Unlike the 9-11 attacks, SARS outbreaks or Hurricane Katrina, the avian flu threat has steadily crept into the public consciousness in recent years. Ever since the virus started making its way through poultry populations in Asia in late 2003, media reports have broadcast ever-scarier assessments of how the potential pandemic could have deadly consequences.

The World Health organization (WHO) now warns that a virulent strain of the human-to-human H5N1 virus, so-called bird flu, could develop in coming months. The WHO claims that the world is closer to a virulent flu pandemic than it’s been since the late 1960s. If it strikes the U.S., the Congressional Budget Office estimates it could cost as much as $675 billion. Just today, in fact, the Bush administration released a plan for coping with a health crisis that it estimates could sideline as much as 40% or the workforce and kill up to 1.9 million Americans.

So, with all this warning, is the commercial real estate industry prepared? Office buildings, warehouses, retail centers and other commercial spaces could be emptied out by such an outbreak. If business grinds to a halt, what will happen to obligations of office tenants? What rules will govern continuing operations of commercial spaces? Will some buildings — hotels, for example — be targets of quarantine orders?

These are hard questions. Many will remain unanswered unless the bird flu mutates into human-to-human form and begins spreading. But risk managers still advise building owners, managers and tenants to closely review their disaster preparedness plans and policies. One question that all companies should ask themselves, according to risk and insurance services firm Marsh, is simply: “Will my plan work with fewer people, losing certain critical people or having staff working from remote locations?”

With this in mind, the Building Owners and Managers Association (BOMA) issued guidelines in February for keeping office buildings open in the event of avian flu. Recommended measures include establishing sick tenant protocols such as monitoring all tenants for symptoms, setting up sanitization stations in lobbies to screen employees and visitors, creating contingency plans for operating properties with skeleton crews and possibly quarantining entire floors. (For a full copy of the report, visit the BOMA Web site)

Several Asian and Canadian office buildings were quarantined by officials during the 2002 SARS scare. For several weeks, in fact, building personnel and medical officials weren’t allowed to enter these buildings without donning protective suits. And, unlike using a Geiger counter to detect radiation, influenza is an aerosol infection consisting of tiny droplets that are incredibly hard to detect.

“I think that the Avian Flu will be less problematic because of changes that have already been made at many companies that set up contingency plans and systems years ago,” says Dale Anne Reiss, global director of Ernst & Young’s real estate, hospitality and construction group.

“Most global firms have back-up systems in place that didn’t come in handy after Y2K, but did after the 9-11 attacks,” says Reiss, who says that many companies (including Ernst & Young) prepared for Y2K by leasing back-up office space in separate power grids outside of Manhattan. Other firms such as Japanese investment bank Nomura Securities — which still occupies space in lower Manhattan’s World Financial Center — fell back on several million sq. ft. of northern New Jersey backup space after 9-11. That Parsippany office space was leased before Y2K.

For this reason, risk managers caution that contingency plans shouldn’t be narrowly tailored to specific catastrophes since it’s impossible to predict the severity of any given event. Some general guidelines for building owners and managers are still suggested. For example, the BOMA report also advises owners and managers to devise ways for critical staff members to work offsite in the event that officials have quarantined the entire building.

Satellite phones and voice over Internet protocols (VOIP) are two technologies that enable workers to communicate while avoiding face-to-face contact. Remote monitoring devices that control a building’s critical systems do exist, but it’s difficult to operate a large commercial office tower remotely for long periods of time. Today’s White House bird flu “implementation plan” says that the Centers for Disease Control (CDC) is unlikely to use forced quarantine except under “unusual circumstances.” The reason, according to the report, is that the flu can be transmitted before infected people look or even feel sick. Thus voluntary quarantine — where people stay home if they are ill — makes more sense.

Another frightening thought is that building owners and managers aren’t necessarily in the clear once a pandemic has abated. They’ll still need to scrub their facilities clean so that scared tenants are willing to return to the property. OSHA guidelines dictate that tenants are legally entitled to break their leases if their building is deemed hazardous. To that end, most office leases also contain so-called “Quiet Enjoyment” clauses that explicitly require landlords to ensure that the space isn’t hazardous. Business interruption insurance would likely kick in to help a landlord whose jilted tenants refuse to return and pay their rent. But not all landlords have business interruption insurance, and many carriers require that several months without income must pass before they are willing to send money.

After the 9-11 attacks, several office tenants on the higher floors of Empire State Building attempted to use the “Quiet Enjoyment” clause to break their lease —their contention being that the high-profile building was vulnerable to another attack. None of them successfully broke their lease on this basis, but it’s not too far fetched to imagine tenants playing up fears that pockets of bird flu remain trapped inside their building’s HVAC system or bathrooms. In such cases, the overall cleanliness of the building would be scrutinized. “In any building, the first line of defense against any virus is on surfaces like doorknobs, keyboards, bathroom sinks and elevator panels,” says Stephen Marshall, safety director at Manhattan-based janitorial firm Harvard Maintenance Inc. Not only does Harvard routinely clean 65 New York City office buildings, but it also cleans both Yankee and Shea stadia.

Marshall has stockpiled latex gloves and plastic goggles for his cleaning crews. The gloves and goggles would protect his janitors while spraying anti-microbial disinfectants, a service that he believes many buildings would need in the event of an outbreak. The same disinfectants have been used in New Orleans, where winds from Hurricane Katrina left many buildings exposed to the elements for weeks on end. The exposure also left many infested with toxic mold.

“We’re telling our building managers that they may need to set up Purel [an instant hand sanitizer] stations in their lobbies so every tenant and guest washes their hands before going into the building,” says Marshall.