What Impact Will Hurricane Irma Have on the Construction Industry?
This year, the U.S. has seen hurricanes the likes of which we have rarely if ever, seen. Hurricane Harvey did incredible flood damage in Texas, Irma made its way through Florida with high winds and flooding, and Maria has all but decimated the Virgin Islands and Puerto Rico.
In Florida, Hurricane Irma made its way up the state, starting with a devastating hit on the Keys, then veering towards the west coast. Experts agree that by moving west, it took Miami out of the direct line of fire. This, in turn, served to lower the overall cost of the hurricane. Moody Analytics estimates that the cost of Hurricane Irma will range from 60-90 billion dollars.
Initially over half the state was without power. This caused businesses to close, resulting in loss of income for the store owner and employees. This caused a slowing of the Florida economy, which will be reflected in the 3rd and 4th quarter GDP and employment data.
Irma will have a measurable effect on construction starts in Florida. Up until this point, the state has seen healthy growth since the recession. In 2011, construction starts in Florida were 22.8 billion, while in 2016 went up to 55.2 billion.
In 2017 up until now, there had been a 32% increase over this time last year (non-residential building), and public works and utilities have increased 21%. Residential starts were up 1% through July. Before Hurricane Irma, projections were that total construction starts would rise 9% for the year.
That forecast is now being reassessed as the recovery and restoration efforts begin. Initially, infrastructure will be the focus, such as water, sewer and roads.
It is predicted that construction starts will slow for the next several months, as efforts are focused on clean up. After that, residential building will start to rise, particularly in hard-hit areas like the Keys.
The good news is, there will be a lot of opportunities, as billions of dollars will be sent here to rebuild damaged structures. These funds will be directed toward construction companies, engineers and architects. The numbers, of course, aren’t clear yet, but many feel that the construction industry will experience an unprecedented boom in the coming 18 months.