By Joshua Burd
The five-year anniversary of Hurricane Sandy is a stark reminder that some of New Jersey’s most valuable real estate markets are also the most vulnerable.
Frank Romeo knows that to be the case in not only the Garden State, but across the country. His firm, Partner Engineering and Science Inc., provides consulting and due diligence services at sites that are susceptible to storms and other natural disasters, while responding to inspect properties after they have been damaged by a severe weather event.
“For a national client or a bank that has property nationally, in one way or the other, they’re all looking at these precautions,” said Romeo, the firm’s president. “And they’re all looking at taking steps to either understand what the potential (impact) to their asset or their investment could be or to understand how they can better handle the situation on the back end of some sort of natural disaster.”
That potential has been top of mind for Romeo and other experts five years after Sandy, not to mention the recent hurricanes that have ravaged parts of southwest Texas, Florida, Puerto Rico and other regions. Such times can lead to a surge in requests for inspections, inventorying and assessments about a property’s ability to withstand such an event.
Romeo, who is based in the firm’s Eatontown office, said Partner has been active in New Jersey in Sandy’s wake and has also been called to the locations of the most recent hurricanes. For instance, one client in Houston recently engaged the firm to asses some 300 properties after Hurricane Harvey.
And while the demand for weather-related services ebbs and flows — much like the rest of the real estate market — the firm is staffed and prepared for such a response.
“The real estate market itself has ups and downs throughout the year and throughout a number of years, so we’ve become kind of accustomed to moving quickly and assessing large numbers of properties,” Romeo said. “So while it adds volume to the market overall, I think we’re in a pretty good position to handle it.”
Real Estate NJ recently spoke with Romeo to discuss how property owners deal with the aftermath of severe weather events and how they can be prepared for the storm. Below are excerpts from the interview.
Real Estate NJ: Let’s start by talking about how Partner’s services tie into properties that are susceptible to hurricanes and other severe weather events.
Frank Romeo: Our primary focus is environmental engineering and due diligence, and by due diligence, we work for banks, investors and anybody that’s really putting their money into property. From the perspective of relating to hurricane response, we have clients that are either in a position of going under escrow on a property, where they’re trying to place a loan, or we have clients that are looking to place a large sum of money or cash of their own into a property or have recently done so.
So events and natural disasters like this, as you can imagine, cause a great deal of concern about the state or condition of their property following these events.
Especially here in the Northeast, if you look at the prime property, it’s all located pretty close to water. And, of course … there’s no natural barrier like what would be inland to protect from wind or severe storms coming off of the ocean — where they would normally be broken up — if you were 50 or 100 miles inland. There’s not that protection for coastal property.
RENJ: Even though we’ve always been prone to hurricanes and major events here, are you seeing a growing awareness or focus by property owners who are looking to be more proactive?
FR: There are a few things we’re doing. A lot of the national corporations or companies that own property nationally, from time to time, they’ll go through and they’ll inventory their locations for things like the condition of their building systems, (such as) their roof or the condition of their exteriors, their windows. We’ll also do sampling for the presence of asbestos, so they know what they have at the property should an event like this happen.
So let’s say (a bank) has locations in New Jersey and a hurricane comes in and does severe damage to the bank branch. Should they have to go in and do renovations, they already have an inventory of what’s there, what needs to be replaced, what has to be treated as hazardous material if it’s removed and so on and so forth.
In addition to that, we’re working with ASTM (an international standards organization) on something that’s loosely known right now as a wind PML. PML stands for probable maximum loss, and that is a product that they use on the West Coast, in zones with a high propensity for earthquakes, to assess the percentage loss they would experience in something like a 100-year event.
RENJ: And so whether we’re talking about developing these standards or this inventorying process, have clients started to ask for that with greater frequency since Sandy?
FR: The way it works is that they get comfortable with the last event. So the last event was roughly five years ago. There were a lot of funds and a lot of attention allocated to those programs immediately following the storms. Then over the next few years, they’re using their money elsewhere. And then they start to see events like we have now and the interest in doing those things kind of increases.
RENJ: And you’ve seen the practical benefits to being proactive about it.
FR: In the case of multifamily properties, it really helps people get back into their living space quicker than they would have otherwise. If they were surprised by the storm, it would have meant a lot of work to kind of catch them up and understand what’s there and evaluate what’s there. When property owners take these steps in advance of a storm, it kind of adds an efficiency to either the rebuilding or the renovation process on the back end.