Post-Hurricane Andrew, Retail Returns to S. Miami by Bob Andelman

Turning his back on what was left on his home, Gerry Bovenkamp climbed into what was left of his new Honda Accord and drove toward The Falls. It wasn't an easy drive, considering most of the three miles between his home and his shopping center were either flooded or impassable due to debris. He took many a detour over soggy lawns and through the backyards of what used to be people's homes, around fallen telephone poles and splintered power lines, a route he could never retrace. At several points he felt disoriented, so alien did the South Miami landscape appear, devoid as it were of road signs and familiar landmarks.
Half a mile from The Falls he was forced to abandon his car and walk, encountering the most treacherous obstacle in his path on the mall's perimeter, a barrage of fallen main power lines from a nearby substation, surrounded by puddles of standing water. Bovenkamp had no way of knowing which lines, if any, were live, so he stepped ever so gingerly.

When he finally saw The Falls, his heart sank. It looked as if it had been in a war and lost.

Trees and construction debris filled the 446,881-square-foot mall's parking lot, walkways and interior lakes. Roof shingles were everywhere but on the roof. Ceiling beams were broken. Air conditioners from the roof of Bloomingdale's and mall restaurants were uprooted, leaving gaping holes.

Hurricane Andrew did to this 55-acre Heitman Retail Properties shopping center what it did to much of South Florida on August 24, 1992. Two years later, The Falls and, a few miles further south, Cutler Ridge Mall, are fully back in operation. What's most remarkable is that these two centers as well as many smaller strips in the path of the hurricane are in better shape today than they were pre-Andrew. Their trials and travails offer lessons of value to every Florida retail center developer, owner, manager and store operator.

"The hurricane did some strange things," says Steven Cranman, executive director of the Perrine-Cutler Ridge Council. "There were (retail) vacancies beforehand. We lost a number of shopping centers. If they weren't doing well, they just didn't rebuild. What's been rebuilt is what will be full and not speculative."

From The Falls south to Cutler Ridge Mall, retail is on fire in South Florida. Virtually every building is either new, renovated, remodeled or, at the very least, re-landscaped. "There isn't a chain who's anybody who isn't trying to get into this corridor," says John C. Breder, president of The Breder Companies, a local retail developer and manager 1.3-million square feet in South Florida, including six centers substantially damaged by the hurricane.

Shopping habits were permanently changed by the experience, Cranman says, because the old stores simply ceased to exist, for weeks, months, years and in some cases, forever. Aggressive marketing, promotional gimmicks and price-cutting could never have caused the wholesale adjustments Hurricane Andrew made overnight.

"This happened for free," Cranman says. "Whoever was first on the block to reopen was able to create a tremendous customer base. I've lost a significant number of small companies but a lot more national companies are coming into the area that were not here before the hurricane. We've got chicken wars! Sears is expanding their presence by adding a Homelife store. Rooms To Go is expanding. Waterbed City is here now. Across from Cutler Ridge Mall, we've got a United Artists theater going in that was not here before. Builders Square and Pep Boys are coming neither was here before.

"They took advantage of property values dropping, prices being cheap. They've got a tremendous opportunity to make money," he says.

The Falls
You couldn't have convinced Gerry Bovenkamp there was a sunny side to the hurricane when he began surveying damage the morning after the storm.

Like most retail center managers operating in Florida, Bovenkamp had a hurricane plan in place: things that must be put away, signs that had to be taken down so they wouldn't become missiles. And all those things were done the day before. An area within the parking garage was set aside for police operations during the storm. Bovenkamp oversaw preparations that day some stores boarded up, some didn't; it was their choice, their responsibility.
Bovenkamp left the mall briefly to board up his home, then returned at 9 p.m. to check his staff's work. "I felt bad leaving the security guards," he says, but his family needed him, too.

In fact, Bovenkamp shouldn't have been anywhere near Andrew. Saturday, he was in Dallas, situating his freshman son at Texas Christian University, when he received a frantic call from his wife: "Gerry, this thing is heading right at us!" Bovenkamp flew home immediately on Sunday, the day the storm hit. He rang up a huge cellular phone bill in-flight, calling his bosses at their homes in Chicago, warning them The Falls was dead in the path of Andrew. Don't worry, he said, we're taking all the precautions we can.

The morning after the storm, about 8 a.m., Bovenkamp told his family, "I gotta get to The Falls." He figured the home office in Chicago must be climbing the walls, eager for a report. But there was water everywhere and his wife's car was under a tree. Two hours later he was still at home, plotting a daredevil escape, when the first car maneuvered its way past. And what an absurd sight it was no glass, no windows, battered and bruised. As an act of faith, Bovenkamp got in his own car and ventured out.

The Falls opened in 1980; Bovenkamp signed on as mall manager two years later under developer and then owner Alec Courtelis.
"Mr. Courtelis was a perfectionist," Bovenkamp recalls. "He loved The Falls. He lived only about a mile away and would come by every weekend. The first week I was here, he left a message with security that there was a screw missing from the directory."
As he laid eyes on The Falls, post-Andrew, Bovenkamp's first thoughts were of Courtelis and how crushed he would be if he could see his beloved Falls now.

Finding his security guards had survived the storm, they established a perimeter around the property to keep out looters. Bovenkamp put them on 12-hour shifts. "The first thing I wanted to do was protect the property," he says.

Incredibly, the phone in the mall office still worked.

"I called Chicago. They were all in a conference room, waiting for my call," Bovenkamp recalls. When he finally reached the management at Heitman, the magnitude of what had occurred hit the mall manager. Hard. "I said, 'You're going to have to forgive me,' and I broke down."

His euphoria that the physical plant still stood faded into a numbness that would last for days. Gathering himself, Bovenkamp described the mall as if a bomb had gone off. But they already knew that unbeknownst to Bovenkamp, who had no electricity at home or on the job, The Falls had already appeared on national TV. It wasn't a pretty picture.

Chicago asked what his immediate needs were. That was easy: roofing materials and workers to install them. Only 50 percent of the mall's shingles withstood the storm and Bovenkamp's No. 1 concern was the threat of more rain. He also needed emergency generators for electricity. Like his home, The Falls would not be back on-line for power for some time to come.

"I walked around," Bovenkamp says. "It was a lot worse looking than it really was, with the exception of Bloomingdale's." Bloomingdale's, the prize jewel of The Falls, took the blunt of Andrew's fury because the winds and rain came from the northeast. Everything blown off or through the upscale department store roofing materials, glass windows, roof air conditioners, merchandise came into the center.

For those who may be unfamiliar with its design, The Falls is an unusual mall because it is open-air, yet inward-facing. Anchored at one end by Bloomingdale's and United Artists Theaters at the other, all the stores in between face each other across lush tropical lakes. Before the storm, the mall was in the process of raising its walkway canopies to create an even brighter, airier atmosphere. As post-hurricane photos prove, only the newest roofs survived the storm intact.

It's lucky for Bovenkamp and The Falls that roof renovations were already underway, because it created an opening for the mall to get supplies and finish work already planned. While other centers scrambled for contractors and roofing materials, The Falls already had its order in and workers secured.

Monday night, Bovenkamp, his security guards and anyone else available covered up broken storefronts as best they could. By Tuesday morning, a truck arrived full of visqueen to provide temporary roof cover, plus permanent roofing supplies and plywood for the windows. By Tuesday afternoon, a security fence was erected, enclosing the entire mall and parking areas. The sole entrance was manned by the National Guard. A commissary was set up on the premises to feed construction workers and mall employees.

"We gave the Red Cross a place to set up and serve meals," Bovenkamp says. "I had a couple vacant spaces and I opened them up for out-of-town building inspectors and utility workers from around the state. We had probably 30 to 40 people sleeping in empty spaces. We even created showers for them."

(The first place the roofers got to work was not Bloomingdale's or any of the mall's specialty retailers. Heitman sent them directly to Bovenkamp's home so he could keep his mind focused on The Falls.)

There weren't many light moments in the early days of restoring order to The Falls, but one stands out in Bovenkamp's mind.
"Wednesday, the third day after the hurricane, one of my cleaning people showed up for work," he recalls. "Her regular job is to go around the center with one of those little dustpans and sweep up litter. Well, there she was, on the sidewalk, sweeping up leaves! We've got debris everywhere, the place is fenced, and she's sweeping leaves! I got a smile out of it. The people from Chicago were down here by then. They took one look at her and said, 'Gerry, you've really got your people trained well!'"

One of the ironies of the storm damage was that it left The Falls sign tower out on South Dixie Highway unscathed much to Bovenkamp's eternal disappointment. "I never liked that tower," he says. "We brought out an engineer to examine it." Bovenkamp crossed his fingers, praying for some unseen damage requiring it be dismantled. No such luck. "The engineer said, 'That tower is probably straighter than it was.' "

Piece by piece, The Falls came back. By October 14, 1992, 26 of the center's 56 stores re-opened. Bloomingdale's didn't re-enter the fray until Nov. 6, 1993, a full year after the hurricane. The 7-screen movie complex took considerably longer, in part because the damage was vast, but mostly because United Artists made a decision to expand to 12 screens and 40,000 square feet. The new theaters re-opened on January 27, 1994. "To bring it back in the time frame we did is a compliment to our company and the people who worked for us," Bovenkamp says.

The real miracle of The Falls, however, is not merely that it was rebuilt to its former glory. No, the surprise twist in this story is that The Falls is roughly doubling its original size and announced a second premier anchor tenant, R.H. Macy & Co. In Spring 1996, Macy's will take occupancy of a new 230,000-square-foot store at the mall's west end and anchor an additional 170,000 square feet of new shops. (A third anchor position is still available.)

And that's not all. Within The Falls' original space, The Gap leased 11,700 square feet. Banana Republic nearly tripled its space, from 3,300 to 8,600 square feet. Additional new tenants include: Swim & Sport, GapKids, Prezzo Italian Restaurant, Sunsations, Alex & Ivy, Bath & Body Works, Mimi Maternity, William Sonoma and Los Ranchos Steakhouse. Available space is 96.7 percent leased.
"That made it all worthwhile," Bovenkamp says. "We were doing some things to change the mall before the hurricane. But The Falls entered into a new era after Andrew. It shows people can make something positive come out of something tragic."

Cutler Ridge Mall
If folks ever took the southern-most enclosed shopping mall in the United States for granted, those days ended after Hurricane Andrew.

Residents from Homestead to Key West missed the Cutler Ridge Mall during the 18 months it was out of business. Its redevelopment during that time became as much a symbol of the area's comeback as turning the electricity and water back on.

"People didn't, before, think, 'That's my mall,' " Steven Cranman says. "But in rebuilding the mall, people said, 'I'm so glad my mall is open again!' There's an identification of community ownership."

Cutler Ridge Mall beaten so badly into submission by Andrew it didn't reopen en toto until March 25, 1994 never slipped from the local mindset, even while it was closed. The Federal Emergency Management Agency (FEMA) set up operations on the premises, as did the National Guard, Southern Bell and a whole host of other federal and local agencies providing aid to hurricane victims. So people never lost the habit of going to the mall; the products and services they walked away with was quite different, however.

The Edward J. DeBartolo Corp., owner of Cutler Ridge, mobilized its malls across Florida to support the rebuilding of its broken mall. The Coral Springs Square Mall served as a staging point for other DeBartolo malls, eventually sending 80 truckloads of supplies into the devastated areas. At corporate headquarters in Youngstown, Ohio, employees donated $28,000 to personally help their counterparts at Cutler Ridge.

Among the mall's stores, Sears returned first, just 48 hours after the storm. Morrison's followed it a week later. Few other tenants were so lucky. The Cutler Ridge Sears took advantage of its ability to reopen and established itself for months as the chain's No. 1 unit based on volume.

Before the storm, Burdines had two stores at the mall. Only one was rebuilt. The other was demolished and reborn as a Luria's and Linen Supermarket. Overall, DeBartolo reduced common areas but leaseable space held steady.

Eureka East Shopping Center
Some of the 21 stores at the 25,000-square-foot Eureka East Shopping Center on SW 184 Street, a block east of South Dixie Highway, held up better than others. Being an L-shape helped; only the stores facing east bore Andrew's full brunt. But the whole center was rocked, including an entire section of roof which collapsed. All the storefronts vanished; all the interior ceilings fell. Air conditioning units were either in the parking lot or gone altogether.

"Regrettably, we didn't have any plan," says John Breder, president of The Breder Companies, which owns and manages Eureka East. "But the amount of devastation we had across our properties any plan we would have had would have been crippled. My offices were destroyed. My house (located just blocks away) was destroyed. We had our insurance, a considerable amount of experience and knowledge. We just rolled up our sleeves and went at it."

Breder and his employees literally rebuilt Eureka East while working out of their cars in the parking lot. There was no water, electric, land-line telephone or postal service for a long time. "It was nothing short of miraculous to get done what we got done," he says. When it was time to start leasing space again, Breder set up shop within his insurance agent's office near Miami International Airport.

There was never any question about rebuilding Eureka East or the company's five other affected retail centers. Demand for space was so high that Breder thought it foolish to walk away from good locations.

But there were some potential tenants Breder steered clear of during the rush to find leaseable space, including out-of-town, storm-related retailers setting up temporary shop to sell furniture, home-improvement supplies or parts.

"They were just here for the storm," Breder says. "You knew they were only going to be here a few years. And they're falling like flies, now. Carpet stores came in saying, 'We'll pay $5 more per square foot than you're asking.' But now they're drying up.

General Electric opened up several supply stores. They're honoring their leases but they've pulled out of all their locations."
Breder's preferred tenants were small, displaced merchants who had successful operations before the storm. He connected better to small tenants. In fact, being small and spry helped The Breder Companies re-open the doors of centers such as Eureka East in just three months.

Homestead Towne Center
No one will be happier to see the Homestead Towne Center reopen this fall than the employees of the center's Eckerd Drugs store. They've been operating out of a trailer for nearly two years, believe it or not.

The Towne Center took longer to come back than other retail centers in the hurricane-afflicted area because Kimco Realty chose to tear down what was left of the original and rebuild from the ground up. The new Towne Center will be smaller than the original, but with room to grow on demand.

Tom Meredith, Jr., Florida Leasing Manager for Kimco, still remembers his first glimpse of the center then known as the South Dade Shopping Center post-Andrew.

"The front of the Ames (then functioning as a flea market) was pushed in," he says. "The roof had collapsed in on it, although the roof was mostly in the parking lot. Landscaping was gone.

Windows were blown out. When I got there, looting was going on in all the tenants' shops. Publix was handing out food that was going to spoil; there was a line out through the parking lot.
"Meanwhile, the woman from Spec's Music was demanding all the entrances be closed, so I asked the National Guard," Meredith says. "The National Guard said, 'Sir, if I do that, I'll have a riot.' People were desperate, there was no food, no water. I went back to the woman and said, 'I'm sorry. You've got insurance. There's nothing I can do about it.' But I felt bad. She was sitting there, watching her merchandise walk out of her own store and she couldn't do anything about it."

Meredith immediately boarded up the stores, more to protect looters from themselves than to save what was left inside the ravaged shops. "We didn't know if the buildings were structurally sound," he explains.

The Towne Center's parking lot, centrally located in Homestead, became a busy place. With Kimco's blessing, Eckerd set up a trailer, rent-free, and rent a bare-bones, substitute operation for its lost store. President George Bush even held a press conference in the lot.

Homestead missed the center, especially its anchor. Everywhere Meredith appeared in town since the storm, everyone asked the same question: "When is my Publix coming back?" It's virtually a neighborhood amenity after two years out of action.

When it does reopen this fall, residents will be shocked in the difference in "their" Publix. Instead of the 30,000-square-foot operation, Publix is going with a 56,000-square-foot superstore.
Kimco, a much larger operation than The Breder Companies and one which suffered damage in the Carolinas after Hurricane Hugo, nonetheless lacked a hurricane plan of action before Andrew.

"Our plan was to hope and pray a hurricane never came," Meredith says. "If it ever happens again, we're certainly going to be a whole lot better prepared."

Hard Lessons
What can retail management elsewhere in Florida learn from the hurricane experience of The Falls and other South Florida retail centers? Plenty, from specific situation controls and disaster lease clauses to public relations and pre-arranging for emergency roofing supplies.

"We always had a hurricane plan. We never had a post-hurricane plan," Gerry Bovenkamp says. "What are you going to do if your building needs construction? Are you going to have a roof immediately? Our major damage in the stores was from water. One of the things we learned is that it's important to have out-of-county accounts set up with construction companies so all you have to do is pick up the phone if something happens. We were somewhat lucky because we were already sort of under construction."

Heitman applied the construction lesson nationwide, according to Bovenkamp. Within Florida, that means linking Heitman malls in Tampa and Sarasota with The Falls and vice versa for all means of emergency support.

"It was a great learning experience for us," says Kim Binkley, president of Bradenton-based Oakmont Capital Resources. Oakmont is a third-party management and leasing company which includes four Southwest Florida Wal-Mart centers in its management portfolio. "I can tell you, our office has hurricane supplies now. We never had that before. If someone had said to us, before Andrew, 'Be prepared to cover your property,' well, there's not a Yellow Pages listing for 'Covering Shopping Centers.' "

Oakmont turned to Fort Lauderdale-based Kimco Realty Corp. for advice on how to handle future calamities, based on Kimco's experiences with the devastated South Dade Shopping Center.

"We asked a lot of questions," Binkley says. "What was their source of lumber? Who did they call when the roof fell in? They brought in private adjusters as well as listening to the insurance company to make sure the insurance company offered fair compensation."

Leadership is important. "There can only be one person in charge before the hurricane and there can only be one person in charge after the hurricane," Bovenkamp says. "Someone who knows what needs to be done, someone who can assign tasks. 'You take care of the electrical. You safety. You clean-up.' "

Cellular phones proved invaluable. Bovenkamp had one and rented another for his director of security before the storm hit. But access to their phone numbers was zealously guarded. Only corporate staffers knew how to reach them; none of the tenants were given the numbers. This worked for two reasons. First, it contained costs. But more importantly, there wasn't a lot of time available to talk to tenants when the crisis started and very few answers to offer them.

Most of this story to this point has dealt with the malls themselves. But dealing with dozens, maybe hundreds of individual local and national retailers after a hurricane is no walk in the park either.

At The Falls, national retailers communicated with the property primarily through Heitman's Chicago offices. Local telephone problems made it impossible for Bovenkamp and his staff to contact local tenants; instead, they waited for owners and managers to come around and look at their stores. Early on, however, until architects and engineers went over every store and every space in excruciating detail, tenants were not allowed inside their stores for their own safety.

"We shut the power off to all stores even though we had no power," Bovenkamp says. "We had each tenant sign a letter of indemnification that the power was shut off and we would not turn the power on until they had an electrician check to be sure it was safe."

Every Breder store damaged or affected by the storm had a notice posted as prominently as possible notifying tenants of reconstruction plans, current phone numbers for reaching management, and a personal message: "We hope you and your family are okay."

Breder leases say, in essence, that if the shopping center is substantially destroyed, the landlord has the option to cancel its leases within 60 days. In retrospect, it seems an obvious, simple thing. And certainly the clause worked well for both The Breder Companies and its tenants. But many landlords in South Florida were still negotiating settlements with their insurance companies 60 days after the hurricane.

"They didn't know what was going to happen," Breder says. "On the 59th day, they had to make a decision. If they didn't exercise their (cancellation) option, they were obligated to rebuild."

"We terminated them all," Kimco's Tom Meredith says. "It took some of our tenants two months just to get in touch with us after the storm. There are a couple of tenants we never heard from again."

"Then there's a whole lot of people walking around with crappy lease forms that don't anticipate this kind of problem," Breder adds.

Breder and Meredith both videotaped their centers after the storm for insurance (and archive) purposes. (Breder, by luck, had taped Eureka East just two weeks before the storm.) But if it ever happens again, Breder says he'll make do with still photographs. "How do you send video to the insurance company?" he wonders.

Under the category of public relations, Heitman did more than just get The Falls back on its feet. The parent company also donated $250,000 in hurricane relief money and allowed Bovenkamp to direct the way it was spent locally, including a convoy of ice trucks Bovenkamp personally led from Orlando to Homestead. He also used a portion of the money to provide on-site facilities for the Red Cross and lodging for out-of-town building inspectors.
The Falls was able to feed its security guards and employees in the days following the hurricane because it lays in supplies of water and non-perishable foods every June 14 the start of hurricane season. When the season ends, unused food stocks are donated to charity.

Breder says his company made a point of using only local trade contractors for rebuilding. "We wanted all the money to stay in the community," he says. There was one exception. Local sign companies were booked for months. He couldn't wait that long so the work went to a Clearwater company.

Many developers in South Florida complained that while attempting to rebuild, building codes changed on a daily basis in some communities, causing cost over-runs and general confusion.
"Our new roof (Homestead Towne Center) has a lightweight concrete layer that was poured onto it," Tom Meredith says. "It was required by code."

Kimco will now provide its Homestead tenants with pre-cut storm panels to protect their windows against future storms. Leases require tenants keep the panels accessible and make tenants responsible for erecting them in case of emergency.

Across South Florida, in Naples, the Waterside Shops at Pelican Bay (managed and co-owned by the Courtelis Company in Miami) was weeks away from opening when Hurricane Andrew ripped across the state. Fortunately, damage was limited to horticulture. But the event left an impression on management and tenants alike.

"National chains based here now have evacuation routes and toll-free numbers," says general manager Glen D. Harrell. "In some cases they have sand bags on hand. They have pre-measured the windows and have lumber on hand. The day authorities call a hurricane warning is not the day to call out to Home Depot."

One of the surprises of Hurricane Andrew was the reliability of concrete slab parking garages. "Our parking garage was the safest place to be," Bovenkamp says. "We had a line of cars coming to park in our garage. People parked in the garage with no damage at all, but dumb Gerry Bovenkamp, who runs the garages, parked at home and saw both of his cars damaged."

end

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