Key Strategies to Building Resilience in Commercial Real Estate With IBHS

by AEI Consultants

A Discussion on IBHS’ FORTIFIED and Wildfire Prepared Home programs, Winter Weather, and Hail

In an era where climate hazards are increasingly impacting the built environment, understanding, and enhancing building resilience has never been more critical. Join us for insightful perspectives from experts at the Insurance Institute for Business & Home Safety (IBHS) on FORTIFIED construction. As a leading voice in the field of building resilience, IBHS offers a wealth of knowledge on how to safeguard properties against a range of natural hazards, from hurricanes and hail to wildfires and winter storms. The insights shared here are not only invaluable for property owners, builders, and policymakers but also for anyone interested in the future of resilient construction.

Some of the key takeaways from our conversation with IBHS include:

  • Critical Importance of Building Resilience: The increasing impact of climate hazards makes understanding and enhancing building resilience essential for protecting properties against natural disasters such as hurricanes, hail, wildfires, and winter storms.
  • Benefits of Investing in Resilience: Investments in resilience measures, such as those outlined by the IBHS FORTIFIED program, can significantly reduce financial losses from damaged property, lost inventory, and business interruption, leading to quicker recovery after severe weather events

  • Economic Advantages of Resilient Construction: Studies show that buildings constructed to resilient standards, like FORTIFIED, experience less damage from natural disasters, leading to lower insurance claims and potentially lower insurance premiums, alongside the possibility of incentives and grants to offset costs.

  • FORTIFIED Construction’s Appeal: FORTIFIED construction enhances a property’s appeal to insurers, investors, and tenants by significantly reducing the property’s risk profile through stringent standards and thorough documentation of resilience-enhancing measures.

  • Impact of FORTIFIED on Multifamily Housing: Adopting FORTIFIED standards for multifamily housing can meaningfully reduce the impact of severe weather, demonstrating the program’s potential for broad societal benefits beyond individual properties.

  • Continuous Innovation and Advocacy for Resilience: IBHS’s commitment to incorporating the latest advancements and technologies into building resilience, through efforts like advocating for modern building codes and developing new materials and designs, underscores a comprehensive approach to enhancing resilience in the face of climate change and natural disasters.

AEI: Thank you for joining us today. To start off, can you elaborate on why commercial property owners are considering the upfront investment in resilience measures and what long-term benefits might they expect?

Chuck Miccolis: A study by FEMA shows that one in four small businesses fail to recover from a natural disaster. Investing in resilience is more than just an expenditure; it’s an investment that significantly reduces financial losses associated with damaged property, lost inventory, and business interruption. This investment helps businesses to recover quicker after severe weather events, protecting business operations and employee livelihoods, and reducing stress.As a bonus, resilient buildings often last longer because they experience less water infiltration and less damage to building materials. This leads to fewer hidden issues and better maintenance practices, especially pre- and post-storm, ultimately extending the building’s service life.

AEI: Can you explain how these investments in resilience could be economically beneficial?

Chuck Miccolis: First, it’s important to understand that many losses from events like hurricanes and high winds are avoidable. A study from North Carolina State University Institute for Advanced Analytics examined losses from four hurricanes that hit the state. It found that homes built to the FORTIED Home standard were 34% less likely to have damage and if they did have damage, it was on average 22% less severe. Studies conducted after Hurricane Sally hit Alabama also concluded that FORTIFIED homes were less likely to be damaged by the storm.

In another study, the University of Alabama’s Center for Insurance and Research found that even without a storm, building to a resilient standard can provide an internal rate of return – sometimes as high as 72%. The study showed that building to the FORTIFIED standard increased total construction costs by less than 1%. Then, lower insurance rates and increased revenues allowed for a break-even point of less than 17 months.

Moreover, several states, including Alabama, Louisiana, Mississippi, and Oklahoma, offer mitigation incentives for FORTIFIED construction, which can help offset investment costs. In 2023, a billion dollars of government funding was allocated for FORTIFIED construction. These incentives and funding opportunities demonstrate the growing recognition of the importance of resilience in building construction.

With nearly 48% of the U.S. population living in multifamily housing, we can’t meaningfully reduce the impact of severe weather without making apartments and condominiums more resilient. If each of these buildings were built to the FORTIFIED standard, the impact on reducing climate hazard effects and societal losses could be monumental. It’s not just about the immediate benefits; it’s also about the long-term societal impact.

AEI: Can you elaborate on how FORTIFIED construction enhances a property’s appeal to insurers, investors, and tenants?

Chuck Miccolis: The fundamental benefit of FORTIFIED construction lies in its ability to verify that specific steps have been taken to significantly reduce a property’s risk profile. This is a crucial factor for insurers, as FORTIFIED buildings adhere to stringent standards that make them more resilient against natural disasters, such as hurricanes, high winds, and low-level tornadoes.

Our approach is thorough in documenting and recording the specific resilience-enhancing measures implemented. This includes detailing any modifications made to the building’s structure, such as the roof fastening, wall reinforcements, load path enhancements, or backup power installations. This extensive documentation is not only for compliance but also assists in obtaining available incentives and grants.

This documented risk reduction is highly attractive to many insurance companies, and it is reflected in their business practices.  FORTIFIED properties often qualify for lower insurance premiums and greater insurance availability since insurance policies and premiums are so closely linked to risk levels.

The IBHS public policy group is actively working to ensure that resiliency measures are recognized by various stakeholders, including property appraisers. The challenge lies in ensuring that investments in resilience, such as an upgraded roof, are valued on par with other premium property features. This aspect of recognition in property value is part of an ongoing effort in integrating resilience and sustainability.

A notable example of this integration is our approach to roof-mounted solar PV systems. We’ve observed that ballasted PV systems often fail to meet wind-performance expectations. Consequently, we have incorporated additional safety requirements for these systems. Preferably, we advocate for ground mounted systems or roof-mounted systems that are mechanically attached to the building’s load path, enhancing overall structural integrity.

AEI: For multifamily owners, are there any unexpected findings or surprises from your research on how various hazards impact multifamily buildings?

Chuck Miccolis: In terms of wind-related surprises, we haven’t encountered anything particularly unusual. One of the key observations is the stark contrast in damage levels between FORTIFIED and non- FORTIFIED buildings during major storms. For instance, during Hurricane Ida, we observed a FORTIFIED building that was nearly complete and located directly in the storm’s path. It suffered only minor damage (primarily to siding), while buildings just a quarter of a mile away suffered total devastation, with roofs and walls completely destroyed. This example vividly illustrates the efficacy of FORTIFIED construction in mitigating storm damage.

Another significant aspect of our research focuses on buildings constructed before the year 2000. Many of these structures lack modern roof-to-wall connections, which are critical for withstanding severe weather events. Our approach requires an in-depth analysis of these connections, especially in wood-frame constructions, before a building can enter the FORTIFIED program. At the IBHS Research Center in Richburg, South Carolina, we’ve created full-scale simulations that mimic scenarios where inadequate connections lead to catastrophic failures. This approach emphasizes the importance of retrofitting older buildings to meet current FORTIFIED standards.

Our field research extends beyond simulations. We actively study the real-world performance of FORTIFIED buildings in various conditions. For example, during Hurricane Sally in 2020, which impacted over 17,000 FORTIFIED homes in Alabama, we found that 95% of these homes and commercial buildings experienced little to no damage. This was a valuable test for the FORTIFIED program, proving its overall effectiveness.

Additionally, we’ve been analyzing the market response to FORTIFIED buildings. The previously mentioned study by the University of Alabama’s Center for Insurance and Research indicates a substantial willingness among renters to pay a premium for the safety and habitability provided by FORTIFIED construction. Approximately 74% of renters surveyed were willing to pay up to $23.00 more per month for a FORTIFIED building. This suggests that there’s a growing recognition of the value offered by resilient construction, not just in terms of physical security but also in terms of habitability and post-disaster recovery time.

The case of the Lodge at Gulf State Park, a Hilton Hotel located in Gulf Shores, AL is particularly noteworthy. Rebuilt to FORTIFIED standards after its destruction by Hurricane Ivan in 2004, the Lodge withstood Hurricane Sally in 2020 without any significant damage. Its resilience turned it into a beacon of hope and a critical resource for the community during the storm, housing staff and first responders while maintaining operational continuity.

In contrast, buildings in Acapulco, which were designed mainly for earthquake resistance, showed severe vulnerabilities to winds from Hurricane Otis in 2023. The significant damage there highlights the importance of adopting a holistic approach in building codes that accounts for all possible natural hazards.

Lastly, IBHS research is backed by economic studies, such as the one by the National Institute of Building Sciences, which demonstrated the cost-effectiveness of resilience investments. For every dollar invested in resilience, there’s a potential saving of $6.00 on recovery costs. This finding is crucial for policymakers and stakeholders in understanding the long-term financial benefits of investing in FORTIFIED construction.

AEI: For properties in hurricane and flood zones, what are the top resilient upgrades you’d recommend to mitigate potential damages?

Chuck Miccolis: When it comes to building better against high wind events, the most crucial element is the roof. It’s the primary line of defense against these natural disasters. Proper roof design and maintenance, including secure edge flashing where the roof meets the walls, is essential. This area is particularly vulnerable to wind, with the greatest pressures usually found at the corners and perimeters.

In addition to securing the roof, ensuring all roof-mounted equipment is well-secured is vital. Our FORTIFIED program focuses on these key areas because they are the main drivers of loss during storms. It’s important to have strong, well-secured components, especially in the roof.

Keeping wind and water out of a building is essential. So, on sloped roofs, a sealed roof deck is critical.  By covering the gaps between wood boards, it helps keep the interior of the building dry even if high winds rip off the roof covering. Opening protection is another crucial aspect. This includes impact-resistant protection for windows and doors, as broken windows during a storm can allow air pressure inside that can push up on the roof and surrounding walls, often resulting in further damage.

Inspect roll-up, sectional/garage and overhead doors to ensure they are wind-rated and reinforced. Maintaining the landscaping to prevent damage from falling trees or debris is also advisable. Additionally, closing interior doors, during a storm, can reduce pressure on the roof, which is a simple yet effective measure, especially for smaller structures.

For properties in flood zones, understanding the specific flood levels is crucial. You can use flood insurance rate maps to determine your flood zone and estimated flood level heights. Once you know the flood level, you can decide on the appropriate flood protection method, whether it’s dry flood protection to keep water out entirely or wet flood protection that allows water to enter and exit strategically, minimizing damage.

In the FORTIFIED program, we address vulnerabilities to high wind events and also require protecting critical electrical utilities, such as elevating or waterproofing secondary switchgear from potential flood waters.

We advise property owners to always prepare for at least one storm category higher than predicted due to rapid intensification, a trend that has become more common in recent years. For example, if a Category 1 hurricane is predicted, prepare for Category 2 or 3 as a precaution. This is vital as no two storms are alike, and understanding the unique aspects of each storm is key to effective preparation. This approach has become increasingly important as storms like Hurricane Sandy have shown the extensive damage can be caused even by lower category storms.

Ultimately, our message to property owners is clear: Don’t assume it won’t happen to you, don’t underestimate what can happen, and always prepare for the worst-case scenario. By taking these proactive steps, you can significantly reduce the potential damage from hurricanes and floods.

AEI: With wildfires becoming more prevalent, what strategies do you recommend through IBHS programs to protect properties in fire-prone areas?

Chuck Miccolis: In addressing wildfire risks, our approach at IBHS is grounded in scientific research and focuses on a holistic strategy of resilience. We’ve extended this philosophy to the development of the Wildfire Prepared Home program. It is the first-ever wildfire mitigation program to allow property owners to achieve a designation showing they’ve taken the science-based actions required to meaningfully reduce their structure’s wildfire risk, and is currently available in California. This program guides homeowners through a series of preventative steps to safeguard their homes against wildfires.

The core of this approach is creating defensible space around the property. This means ensuring that not just the fire itself, but also any embers, are kept away from the building to prevent ignition. Embers are often the primary cause of fires spreading, as they can travel significant distances and ignite materials upon landing.

When it comes to construction, our emphasis is on using non-combustible materials as much as possible. For instance, the Wildfire Prepared Home program requires Class A roofs and an ember-resistant vent to cover any openings or vents with 1/8th-inch mesh. We also require a minimum six-inch vertical of non-combustible material at the base of walls and decks to prevent embers from smoldering in an area that could then ignite siding or other materials.

Our approach also includes aesthetically pleasing solutions that contribute to wildfire resilience. A practical example is using stone pavers or rock beds instead of wood or bark mulch, which are combustible. This was exemplified in the case of the so-called “miracle house” in Maui, which survived the Lahaina Fire due to unintentionally incorporating wildfire resilience measures, like removing wood mulch and dead debris, which are major factors in ember ignition.

Our post-event investigations play a crucial role in understanding what fails in real-world scenarios. We take these findings back to our labs to recreate and study them, developing solutions that form the basis of our guidance. Our research has shown that a comprehensive system approach, integrating various protective measures, is far more effective than isolated upgrades. For example, window protection alone is inadequate if the roof is vulnerable. It’s the integration of various elements, like a non-combustible buffer of five feet around the structure, a Class A roof, and ember-resistant mesh over vents, and other practical steps can reduce a building’s wildfire risk.

AEI: What are some often overlooked aspects of preparing commercial buildings for severe winter weather?

Chuck Miccolis: In preparing for winter weather, there are three critical areas that are often overlooked but are essential for protecting commercial buildings. The first is ensuring the roof can handle the snow load. Snow weight varies significantly – fresh powder is lighter than wet packed snow, and ice is the heaviest. A combination of these can pose a substantial risk, so the roof must be structurally sound to handle these varying weights.

The second aspect is preventing ice dams. These occur when snow melts and refreezes at the roof’s edge, preventing proper drainage. This can allow water to seep under the roof covering and into the building, causing significant damage. In northern climates, FORTIFIED’s locked down edges and sealed roof deck work together to prevent water from backing up into the building. This is especially important for steep slope roofs and low slope roofs around drains, where freezing can hinder proper water flow.

The third, and perhaps the most significant risk, is frozen pipes. This is a major concern in southern and typically milder climates, where buildings aren’t typically designed for extreme cold. A vivid example of this was Winter Storm Uri, which struck Texas in 2021, where thousands of pipes froze and burst causing extensive property damage and widespread business disruption. To prevent this, it’s important to insulate pipes, especially those that come up out of the ground and enter buildings. Using heat trace tape and ensuring a backup power supply can prevent pipes from freezing. Additionally, setting the thermostat to a minimum of 55 degrees will ensure the entire building does not drop to freezing temperatures. Connecting the HVAC system to backup power is recommended to prevent interior freezing temperatures in case of power loss. Flow-temperature gauges can alert building managers to potential freezing conditions in pipes and remotely monitored automatic shut-off valves can greatly reduce damage from broken pipes. In high-rise or mid-rise buildings, fire protection systems in stairwells can be prone to freezing if the stairwells are not properly pressurized. Therefore, ensuring these systems are adequately protected against freezing is crucial.

A comprehensive approach to winter weather preparedness includes not just these structural aspects but also a solid business continuity plan. It’s important to consider the potential for severe winds during winter storms, which can cause additional strain on roofs and structural elements. Being prepared for all these factors is key to minimizing damage and ensuring the safety and functionality of commercial buildings during harsh winter weather.

AEI: Can you discuss innovations in building materials or designs that have proven effective against hail?

Chuck Miccolis: Our research into hail damage has been quite extensive and innovative at IBHS. We recognized early on that traditional testing methods using steel balls were not accurately replicating the damage caused by natural hailstones. To address this, we developed our own testing methods that more closely mimic the conditions of an actual hailstorm.

We created artificial hailstones based on detailed analyses of natural hail. These hailstones are designed to replicate the unique formation process of hail, which involves layers of ice forming concentric circles as they are carried up and down in the atmosphere. This approach allows us to assess how different building materials stand more accurately up to the impact of hail.

Our tests with these artificial hailstones led to some eye-opening findings. When we tested roofing materials that were already available in the market, we found that even some materials rated for hail impact resistance might not offer the protection consumers expect. Business owners should review the Impact-Resistant Shingle Performance Ratings to see how each shingle stacks up.

As a result of our findings, several shingle manufacturers have taken steps to improve their products’ hail impact performance. IBHS’ collaborative approach is a key aspect of bridging the gap between scientific research and practical, market-available solutions.

The impact of this research is far-reaching. While building codes do not typically require materials to be hail-resistant, our work has led to a better understanding of what true hail resistance means. This knowledge is invaluable for homeowners, builders, and insurers alike, helping them make more informed decisions about materials and construction methods that offer genuine protection against hail damage.

Our efforts at IBHS have not only advanced the understanding of hail’s impact on building materials but have also driven innovation in the industry, leading to improved products that offer more reliable protection against hail damage.

AEI: Can you discuss innovations in building materials or designs that have proven effective against hail?

Chuck Miccolis: In the field of waterfront architecture, the technological advancements primarily revolve around forecasting and understanding hazards and vulnerabilities, which are rapidly evolving. While not all architects may be leveraging these technologies, they are integral to waterfront architecture due to the constant interaction with nature’s forces.

One key technology we use is wave monitors. These are essential for understanding the wave climate at specific sites. This is because general reports from NOAA, USGS, or the Coast Guard provide a macro perspective and often lack the nuance required for individual site conditions. By deploying wave monitors, we can gather detailed data on local conditions, such as the impact of ferry boat wakes, which might not be covered in the more generic national reports.

Our team is multidisciplinary, encompassing various specialties within architecture, engineering, and planning. We have traditional building architects, landscape architects, naval architects specializing in floating structures, urban planners, and climate adaptation planners with a scientific approach. In the engineering field, we have experts in geotechnical, structural, marine, and coastal engineering. Additionally, we employ professional engineer divers for underwater inspections.

A notable technology in our toolkit is the use of underwater drones. These drones allow us to inspect structures in tight spaces underwater, which would otherwise be inaccessible or too risky for divers. This capability is particularly valuable in assessing the condition of underwater infrastructure and contributes significantly to our understanding and ability to enhance the resilience of waterfront properties. These technologies and our team’s multidisciplinary approach are crucial in advancing the design and resilience of waterfront developments.

AEI: As a closing question, are there any new technologies or practices on the horizon that you believe could further enhance building resilience?

Chuck Miccolis: At IBHS, we’re constantly engaged in various areas to incorporate the latest advancements and technologies into building resilience. A significant focus of our work revolves around building codes. Our research has consistently shown that modern building codes, when uniformly adopted and enforced, are highly effective. Therefore, a substantial part of our effort involves working with a variety of stakeholders and organizations like the International Code Council (ICC) as well as those involved in the WUI code, to integrate resilient construction practices into policy.

One of our key initiatives in this area is our Rating the States report, in which we assess and evaluate the adoption and enforcement of building codes across 18  Atlantic and Gulf Coast states. This report, which we update every three years, provides valuable insights into how states are progressing in terms of building code adoption, enforcement, licensing and education of building officials, contractors, and subcontractors. which is crucial for resilience. Our latest evaluation is set to be released this year.

What’s particularly interesting about building codes is their lack of consistency across the country, especially when considering the increasing frequency and severity of natural disasters. That’s where our programs like FORTIFIED and Wildfire Prepared Home come into play. These programs are designed to go beyond the minimum requirements and apply a consistent approach to resilience, providing property owners and developers with the means to achieve higher levels of storm protection without incurring excessive costs.

In addition to building code advocacy, we’re continually exploring new technologies and construction practices that can enhance resilience. This includes materials that are more durable and designs that are better suited to withstand various natural hazards. Our goal is to make resilient construction more accessible and cost-effective, encouraging widespread adoption.

In essence, while not all our work revolves around new technologies per se, our approach to enhancing building resilience is comprehensive, encompassing both policy advocacy and the promotion of advanced construction practices. This multifaceted strategy is vital in driving the adoption of resilience-enhancing measures in the face of changing climate patterns and increasing natural hazards.


Final Thoughts:

IBHS provides valuable insights into the changing nature of building resilience. To protect against natural disasters such as hurricanes, hail, and wildfires, advanced construction standards, innovative materials, and proactive mitigation strategies are essential.

At AEI, we offer tailored Property Resilience Assessments to evaluate a property’s resilience to specific environmental risks. These assessments are effective in identifying vulnerabilities and recommending improvements to enhance a property’s resilience. With AEI’s tailored assessments, CRE stakeholders can take informed steps in creating safer and more resilient buildings. This proactive approach to resilience is not only about addressing today’s challenges but also about preparing for unforeseen events in the future. If you’re considering the resilience of your property against climate hazards, feel free to reach out to AEI for a comprehensive assessment that can guide your preparedness and mitigation plans.