The devastating Texas winter storm of 2021 was unprecedented and resulted in billions of dollars in losses. Business owners reported more than $4.1 billion in insurance losses from the catastrophe, and many claims have yet to be closed from the past year.

They caused extensive destruction because no one was prepared for them. Texas had not faced such extreme winter conditions in recent history, and the structural designs for properties couldn’t cope with the weather.

While most stories from that time revolved around residential properties, commercial real estate also suffered extensive damage. This blog will explore this topic and address the impact of the Texas winter storm on the industry.

The Texas Winter Storm

Texas residents were unprepared when a winter storm hit the state and raged on for four days. The storm claimed 57 lives and resulted in $196.5 billion in damages, making it the costliest storm in history.

The storm caused severe power and gas shortages, plunging several areas into darkness. Lack of heating caused the water to freeze, and the pipes burst once the restored supplies caused the pressure to build up.

The result was flooded residential and commercial properties, loss of business, and trauma.

How the Texas Winter Storm Affected Commercial Real Estate

The storm brought everything to a standstill for a few days, and businesses spent the next few months recovering from the effects. Following are the primary ways in which commercial real estate was affected by the Texas winter storm:

1. Impact on Small and Medium Businesses

Small and medium businesses were hit the hardest because their insurance plans did not cover the entire cost of restoration. According to data, case-incurred losses for commercial properties amounted to $4,749 million.

The individual sums were too much for several organizations and sent several out of business.

2. Average Loss to Commercial Property

The average non-revenue loss to commercial property was $127K, and 39.1% of the insurance claims for these amounts are open one year later. There is no telling when these claims will be resolved, and business owners are frustrated with the lengthy process.

3. The Future of Property Design

There was extensive uncertainty last year about the future of properties after the storm devastated everything. However, that uncertainty has also been a source of learning. Lenders and insurance providers now demand property structures to include such conditions in calculations.

While the demands may seem excessive, they will eventually help the industry evolve. The climatic conditions have been unpredictable for the past few years, and more storms are likely to occur. Under such a situation, it is much better to be prepared beforehand.

Final Thoughts

Overall, the Texas winter storm resulted in extensive damage to commercial property, and several cases remain open. The right way forward is to take a precautionary approach in the future and invest in commercial properties that can reduce the extent of the damage.

Please contact us if you are looking for a suitable commercial real estate investment. The CHRE team has been part of the industry for several years, and we will find the best solutions for you.