With residents of southeast Texas still reeling from the aftermath of Hurricane Harvey, analysts are working to assess the full scope of the damage on senior housing properties in the area.
Houston has 26,969 square feet of senior housing property, valued at $100,000 per square foot, according to a new white paper from market intelligence firm Reis. All together, the property is worth $2.7 billion.
So how did these senior housing properties fare in the wake of Harvey? The full extent of the damage has not been determined, but for every 1% of property damaged, the cost will be $30 million, according to Reis.
This could be a heavy blow for the many senior housing providers that have established a market presence in Houston in recent years. The city is one of seven metropolitan areas that currently make up about 30% of all inventory growth in the past year, according to the National Investment Center for Seniors Housing & Care (NIC).
A shortage of construction workers, which could be made even worse if Hurricane Irma causes serious damage in the Southeast, is expected to make rebuilding costs even higher in Texas, The Wall Street Journal reports.
The good news is, Houston’s path to recovery is expected to more closely follow that of Hurricane Sandy in New York in 2012, costing $50 billion, rather than that of Hurricane Katrina in New Orleans in 2005, which cost $110 billion, the Reis white paper reports.
Houston is the fourth largest metropolitan area in the U.S. and its broader economic base will aid in its recovery, like New York City’s diverse economy was able to bounce back after Sandy. New Orleans, on the other hand, had a weaker economic base and did not fare as well after Hurricane Katrina.
Commercial real estate in Houston as a whole is expected to see a decline in inventory and occupancy over the next few months, according to the Reis white paper. Vacancy rates will likely fall as well, particularly in apartments, where rent growth could exceed 10%.
Written by Elizabeth Jakaitis