Property managers rally in the face of real crises

Three property professionals tell how their preparedness plans were put to the test

by John Salustri — Originally published in the September/Octobert 2019 issue of BOMA Magazine

Let’s face it. No building manager can be fully armed against all risk to life and business at all times, unless they work in a fortress—and who wants to work in a fortress? Yes, there will be times when they’ll be caught off guard. Then, every event becomes a learning experience, costly though it might be, informing the recovery strategy for the next time. And, there’s always a next time.

It’s one thing to have a preparedness plan on paper. It’s another to put that plan into action. Here’s how property managers coped through days no one wants to experience.

SHAKEN INTO ACTION

“The earthquake hit at 3:20 on a Sunday morning,” recalls San Francisco resident Shayna Eskew, regional director of Alhouse Deaton Property Management. “It would register 6.0 on the Richter scale,” and, ultimately, cost as much as $1 billion in damages, one life and roughly 200 injuries. “There’s this moment, and then it all stops. We assessed our surroundings. Everything seemed okay, and I went back to bed.”

Eskew is frank, explaining that as a lifelong Californian, she grew up with quakes: “Being the veteran that I am, that was a big miss, but at 3:20 in the morning, you’re not thinking clearly.”

Eskew, who was working for another property management firm at the time, didn’t “miss” for long, and got on the internet to discover the epicenter of the August 2014 quake wasn’t in San Francisco, but an hour north, in Napa, where she then managed a 200,000-square-foot medical office building. “I turned on the news and saw a reporter standing in front of one of my buildings. I immediately took off for Napa to assess the damage, making calls the entire time in an effort to get as many resources as possible and start the notification chain,” she recalls.

Unpredictable though they may be, earthquakes are frequent occurrences on the West Coast, so the San Francisco Department of Building Inspection has instituted a Building Occupancy Resumption Program (BORP). Created in conjunction with BOMA/San Francisco and other industry groups, BORP “is an action plan on steroids,” says Eskew. BORP dictates, among other things, that all players key to recovery, including structural engineers, be contracted in advance “to respond so you can get the building back to occupancy as quickly as possible.

“We already had relationships and contracts in place, so when it hit, we had structural and mechanical engineers and cleaning crews that jumped in that day,” she continues. “We were among the first in line.”

Throughout the United States, buildings unfit for occupancy are red-tagged by the local government. “When the City of Napa building inspectors came to our building to do their own assessment, we could tell them with confidence that the building had already been assessed. We gave them the report and they were able to move on to the next building,” explains Eskew.

But, situations were not that cut-and-dried. The building sustained roughly $500,000 in damages, including “flooding caused by wrenched copper tubing in many of the [variable air volume] VAV boxes,” she says. “And, we had broken glass everywhere. There was a pane of glass that was probably 20 feet square over a walkway. It shook from its frame and practically bounced onto a walkway. If this hadn’t happened at 3:20 am, we’d have a very different situation.”

Business continuity is always a concern, but first comes life safety. “The first priority was to make sure the building was safe,” notes Eskew. “It was a medical office building, and doctors were expecting patients the next day. We reached out to all of our tenants to make sure everyone knew where we stood.”

Communication is key, as is doing it quickly and as often as necessary. “As soon as we assessed the damage, we sent out messages to everyone, and updates whenever it made sense to do so,” she says. “We knew the building wasn’t going to be red-tagged by the city, due to our ability to get an early structural assessment, but we still needed to clean up as much of the debris as possible. So, we closed the building for about 48 hours before we let the tenants come back to start the process of figuring out how they were going to handle their individual offices.”

In terms of advice to other managers, Eskew advises: “As you respond to a disaster, don’t forget to bring chargers for your cell phone and laptop. You’ll find you’re on the phone nonstop.” In addition: “Be aware of how your leases will play out. Many standard leases allow for restoration to be covered by the tenant. But, others include language that makes the landlord responsible, and it’s not always obvious until faced with a real loss like this one.” She also recommends making sure everyone’s insurance is in place “pursuant to their lease.”

Finally, develop relationships with your recovery resources, including local authorities. “They should all be familiar with you and your building,” says Eskew. “As a result of this earthquake and other emergencies we’ve withstood, I keep them all on speed dial.”

THE PROOF OF PREP

In August 2017, Hurricane Harvey made U.S. landfall in Texas as a Category 4 storm packing 130 mph winds and dumping more than 60 inches of rain in what has been called the wettest tropical cyclone in U.S. history. It left 68 people dead and $125 billion in damages in its wake.

“The building I was stationed at is near Buffalo Bayou,” says Houston-based Mike Short, regional director of Operations for Stream Realty Partners (see “A ‘Living’ Plan for a Changing World,”). “Once that washed over the road out in front, there was no stopping flood waters from getting in, and there weren’t enough sandbags to stop it. This was a pure flood event.”

But, of course, they had the sandbags. Everyone did. In Houston, when hurricane season rolls around, “everyone is on high alert,” he notes.

Which for Stream, meant stocking up early on critical supplies—everything from plywood to food, and, yes, sandbags and flood dams. Short says the firm also planned for fuel pods for employees at strategic places around the city. “When power goes out,” he explains, “gas stations are out of business.”

Much as Shayna Eskew recommended, he explains, “Managers also review the properties’ insurance policies, as well as hurricane-related procedures and all employee roles and responsibilities.”

As the storm built offshore, adds Short, “We discussed logistics, such as where critical employees would be located around the city.” Alerts also went out to tenants, advising all but critical personnel not to be on-site. “Everyone was encouraged to stay home with their families.”

And, then, with preparations in place, they waited.

At the time, three local buildings in the Stream portfolio were impacted by Harvey, all due to flood waters; of them, Short’s 369,000-square-foot office building was hit hardest. Due to its proximity to the bayou, his building took on six-and-a-half feet of water, all sub-basement or parking-level flooding. “There’s always some envelope intrusion with wind and rain pounding on the building,” he says, “and, before we allowed tenants back in, we had our disaster recovery contractors do indoor air quality testing. But, above grade, there was nothing major.”

Below grade was a different story, with damage to building equipment and structural weaknesses totaling about $7 million for Short’s asset alone. “It could have been a lot worse,” he states. “But, this was bad enough.”

His advice for other property professionals is simple: “Have a good, strategic logistics plan in place. Within five days, we were able to get critical tenant employees to their offices to remove equipment for their use off-site while we finished restoring the building. By day 11, our critical equipment was back in place and the building was fully online.”

Indeed, that plan proved itself. For the next 18 months, Short adds, it was “business as usual” as far as the tenants were concerned, while the management team and their contractors finished restoration.

Despite Houstonians’ high-alert status come hurricane season, lessons were still there to be learned. “Tropical Storm Allison [2001] hit downtown Houston,” Short recalls. “Hurricane Ike [2008] brought more coastal flooding and wind damage. With the current weather model technology that’s available, it’s easier to predict where storms will make landfall. What’s unpredictable is the overall damage they can cause. So, we tweak our plans every year and adjust accordingly.”

THE UNTHINKABLE BECOMES REALITY

Reports of active shooters are occurring with staggering frequency.  When it happens to you, the reality of this threat drives home. It happened to Lynn Berger, director of Property Management at Liberty Property Trust, at one of the REIT’s warehouse/distribution centers. Due to a variety of sensitivities surrounding the incident, certain details have been excluded from the following narrative. But, the impact of the incident on Liberty’s preparation strategies is here in full.

“The situation lasted for several hours,” says Berger, “and, sadly, it resulted in multiple casualties. The building we’re talking about is a multitenant industrial property, situated in close proximity to a user-owned facility, and that user was also a tenant in our property, creating a minicampus comprising their own building and a portion of ours.”

TRIPLE-NET CHALLENGES

That configuration, Berger says, coupled with the fact that these are triple-net leases, presented certain challenges to the Liberty team. “Although the incident occurred during normal work hours, we don’t have on-site personnel at the property. So, we didn’t have Liberty eyes and ears on the ground and had to rely on contact with our tenants and on media coverage, which escalated to national cable news coverage as the situation continued. So, our information on what was actually occurring and where was vague and sometimes contradictory.”

These challenges impacted the team both during and after the incident. “Of course, the first rule of preparedness is to make yourselves available to the authorities, and being on-site might have made that easier,” notes Berger.

On the other hand, “in these situations, it’s just as important to support first responders by not getting in the way. As property managers, we’re hard-wired to want to jump into action when our tenants may need help, but, sometimes, you have to do that from a distance and just accept it.

“Nine hours after the incident,” she continues, “local law enforcement contacted our property manager to let us know the property was being released and tenants could return. Our challenge then was reaching our local contacts and offering whatever assistance we could, while being sensitive to questions, since we didn’t have any additional details other than what law enforcement had provided in their public statement.”

Not surprisingly, then, it was impossible to deal accurately with the press, especially “without getting ahead of the tenants and the authorities,” recalls Berger. “For example, we didn’t know for sure until the event had concluded that it had actually happened at the property we own as opposed to elsewhere in the vicinity. So, although the press was calling to confirm the location of the incident, we couldn’t respond accurately. Our local property management team and our corporate communications team actively monitored news sites, including social media, for information, but per our crisis communications plans, we always defer to authorities on the scene to release information.”

The details of such incidents can defy perfect preparedness plans. Nevertheless, Liberty management has refined its strategy based on lessons learned:

“First, know your tenants,” Berger says. “They’re your eyes and ears on your property. Despite the fact that they were experiencing a traumatic situation, our tenants provided us with valuable information we could use to determine what actions were appropriate on our part throughout the situation and in the aftermath.

KNOW YOUR PLACE

“Second, trust the experts,” Berger continues. “Their expertise and training far exceed your own. Make sure they know who you are and how you can support them, and then don’t get in their way.”

Other components of Liberty’s protocol include:

  • Remain calm. Don’t overreact.
  • Maintain a mass internal team text so everyone is informed.
  • Remember that law enforcement will take control of the property until they issue a release.
  • Assign a team member to maintain contact with local law enforcement.
  • Maintain internal communication throughout the incident.
  • Reach out to local tenant contacts no later than 24 hours after an incident.
  • Reach out to corporate real estate contacts at the first opportunity or no later than 48 hours after the incident.
  • Conduct in-person visits to tenants within 24 hours.

No, we may not be able to protect our assets from all crises all the time. But, as the stories outlined here reveal, we live and we learn. That’s life. Literally.

ABOUT THE AUTHOR: John Salustri is editor-in-chief of Salustri Content Solutions, a national editorial advisory firm based in East Northport, New York. He is best known as the founding editor of GlobeSt.com. Prior to launching GlobeSt.com, Salustri was editor of Real Estate Forum.

BOMA Magazine is the official magazine of the Building Owners and Managers Association (BOMA) International. It is a leading source for the latest news, issues and trends affecting the commercial real estate industry.