Rebuilding After Katrina: An Owner's Perspective Two Years Later

Real Estate Issues, Spring 2008 by Meltzer, John A, Shlaes, Noah

Mold analysis and remediation was a constant concern. These contractors were also in short supply. Here, the squeaky wheel theory and our GC got their attention to address our issues.

PERMITTING AND ZONING

As a result of Katrina, the rules had changed for permitting and zoning. All this new work called for new reconstruction drawings, but architectural and engineering services were in great demand and short supply. Governmental approvals of those plans were in even shorter supply. Successful approvals called for hand delivery of everything, and a wait of hours or days for simple permits.

At the beginning, where time was essential and we had no idea how long approvals would take, we let the permitting office know what we were up to, but commenced demolition without the required documentation.

THE RESULT

Now that the reconstruction is all but complete, and we are back to 100 percent occupancy, I have time to think.

What have I learned?

First, the things that I had taken for granted were the things that mattered most-old friendships; our reputation with contractors, lenders and tenants; the obscure and seldom-used clauses in leases. All of these things took on new prominence and dictated whether we would succeed or fail.

Next on my "lessons learned" list was how important it was to keep a continuous focus on prioritization. The balance between time and money had shifted, and anything that created time or accelerated construction was usually worth the cost. Money was a jigsaw puzzle, and the few properties that still had paying tenants were my edge pieces. They got consistent, sometimes daily visits, focus, and resources. Information and communication were crucial. Backups, cell phones, radios and multiple copies of everything are crucial.

Lastly, it was important to focus on the real concerns of others. Their problems were our problems. Money and contracts work well in a stable world, but when the wind hits and the water rises, you're not the only one thinking about survival. If your employees, contractors, lenders and tenants are convinced that helping you and working with you is their best path to safety, that's what they'll do.

BY JOHN A. MELTZER CRE, CCIM, AND NOAH SHLAES, CRE, FRICS

About the Authors

John A. Meltzer, CRE, CCIM, is president of Meltzer Properties, a Metairie, La., and Ouray, Colo.-based owner/operator of commercial product. His practice has for 25 years specialized in using entrepreneurial strategies to turn around problem product, and the leasing, management and retrofit of office, retail and multi-family product.

Noah Shlaes, CRE, FRICS, is managing director-strategic consulting for Grubb and Ellis. His work focuses on real estate decision-making inside corporations, universities and government.