Written by Marc Steyer, SE, Tipping Structural Engineers
The probability of at least one earthquake of magnitude 6.7 or larger occurring during the next 30 years in the San Francisco Bay region is 72 percent, yet much of the building stock is unprepared for this event. How have the double crises of COVID-19—plus the worst GDP contraction in economic history—impacted the need for resilience?
Although a great deal of progress has been made to improve certain buildings known to be especially susceptible to earthquake damage, the problem with the Bay Area building stock is that a large proportion of existing commercial properties have never been seismically retrofitted and remain at risk of significant damage or total loss in a large earthquake. Typically, these buildings are in five categories:
- Unreinforced Masonry (URM) buildings
- Soft-Story buildings
- Non-ductile Concrete Moment Frame & Shear Wall Buildings
- Pre-Northridge Steel Moment Frame Buildings
- Early Vintage Tilt-Up Concrete Buildings
Many building owners are aware of the risk that earthquakes pose to their long-term portfolios and recognize the need to address this risk. Despite the recognition and willingness, owners have faced a number of obstacles making it difficult or prohibitive to implement seismic improvements and minimize their exposure. For example:
- Seismic retrofits often (but not always!) require some imposition into occupied space. These could have temporary impacts on building tenants and functions during construction and permanent impacts to the space plan.
- For obvious reasons, both landlords and tenants (especially large companies) view any amount of construction-generated business/occupancy interruption as something to avoid.
- Even when office suite leases turn over, it can be a difficult for owners to decide to forego a period of consistent rental income for the time required to complete a retrofit.
- In large or tall buildings with multiple tenants and different lease durations, it can be very difficult to address the structure as a whole in a practical and efficient way.
- Mitigating logistical challenges to performing seismic retrofits in tight urban spaces (traffic, building access, noise, vibration, and so forth) has been a major contributor to increasing construction costs for seismic renovation work.
However, the current uncertainty in business outlook for commercial real estate has created conditions that are making it increasingly compelling and opportune to make the capital investment in seismic retrofit for the following reasons:
Ownership costs of existing commercial and residential real estate are a combination of hard and soft costs. Hard costs include operations and maintenance, while soft costs are taxes and insurances. In these times, seismic upgrade work is more likely to be considered essential maintenance. There are many triggers in the building code which leasing changes or other desired building modifications can cause to be enacted. Further the market is moving towards building specific insurance policies in which the actual risk, not the zip code, determines the premium.
Therefore, in a market in which construction companies are looking for work for the first time in twelve years and where seismic upgrades produce an ROI by virtue of lower insurance risks, it’s a great time to consider this work simply from a cost and return-on-investment perspective.
For many commercial and residential buildings, occupancy is down while people adjust and adapt to the new normal. While this presents a problem on the income side, it offers an opportunity to access currently unoccupied spaces and implement the seismic work without disturbance.
Historically, one of the biggest construction difficulties in seismic retrofits has been the need to work carefully around existing tenants, minimizing noise and dust, without blocking circulation or access. These factors slow down the work and drive up the cost. Working in buildings that are not fully occupied would eliminate many these obstacles to create efficiencies in cost and construction schedule.
People are generally aware of the classification of a building that they have decided to occupy. Online data is readily available and more prevalent than ever, so seismic upgrades will surely make buildings more attractive after this crisis has passed. A seismic retrofit can be an investment in future positioning on the market, made possible by lower occupancy.
One of the biggest post-earthquake risks to an owner is the time it takes for their building to be reoccupied. Once a seismic retrofit is undertaken, relying on a digital design model in conjunction with seismic monitoring, a building owner can know how their building actually performed in the earthquake. Using combined technology (such as a digital twin, along with data gathered remotely using technologies), owners can get the assurance to know and prove that a building is safe to be reoccupied. Today, the merging of digital technology can mitigate the risk of business continuity in a way that was not possible before.
For many old, seismically deficient buildings, now is the time to consider moving forward with a seismic retrofit.
The seismic upgrade has historically been the ultimate example of deferred maintenance owing to the complexity involved in making such improvements a reality. However, in a post-COVID-19 world, short-term realities may scramble the previous calculus and make seismic retrofit projects a compelling investment in preparation for the future market recovery.
- Construction is (and is likely to remain) a permitted activity even with larger societal restrictions owing to the novel coronavirus.
- A period of lowered building occupancy provides an opportunity for construction to take place that would otherwise not be possible in a fully leased space: builders would have access to unoccupied critical spaces, or wouldn’t have to worry about minimizing adjacency impacts like sound and other forms of vibration.
- With spatial distancing and more prevalent work-from-home scenarios likely to be with us for the foreseeable future, access, delivery, and logistical challenges may be somewhat reduced.
- Implementing a retrofit during a time when spatial-distance restrictions are still in force reduces the builder’s risk and the casualty insurance needed during construction.
- With a likely slowdown in overall construction activity, the number of qualified contractors available and willing to bid on seismic renovation projects is likely to increase, with potentially more competitive pricing structures than in years past.
- For any building owner managing the long-term risk of their portfolio, implementing a seismic upgrade is a sound long term investment notwithstanding short term market disruptions. As retrofit measures can improve the seismic performance of the building, a retrofitted building will attract more insurers willing to provide coverage; similarly, the insurance premiums covering the building for catastrophic events (usually high in the Bay Area) could be negotiated with a more favorable rate.
Simply put, if you are an owner with a long-term outlook vis-a-vis your real estate portfolio, now might be the perfect time to invest in and implement seismic retrofits to protect your asset.
About Marc Steyer, SE, Tipping Structural Engineers
As a principal at Tipping Structural Engineers, Marc Steyer, SE, works to understand and internalize the unique goals, concerns, and needs of his clients. Marc’s wide range of experience includes work for engineering, architecture, and construction firms. Since joining Tipping in 2005, he has combined his engineering and management expertise on projects involving both new and existing structures, with an emphasis on sustainable design and seismic safety. One of Marc’s first projects at Tipping was the multiple-award-winning seismic retrofit of 2850 Telegraph Avenue in Berkeley; he also co-authored articles in Concrete International and the Post-Tensioning Institute Journal on Tipping’s pioneering breakthrough using vertically post-tensioned concrete walls for seismic resistance, first applied to 2850 Telegraph.