Mariwyn Evans is a former REALTOR® Magazine writer and editor, covering both residential brokerage and commercial real estate topics.
Oil Spill Breeds Distress, Demand in the Gulf Commercial Real Estate
Warehouse and office space filled up fast in cities where cleanup efforts were based.
September 1, 2010
Residents of in Florida's Panhandle knew the spill was coming, but seeing oil from the Deep Water Horizon wash up onto the beaches at Gulf Shore was “a reality check,” says Justin Beck, CCIM, president of Beck Property Company in Pensacola, Fla.
He says the spill put a dent in tourism and retail—particularly troubling because the two sectors are major employers in West Florida, according to the Haas Center at the University of West Florida.
But even in areas where tourism declined, the short-term efforts to stop and mitigate the spill generally had a temporary positive effect on commercial demand around the Gulf, says Richard Juge, CCIM, president of RE/MAX Commercial Brokers Inc. in Metairie, La. “It’s certainly not something you want to base an economy on, but hotels are packed with workers,” Juge says. His company has been coordinated with Jones Lang LaSalle to open community outreach centers for BP.
Beck concurs, saying that there was increased demand in Pensacola for warehouse and office space for clean-up companies.
But, still, the unknown mid-to-long term negative effects of the spill are troubling, both brokers say. For example, if oil companies can no longer drill profitably in the Gulf, they’ll go elsewhere and jobs will be permanently lost, notes Juge.
The long-term impact on industry and commercial real estate values is harder to predict. In a recent article, CoStar Group Vice President of Analytics Norm Miller estimated that the oil spill could lower land prices by approximately 10 percent. “We’re pretty resilient,’” says Beck, “but unlike a hurricane, we don’t know what the final outcomes from the oil spill will be. That makes the next 12 to 24 months pretty scary.”
Beck hopes that the federal government will step in with incentives such as accelerated depreciation on investment, which, he says, helped the area recover after Hurricane Katrina.