Leone: What Lies Beneath

By Nicholas B. Leone

I received an interesting call the other day from Michael Gibbons, a property manager for a mid-size multifamily investment firm in San Francisco. I’ve done some due diligence for Michael in the past and have solved some other problems on a number of his properties. On this call, Michael was unnerved. It had just rained, and he’d had six tenants from the same property call him within an hour. Each had the same complaint: a puddle of water on the floor beneath the windows. Suspiciously, the six tenants were all next to and above each other. I went by that afternoon to take a look.

The property is a 78-unit, wood-framed, stucco apartment complex built in the East Bay during our housing boom six years ago. I walked the project and went inside many of the units. Sure enough, puddles. They all seemed to be formed by water dripping from the interior trim at the windows. In doing some investigation at the window heads, I found some consistencies: The material installation was out of proper sequence, and water was infiltrating the wall. The exterior stucco looked fine, however. As time has passed, I have begun to realize that Michael’s problem is part of a larger trend across many stucco projects.

Real estate was a fun place to be from 2003 to 2007. With minimal investor effort, properties could be bought and rented or sold at huge profits. Eager to join the party, many developers built multifamily projects all across the Bay Area in hopes of striking it rich. Who blames them? In 2005, home, condo and apartment values were rising at such a fast pace, even Time magazine reported on “America’s House Party.” Unfortunately, the bubble soon popped, and the hangover kicked in.

As investors have taken their Advil and massaged their temples, we are all beginning to realize they were not the only ones to make mistakes. I have been on a remediation job where the original contractor poured the footings in the wrong place, then tried to adjust the building’s footprint to make it work. In Daly City, one of the harshest weathering climates in the Bay Area, I have seen interior drywall used as the building’s exterior. I cannot begin to count the number of projects where I have seen nails driven through horizontal flashing. All that said, stucco wall assemblies are consistently one of the most mistake-riddled elements of buildings.

Stucco has been around for centuries but gained its current popularity beginning in the 1950s as an economical alternate to stone for residential buildings. Stucco design has since evolved and its current design includes the use of numerous accessories intended to control cracking, improve drainage and strengthen vulnerable areas such as corners. While these accessories are intended to improve the stucco’s performance, they are potential hotspots for leaks as they require extensive detailing and are usually one of the first design elements to get cut when the client’s budget gets tight.

But the nature of stucco is to conceal. It conceals the accessories intended to improve its performance, and it does not provide many visual clues on its face. In fact, by the time that staining or cracking appears on the face of the stucco, it is probably too late. Water is probably infiltrating the building and is causing deterioration. Stucco is like a book: You should not rush to judge it by its cover.

I am not alone in my observation of defective stucco installations. Many other forensic and remedial architecture firms have been busy with a multitude of flawed projects built between 2003 and 2008. We’re seeing the same damage over and over—soggy drywall in bedrooms; water staining on interior surfaces; and even mushrooms growing from cracks in the stucco. I had a project where repetitive water exposure deteriorated a beam to the point where it failed and a flight of concrete stairs collapsed. Luckily, no one was hurt. Remedial architecture firms are getting calls from brokers, property managers and tenants, each of them asking, “Is this normal?” What we are finding is that these mistakes are frequent, and not normal.

This lack of quality has begun to take its financial and emotional toll on the Michael Gibbonses of the world. Michael had to reinstall flashing at more than 100 window heads at his building. This included selective stucco removal and replacement of deteriorated framing at some locations. In all, he paid $185,000 to remove stucco, replace rotted framing and to re-flash the windows. The complex with the mushrooms is a different story. Further investigations revealed several egregious structural, plumbing and electrical errors and oversights. The team is currently wrapping up a $20 million rebuilding effort, and attorneys are preparing for litigation.

Stucco can be a good, quick-to-install product. However, its ideal applications are limited. It has performed well for more than 60 years as a residential alternate to brick. Applications were simple one-story homes. These days, architects are applying stucco to four-story and five-story buildings. This shift in scale has implications. We have larger fields of stucco that require more control and expansion joints. Our drainage needs have also become more complicated.

As we are now in the third year of a new decade and as multifamily history begins to repeat itself, I write in hopes that we can all learn from our mistakes. Since 2010, the multifamily sector has been the guiding light of the real estate world, and many experts believe that it will continue to be strong for many years to come. In its 2012 “Emerging Trends” report, the Urban Land Institute predicts that apartments will be one of the best development bets of 2012. Chances are that development will include lots of stucco.

Nicholas Leone is a project manager for San Francisco-based McGinnis Chen Associates Inc., an architectural and engineering firm. He a licensed architect and a member of the Urban Land Institute. Among its other work, McGinnis Chen has offered remedial architecture design, waterproofing consulting and litigation support for nearly 50 years.

West Coast Commercial Real Estate News