Shopping Centers Today

SEP 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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40 S C T / S E P T E M B E R 2 0 1 8 supplies and relief shipped in," said Freeman. So Kimco, cash in hand, quickly found contractors in San Juan and the surrounding islands to supply building materials. "Quick reaction time is critical in a storm's aermath," he said. Because Kimco has a relatively flat organizational struc- ture, approvals during the recovery process "were just an instant-message or phone call away," Freeman said. Kimco also settled its losses before most of the rest of the industry did. "We were very aggressive in getting insurance adjusters to our properties, signing and approving things on the spot," said Freeman. "Unfortunately, the same didn't happen for other real estate companies." ough Kimco prepared thoroughly, it still hired an outside expert aer the tumult to evaluate its response and suggest improvements. One weakness was post-storm coordination with vendors. "We find that they are usually slow to respond aer a ca- tastrophe, because they're taking care of their own families," Freeman said. "But in Puerto Rico, the problem was multi- plied almost 10-fold. It was difficult to rally the troops." Hurricane Harvey, which dropped rains of up to 60 inch- es in the Houston area, offered more harsh lessons. "What we saw in Harvey were areas that have never been flood- ed before were getting flooded," said Billy Short II, vice president of large loss for North America at FirstOnSite, a Canada-based disaster-restoration firm. "ese included businesses in 1,000-year flood plains and a very large num- ber of ones that weren't in a flood plain at all." SOME TAKEAWAYS FROM THE HURRICANES l About 70 percent of Harvey flood damage was unin- sured. Most centers in the region need to buy National Flood Insurance Program coverage, but owners must realize that there is a 30-day waiting period for new policies, according to Short. l Many nonflooded retail businesses will be unable to reopen right away aer a major hurricane and/ or flood. "In Harvey, the infrastructure around centers wouldn't allow it in many cases, and the centers had no power," Short said. l Commercial property insurance usually does not include flood or business-interruption coverage. l Most business-interruption policies typically require "direct physical damage" as a coverage condition, ac- cording to the Insurance Information Institute. l Supply chains are bound to be disrupted. "With road and port closures, getting new merchandise was a problem right aer Harvey," Short said. It was espe- cially problematic for retailers relying on items from China and elsewhere overseas. Houston ports were s the industry goes into a new hurricane season, retail property owners and tenants have had nearly a year to evaluate their responses to last year's trio of hurricanes, which caused a record $202 billion in damage in the U.S., and $370 billion worth worldwide. Deterrent examples are many, but one overriding lesson is clear: Large segments of the retail industry were unprepared for the worst last year, according to Andy Carlson, JLL's national director for retail in Puer- to Rico, the Caribbean and Latin America. "e lesson is, if you think you have planned for it, you probably haven't," he said. When Category 5 Hurricane Maria struck Puerto Rico, commerce all but ground to a halt, with 90 percent of the territory's electrical grid destroyed. Home life in that U.S. territory became a "disaster," Carlson says. "People had no food and no air conditioning, and the shopping center be- came a clearing house for information," he said. "Walmart and Kmart set up huge lounges for them." Hence, centers need to prepare to resume business as soon as possible — and not just for economic purposes, notes Carlson. "It's important to have a place where residents can charge their phones and use the Internet and get a hot meal — things that bring back a bit of normalcy and get your people working again." JLL created a systemwide RedFlag Alert System a few years earlier, enabling employees and tenants to manage crisis communications and alerts in a mode of their own choosing aer a major storm. RedFlag helped save time in locating workers last year, says Carlson. JLL has since added a corporate-communications portal for even swier connections with personnel. Kimco Realty, which has seven centers in Puerto Rico, exercised pre-event protocols, prepping for high winds and flooding and putting vendors on standby, then stationing security guards at centers with enough supplies to hunker down for a week. "at was very useful, because they were our only eyes and ears out there," said Christopher Free- man, Kimco's senior vice president of property manage- ment. Stores that were able to quickly reopen usually did so without power and water and were forced to conduct cash transactions under the illumination of large flashlights, he says. Kimco managers in San Juan had to hold conference calls with statewide corporate decision makers late at night near the island's one functioning cell tower, because resi- dents were swamping the area during the day. "Hurricane Maria was literally the perfect storm because it was out in the middle of the ocean, and it was extremely difficult to communicate with the mainland U.S. and to get A

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