You are here

Coastal developers are building to beat monster storms

As older structures get wiped out, they're replaced by stronger construction that cushions against the next disaster

BT_20181124_SMCOAST24_3626389.jpg
A resident carries his dog past destroyed homes near Port St Joe, Florida, on Oct 12, two days after hurricane Michael hit the area.

DEVELOPER Jeff Lamkin knew the risks when he paid US$250 million for 63 acres of an island off the Texas coast. But he saw only upside in the quaint little beach town of Port Aransas.

Over the next 10 years he built Cinnamon Shore, a village of luxury vacation homes fortified by the latest hurricane-proof construction methods. Then Hurricane Harvey blasted ashore, leaving behind US$125 billion of devastation along the Texas coast. It was the test every coastal investor dreads. But Cinnamon Shore passed with flying colours.

"To the left of us and to the right of us was total destruction," Mr Lamkin said. "But we had better construction, and so we just held up really well." At a time when climate change is being linked to the rise of monster storms, Cinnamon Shore helps explain why real estate developers are still willing to thumb their nose at Mother Nature, with residential sales along the Gulf Coast increasing 60 per cent over the last five years - almost twice the rate of the nation overall, according to Attom Data Solutions.

Panama City, Florida, ravaged by Hurricane Michael last month, is the latest example of the potential costs, yet developers like Mr Lamkin still say it's worth it. Vacation beach towns like Port Aransas and Panama City are increasingly dependent on new building methods to protect against catastrophic storms.

sentifi.com

Market voices on:

As older structures get wiped out, they're replaced by stronger construction that cushions against the next disaster, emboldening developers to keep investing. Buyers are on track to sink about US$2 billion into Gulf Coast homes this year, based on the mean selling price, according to Attom Data.

That would be up from US$1.8 billion last year, and a 12-year high. Developers aren't deterred by rising insurance rates, which are largely passed along to buyers and renters, or by more expensive building requirements.

A year into Port Aransas' recovery from Harvey, Cinnamon Shore remains Mr Lamkin's most successful beachfront venture, with "solid returns on every level", he said. This year will go down as the project's best yet, with US$40 million in sales for homes ranging from US$750,000 to US$3 million.

On Oct 5, Mr Lamkin's Sea Oats Group broke ground on a second resort in Port Aransas - a US$1.3 billion vacation community on 300 acres of sandy beachfront. After last month's Hurricane Michael, Florida's storm-wrecked panhandle beach towns can look to Port Aransas for a glimpse of what their future might hold a year from now.

Chamber of Tourism president Jeff Hentz, 57, had only been in his job for eight months when Harvey blipped onto the radar screen and started heading for Texas. After a career bouncing between New York and Florida promoting destinations from Walt Disney World to Yosemite National Park, Port Aransas had seemed like the perfect place to settle down.

"Port A," as he calls it, was an underdeveloped beach town within driving distance of 28 million Texans in the middle of a booming economy. Even Florida's coast and New York's Hamptons didn't have that kind of consumer base. With South Texas's warm winters, Mr Hentz envisioned a year-around destination where vacationers could escape to a more authentic, laid-back beach vibe. Sports tournaments, business conferences and festivals could fill the gaps.

When Hurricane Harvey zeroed in, demolishing homes, restaurants, businesses and even Mr Hentz's own office, it washed away all those plans - at least temporarily. He shifted his attention to raising US$2.5 million in public and private funds to speed the rebuilding of Port A. He quickly formed a new plan: "This is going to be the greatest comeback story of all time," he resolved. It seemed unlikely at the time. Town residents who fled before the storm returned to eerily quiet streets. The air was heavy with the stink of seaweed and saltwater. Boats from the harbour had been tossed around like toys.

Even structures that remained standing had to be gutted, with debris piling up into a four-story high heap locals called Mount Harvey.

Mayor Charles Bujan, 74, had been through several hurricanes during his lifetime. He remembered Carla in 1961 and Camille in 1969. But it's Harvey that brings tears to his eyes. He estimates the storm wrought as much as US$1 billion in damages to the small island. " Amid the devastation, residents found an opportunity. Many buildings were destroyed, but they've been rebuilt stronger to help withstand future storms.

The idea of recovery was daunting at first. Tracy Ellwood, a 53-year-old manager at Moby Dick's restaurant, said her friends and family rely on local businesses for their livelihood. "The sooner you fix things and get going, the sooner everybody can get back to work and start to live again," she said.

The Palmilla Beach Resort, started by San Antonio billionaire Red McCombs in 2014, is again filled with vacationers. Its newly established neighbour, Sunflower Beach Resort, remains on track for development with no visible scars from the storm.

A little over 3km away at Cinnamon Shore, sales started picking back up just six weeks after the storm, Mr Lamkin said.

For the 140 structures that weathered the storm, only 20 suffered enough damage for homeowners to even file insurance claims. For Mr Lamkin, Hurricane Harvey was a proof of concept: That with the right building techniques - like doors and windows that can sustain 130 miles-per-hour winds, steel rods and straps that tie down the roof, and base floors elevated above flood levels - it's possible to invest profitably in coastal real estate. Before Harvey, he says, he believed in the hurricane construction codes in theory. "But now I really believe in them." WP