As we share this update, our thoughts are with all those in Tampa, Florida, as they prepare for the arrival of Hurricane Milton, preceded by Hurricane Helene, which brought devastating impacts to the southeastern coast of the U.S.

The increasing frequency and intensity of these storms, whether influenced by climate patterns or other factors, are reminders of the importance of ensuring that property insurance coverages are up to date - especially as these costs continue to increase.

“Post-pandemic vacancies and surging debt payments have eaten away at commercial real estate for more than two years. Even as those threats start to fade, owners of strip malls, apartment buildings and office towers face a problem that could last much longer: soaring insurance costs,” reports the New York Times.

The insurance brokerage Marsh McLennan estimated that premiums on commercial properties rose an average of 11 percent across the country last year but as much as 50 percent in storm-vulnerable places like the Gulf Coast and California. This year, premiums may have doubled in some of those places, the brokerage said in the article.

“Like homeowners, commercial property owners are required by banks to carry insurance policies if they have a mortgage. But the requirements can be stricter: A commercial real estate borrower often needs explicit permission from its lender to make tweaks to insurance coverage, and if the loan has been securitized and sold to Wall Street investors, getting that permission can be impossible.”

The New York Times article said “the insurance problem is more of a headache than a potential catastrophe, and data on loan delinquencies shows stress but no cause for major alarm. By being extremely cautious about their lending and shedding as many older commercial real estate loans from their books as they can, banks may have staved off a crisis.”