One of the most devastating storms in US history, Hurricane Katrina, damaged or destroyed hundreds of thousands of homes and buildings in Louisiana, Mississippi and Alabama. The storm packed a wallop— 145 mile-an-hour winds and 28-foot waves in some areas. In the greater New Orleans area alone, an estimated 200,000 homes were destroyed. Then several weeks later, Hurricane Rita roared into western Louisiana and Texas, wreaking more destruction. With so much damage, the huge rebuilding effort will have a lingering impact on the AEC industry for many years.

The initial impact was a spike in the cost of construction materials.

“Katrina had a significant, immediate, but short-lived impact on the cost of petroleum and natural gas-based construction inputs: diesel fuel, asphalt, polyvinyl chloride (PVC) pipe and other plastics,” says Ken Simonson, chief economist with Associated General Contractors of America.

Simonson believes that the storm’s impact on materials costs will be slight from here on out. “There has been so little rebuilding from the hurricane, and what rebuilding does occur will be so stretched out that I don’t anticipate any extended impact on demand for materials or [construction] labor,” he says.

Ultimately, the biggest impact for our industry will be from the continuing opportunities in the region for many years. Opportunities will abound for firms offering just about every type of service including environmental assessment and remediation, land development, urban planning, engineering, architecture and landscape design.

Mick Brennan, a senior environmental manager for Fort Worth-based design firm Carter & Burgess, saw the aftermath of the storms firsthand. Brennan was as a consultant to a FEMA contractor from October 2005 to February 2006 in the region. Having served in the Navy during the Vietnam War, and having been stationed in Corpus Christi, Texas when a major hurricane hit that city, Brennan had witnessed his share of destruction. Nothing, however, compared to the wholesale devastation he saw following last year’s storms.

“It was incredible,” Brennan said. “I had never seen anything like it before.” He saw thousands of homes in St. Bernard Parish, near New Orleans, that had been immersed in up to 12 feet of water, infested with mold. The city of Cameron, a coastal industrial community south of Lake Charles, La. had essentially disappeared. Just about every home and building, including the hospital and fire station, had been completely destroyed.

When Brennan completed his consulting stint in January, there was still a lot of demolition and cleanup work to be done. There will be a lot of opportunities for AEC firms in the next few years, he says, and the oil and casino industries will be among the most prominent private-sector investors, as they have a strong presence in the area. In addition, some roads and bridges that had temporary repairs after the storms will need more permanent repairs.

We at SullivanKreiss know of at least a couple of clients who have been considering opening a branch office in the Gulf Coast in anticipation of a building boom. There are still a lot of uncertainties, however, that complicate any decisions about expanding in the region. With many displaced New Orleanians still living in other areas, the question remains about how many will return home and when. There have been numerous reports that these residents have had difficulty getting reimbursed for their losses from insurance companies and the government.

New Orleans is still building consensus about how to rebuild. The city released a preliminary plan in September that described how whole sections of the city would be reborn. Themes ranged from creating “town centers” and business developments anchored by a major retailer to expanding the city’s public transportation system with more streetcar or light-rail lines.

The casino industry hasn’t delayed in reinvesting in the Gulf Coast. For instance, Harrah’s, the largest casino corporation in the world, is planning a $1 billion dollar expansion of the 30-acre facility it already owns in Biloxi, Miss. In the French Quarter of New Orleans, Harrah’s invested $170 million into the construction of a 450-room hotel across the street from its casino.

Before the hurricane, Mississippi law required casinos to be on water, either on riverboats or on barges tied to shore. But soon after the storm, the state changed its laws to allow Gulf Coast casinos to build on land. Land-based casinos will be less vulnerable to hurricanes, and can be built much bigger.

The mayor of Biloxi has predicted that the casino business will double in size within a decade. There’s already been a land rush in East Biloxi, a long peninsula home to a number of casinos, and long a home for working class people.

Another interesting development resulting from Katrina rebuilding may be a boost to the modular home industry. Once shipped to its final destination, a modular home can be set on its foundation in less than a day by a small team of workers. Most of the labor to construct the home is done at the factory, which could be in another state. Leaders in this industry believe that because modular homes have a speed advantage over traditional site-built homes, they could gain acceptance in a part of the country that has not been particularly receptive to them in the past. Some even believe modular construction could make inroads in the small commercial building market.

What do you think? Is your firm looking at opportunities in the Gulf Coast? Let us know.