Growing up along the Gulf Coast, commercial real estate developer Jerry Wallace had hunkered down for more storms than he cared to remember. But the ominous warnings preceding Hurricane Katrina in late summer left him fearing the worst — the decimation of entire towns.
When Katrina made landfall Aug. 29, it brought with it wind gusts of more than 140 miles an hour and a 20-foot storm surge, flooding much of the Gulf Coast, including New Orleans and Biloxi, Miss. Like most Americans, Wallace's first glimpse of Katrina's strike zone was caught on a TV screen. Watching the devastation on the big screen from his place of refuge in Savannah, Ga., Wallace instinctively understood the challenge facing the United States: to rebuild the lives and communities caught in the path of the powerful Category 4 storm.
Several days after Katrina passed, Wallace, founder and president of Jerry Wallace Interests located in Destin, Fla., made his way back to the Gulf Coast region to evaluate the damage up close. From there, the developer quickly sprung into action, creating a 40-member coalition of industry professionals to pledge their financial support and expertise.
The effort, Wallace hopes, will bring new development to towns that he characterizes as being “nothing but piles of sticks.” As of late October, coalition members committed to work on $1 billion in projects along the Gulf Coast.
Wallace also has dispatched a team of land planning experts from his company to Long Beach (population of 17,500); Gulf Port (population 71,000); and Biloxi (population 50,644). He fervently believes that the planners will make a difference because smaller cities typically do not have the expertise or staff to tackle such large-scale rebuilding projects.
From his own wallet, Wallace is hammering out the details of a potential loan or grant to the City of Long Beach worth several hundred thousand dollars to be used for restoration before federal monies arrive.
“There are a lot of people who don't know what to do when something like this happens,” says Wallace. “But when I see something that is totally devastated, I can envision what needs to be done to bring it back to life, and I will move forward.”
Wallace is just one of many commercial real estate professionals compelled to help the Gulf Coast recover. These professionals and their companies have committed time, energy and money to fulfill basic needs of food and shelter. They also are working on long-term solutions that will help mend broken lives and reopen businesses.
Here are a few of their stories.
As Hurricane Katrina flooded the Gulf Coast, residents of the region struggled to obtain basic living necessities. Many of them headed to Texas, where they spread out in shelters across the state.
In San Antonio, the Greater Kelly Development Authority, which leases and manages the former Kelly Air Force Base, donated the use of two warehouses and an office building, a combined 1.1 million sq. ft., to the Federal Emergency Management Agency (FEMA) and the American Red Cross for disaster recovery facilities through Jan. 1, 2006.
In just two days, Kelly employees, along with military personnel from nearby Lackland Air Force Base and Salvation Army volunteers, converted the buildings, — dubbed Building 171 — into a central processing area for every evacuee entering the state through San Antonio.
The conversion included reception areas, sleeping quarters, cafeterias and full bathrooms. In the immediate aftermath of the storm, the former Air Force base structures housed 13,000 displaced Gulf Coast residents.
“Once we realized that we were in a massive disaster, we all pitched in,” says Bruce Miller, CEO of the Greater Kelly Development Authority. “A lot of companies think it's enough to have a disaster preparedness plan for something that might happen to them, but it's really important to plan for ways to help others handle disasters.”
Most of the group's 90 employees got involved in the relief effort, and during that first weekend they logged more than 1,600 hours. As of late-October, there were still 800 evacuees remaining in the buildings.
Light in the dark
As Hurricane Katrina brushed past Florida, David Lichtenstein, CEO of the Lightstone Group, started to outline the ways that his company could offer assistance. One of Lightstone's largest assets, the 420 sq. ft. Prime Outlets-Gulfport — sat directly in the hurricane's path — and Lichtenstein began preparing for the worst.
The Lightstone Group couldn't assess the damage of its outlet center for nearly a week after Katrina hit, Lichtenstein recalls. “We couldn't get anybody on the ground for five days,” he says, adding that employees were unreachable and satellite images of the outlet weren't yet available.
In Lakewood, N.J., where the Lightstone Group is headquartered, Lichtenstein and his management team made the decision to continue paying the staff of Prime Outlets-Gulfport their full wages during the mall's closure. “We thought about our employees, and it comes down to the fact that we're in this together,” he says. “When times are tough, we have to pull together.”
Finally, the Lightstone management team chartered a plane to conduct a flyover of its Gulf Port property, confirming the extent of the damage to the center. “We've seen hurricanes come and go, but we were surprised,” Lichtenstein explains. “I don't think anybody really believed that it would be as bad as it was.” Later on, he discovered that employees of Prime Outlet-Gulfport stood outside the center with shotguns to make sure it wasn't vulnerable to looters.
Meanwhile, Prime Outlet — Brazos in Brazos, Texas, pitched in to help out its Gulfport counterpart by collecting supplies. Once the Lightstone Group attended to the needs of its employees, the company decided to help Katrina evacuees find housing after hearing that 500,000 people were displaced.
With nearly 20,000 apartments in its portfolio nationally, Lightstone looked to the closest major market in which it had a presence: Memphis, Tenn. There the company donated 50 apartments in Ascension Towers to homeless hurricane survivors for six months.
“We know that we can't fix everything,” Lichtenstein says. “But from our perspective, it's important to do what we can. As a philosopher once said: ‘It's better to light one candle than to curse the darkness.’”
Most companies in Milwaukee, Wis., worry more about snowstorms than hurricanes. That's not the case with The Towne Group, which owns and operates office, industrial, multifamily, senior housing and resort projects in nine states including Florida.
The Towne Group has experienced its fair share of hurricanes — most recently when three hurricanes slammed Florida last year. With Katrina barreling her way toward the Gulf Coast, the company opted to make use of its considerable resources.
“You can't be paralyzed when something bad does happen,” says Mike Merris, president of The Towne Group. “You have to stand up and be willing to do something to help.”
Initially, the Towne Group planned to adopt a community along the Gulf Coast, but soon realized that the idea wasn't practical because most communities were completely destroyed, and companies and residents had to flee the region. After some discussion, Towne Group, founded 58 years ago by Joe Zilber, ended up donating office space and apartments to a displaced firm from New Orleans, Patient Care.
Patient Care's CEO Jane Cooper had made her way from New Orleans to Milwaukee to wait out Katrina with family. When New Orleans flooded, Cooper and her company, which employed 20 people in the Crescent City, was left with no place to call home or do business.
The Towne Group heard about Cooper's plight. Within days, the company donated the use of 2,300 sq. ft. of office space in one of its Milwaukee buildings to the health advocacy firm for two months rent-free, and at a reduced rental rate thereafter. The company also covered the costs of relocating Patient Care's employees from New Orleans and has donated four apartments in Milwaukee until the end of the year.
The Towne Group has a long history of philanthropy. Under Zilber's leadership, the company recently donated $1 million to develop a hospice in Milwaukee in partnership with Children's Hospital and Marquette University. “We always forget how basically good people can be when given the opportunity,” Merris says. “When the chips are down, I think people, as a whole, are pretty good.”
Providing life's essentials
The professionals of Capitol Development Group also felt a sense of compassion for Katrina's victims, compelling the Atlanta-based apartment owner to play a part in helping put those lives back together.
“As a country we have not experienced this kind of tragedy, and the magnitude of the situation caused us to respond,” says Denise Koehl, asset manager for Capitol Development Group. “We realized that we could all be in the same situation of losing our homes, and we thought about how we would want to be treated if the role was reversed.”
To meet the housing demand, the company decided to accelerate completion of six redevelopment projects by several weeks and quickly prepared apartments for occupancy.
Capitol Development, in partnership with local landscaping firm ProLandscapes Inc. and property manager, the Lane Cos., donated the use of nearly 80 apartments throughout Atlanta rent-free for four months. Together, the companies helped several families obtain household goods to furnish their new homes and even hosted a job fair to help their new residents get back on their feet.
Rebuilding the communities and the lives that were ripped apart by Hurricane Katrina will take many years — maybe even decades. The Gulf Coast and the people who once lived there, however, will never be the same. With the support of people and companies like those highlighted here, Alabama, Louisiana and Mississippi may even build a stronger economy than before, offering a better life for the residents who return.
“It is unimaginable how much damage and destruction has occurred from Mobile all the way through New Orleans, but this entire industry can help bring back income and jobs,” says Wallace.
Jennifer Popovec is a Dallas-based writer.
Industry Organizations Show Their Compassion
Building and Owners Management Association (BOMA)
As of mid-October, BOMA International had donated $72,000 to several national relief organizations. Individual BOMA chapters also have stepped up to the plate. BOMA Chicago, for example, participated in an event held with other real estate associations that raised over $600,000 for Katrina relief efforts that will be donated to the Red Cross.
The Chicago Chapter of CoreNet Global dedicated proceeds totaling $5,000 from its “Viva Las Vegas” event held in late September 2005.
Certified Commercial Investment Members (CCIM)
The CCIM Institute contributed $15,000 to the REALTORS® Relief Foundation established after the 9-11 terrorist attacks on the World Trade Center and the Pentagon. The Foundation, seeded by a $1.15 million donation from the National Association of Realtors, has given nearly $6 million to various organizations.
International Council of Shopping Centers (ICSC)
The International Council of Shopping Centers has established a member locator on its Web site focused on the affected states. Additionally, it is assisting FEMA in locating available space for Hurricane Katrina victims.
National Association for Industrial and Office Properties (NAIOP)
The National Association of Industrial and Office Properties donated $50,000 to the American Red Cross Disaster Relief Fund. The organization also established a matching contribution program, which will match dollar-for-dollar monies raised by NAIOP's 50 chapters throughout the United States and Canada.
National Association of Real Estate Investment Trusts (NAREIT)
Member companies have donated a total of $668,236 to various associations including the American Red Cross, Salvation Army and Habitat for Humanity. Additionally, many REITs have set up employee matching programs for employee donations.
Mortgage Bankers Association (MBA)
Mortgage Bankers Association has contributed more than $160,000 in response to Hurricane Katrina. The organization donated $100,000 to the American Red Cross, while MBA officers and leadership committed $500,000 to Habitat for Humanity International. Additionally, MBA staff contributed $8,600.
Urban Land Institute (ULI)
The Urban Land Foundation is raising $1 million to aid in rebuilding the Gulf Coast region, including providing assistance in planning the redevelopment of New Orleans. This fund was initiated with the stipend from the ULI J.C. Nichols Prize for Visionaries in Urban Development program. Albert Ratner, 2005 laureate of the prize and co-chairman of Cleveland-based Forest City Enterprises Inc., declined the prize's $100,000 stipend and requested that ULI apply the funds a revitalization plan for New Orleans. In addition, the Ratner family and Forest City made a donation of $100,000 to support ULI's work in New Orleans.
— Jennifer Popovec