Property Management Success: Extreme Weather and Industrial Resiliency

As industrial demand and development continue their upward trajectory, so too has the complexity of their operations. From storage racks to semiconductors, these facilities depend on reliable transportation, location, energy and internet connectivity.

But with that complexity comes potential for disruption. Natural disasters increasingly pose hazards. According to the National Oceanic and Atmospheric Association’s National Centers for Environmental Information, there have been 11 confirmed severe weather events so far this year, which have caused over $1 billion in damages. Such events, from hurricanes, tornadoes, wildfires, floods and cold waves have nearly doubled in frequency over the past two decades, a significant factor in driving up insurance costs.

The responsibility of ensuring that the facility’s contents and personnel remain safe is often largely on the shoulders of property managers. That underscores the need for strategies that can anticipate disruption as well as respond to it.

Perfect storms

The natural disasters that a facility is most likely to face is a matter of location. But as the effects of climate change evolve, so too have disruptions. Historically, facilities along coastal areas, particularly along the East Coast, were most at risk of hurricanes and floods, while those in the South, Midwest and West were susceptible to heat waves, tornadoes and wildfires.

Now, a shift in the locations and severity of these events appears to be underway. “Tornado Alley used to span between Texas and South Dakota, but this year Ohio had the highest number of tornados until mid-May,” noted Karen Whitt, president of real estate management services at Colliers. 

Others have observed a similar trend in the Northeast.  “What we are most aware of is flooding, but we have raised and increased concerns due to heat waves,” observed Edward Chandler, director of property management at Greek Real Estate Partners, which operates primarily in New Jersey. The fact that such areas are only beginning to experience such events as tornadoes, hurricanes, and extreme heat further increases risks to life safety and property.

Apart from the impact on buildings, the most severe damage often hits the power grid, in large part due to its age, fragility, and interconnected nature. A disruption in one area can often impact electricity services several states away, and even a minor outage can cause damage or contamination to an entire industrial facility. With this in mind, some managers have turned their focus to mitigating the impact of power disruptions. “When we speak of resiliency, that word pertains to how we are supplying power and energy to the facility, and what you can do to mitigate the risk of disruption,” commented Jay Balasubramanian, senior director of sustainability solutions at JLL.

Smart preparation

To prepare for these threats, a highly recommended tactic is to plan responses to events before they happen. Whitt advises property managers to consult individually with tenants and portfolio operators while monitoring the news.

“A robust warehousing and distribution customer may not even notice severe weather has started becoming more common in neighboring jurisdictions,” she said. “As their sites tend to be located outside of central business and residential districts, local news may not even mention what’s happened a few hundred miles away, but the next event could still impact them.”

But there is no substitute for thorough preparation: a consistent, on-the-ground presence that detects hazards and provides needed maintenance before a crisis. “In order to be properly doing your job as a property manager, you need to be present at the property, and for us that means more than swinging by in a car and taking a cursory glance,” Chandler said.

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As an example, even a simple downpour can add too much weight to a roof that contains sophisticated mechanical equipment. Property managers should stay on top of such hazards by monitoring gutters and making sure that retention basins are unobstructed, Chandler advised.

At the personnel level, centralized portfolio management and cross-training are the name of the game, as they give property managers the skills necessary to deal with disruptions. As Whitt put it: “Managers need to get their eyes on as many properties as possible, as quickly as possible, so they can prioritize response items and ensure we’re using our resources as effectively as possible.,”

Additionally, the most acute observations related to maintenance often come from tenants. “(They) are there more often than we are, and they are such an invaluable resource and wealth of knowledge as far as what takes place at the property,” Chandler said. “They will let you know, once you establish that relationship with them, what is working properly, (and) what is not, in order to better prepare them for what is ahead.”

Technology’s tools and limitations

Beyond hiring the most capable personnel, the astute use of property technology is also a must for industrial property managers. Colliers preaches the use of hardware and software that aid resilience, from internet-of-things connected sensors to tenant experience applications.

At the property level, the firm uses sensors to get the jump on potential disruptions. “Rather than needing a manager on-site to check the lowest level of every property for water intrusion, an IoT sensor can automatically alert us,” Whitt reported. “(The) same goes for building management systems, electrical spikes, and cameras for monitoring everything from security to keeping an eye on problem areas.”

On the macro level, the firm uses a geospatial monitoring tool that reports on property vulnerabilities, in addition to suggesting site-specific resilience. “(It) paves the way for faster, more-informed decision-making,” Whitt noted. At the same time, Whitt cautions against using these programs to replace on-site inspections and interventions. “It isn’t a replacement for an experienced management team with carefully planned out processes,” she added.

Outside of flashy computer screens, the firm also equips leadership with satellite phones, and parking RVs outside of regions that are expected to be hit the hardest.

To promote resilience after an event, some tenants are installing microgrids at their properties, following their success with keeping the lights on in parts of Manhattan, New Jersey and Maryland. “If you have the energy on site, it costs a lot less than what you are buying from the grid. The benefit is immediate, and it’s not only a resiliency solution, but it is also a sustainability solution,” JLL’s Balasubramanian observed.