole, Orange, and other counties in the Orlando metro area. Commercial and residential real estate sectors are starting to see the effects of Ian’s destruction, with commercial and real estate professionals assessing the long-term impacts.
Peter Vilmos, a construction and project development Partner with Burr said, “The first thing that we're thinking of, and what we're already hearing, is 'what are we going to have to do to [building] codes? In recent years, we’ve seen several storms strengthen rapidly which may create a new wave of building code reconsideration.” He goes on to say, “While it is possible that buildings could be built to meet even higher storm standards, it seems like such construction would be cost-prohibitive. I think some of these municipalities are going to be looking at whether or not it makes sense to build [in certain places],”
He also discussed property insurers and their viability. Insurers are likely to continue to request higher premiums to cover the anticipated higher costs for future catastrophes. If the insurers do not believe they can operate profitably in Florida, they will leave the market. At some point, the State—as insurer of last resort—might face more risk exposure that it can readily fund. “Those are sort of the cascading issues we absolutely will have to wrestle with in the state Legislature and locally for a long time?”
Rob Rosen, a Real Estate Partner at Burr, commented on landlord and tenant issues with insurance challenges, saying, “There's no question that, after an event like this, the first thing insurance companies want to do is raise rates. And that's got to get passed through from the owner to the tenant, by way of increased rents.”
One other area of concern is construction fallout. Rosen said, “It is important to understand that subcontractor teams can be nimble during times such as these and a concern could be construction labor temporarily leaving Orlando. They're portable. They'll start thinking 'well, if I can make more going down to southwest Florida and helping to rebuild there for the next year, then I'm going to do that.”
According to the Orlando Business Journal, “Given Orlando's documented challenges with its construction workforce, an exodus of some subcontractors would, at a minimum, exacerbate issues related to project timelines and costs.”
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