My lifelong home is New Orleans.
Sixteen years ago this past August, Hurricane Katrina pummeled the city and the entire region, laying waste to the communities of Pass Christian, Waveland and Bay St. Louis on the Mississippi gulf coast, less than an hour east of the city.
There the devastation was shocking, as literally nothing was left standing. And worse, the levees and flood walls in New Orleans designed to protect the city, which lies 5 ft. below sea level, failed in a number of places, and the entire city was under water within a matter of hours.
But what followed was one of the most remarkable infrastructure systems built in America, rivaling landmark projects like the Hoover Dam. Sixteen years later, after spending $14.6 billion, placing millions of tons of construction aggregates and hundreds of thousands of cubic yards of concrete, the system is still not complete.
The Army Corps of Engineers plans to request an additional $3.2 billion from Congress to assure the new levees will continue to provide their present 100-year level of hurricane protection through 2073. The project is expected to eventually surpass the $20 billion level.
Hurricane Ida – Yet 16 years later to the day, Aug. 29, Hurricane Ida visited its 170 mile-per-hour wind gusts upon our city in a direct blow, where the eye crossed just west of downtown New Orleans, lashing us with the most ferocious winds on the east side of the storm. No resilient construction can withstand that kind of impact, and afterwards, it showed in the devastation throughout the region.
But the new flood control system worked, at least in part. While the city was free of flooding, the hydraulics of Lake Pontchartrain have been sufficiently altered that the Northshore of the city, as well as communities to the west, suffered the worst flooding in their history. So now more work needs to be conducted to protect those areas, and the control of Mother Nature seems to be ever-challenging.
But as we start a repeat of the Katrina recovery – the multi-year effort that has just begun – we know what to expect, and it will be a boon to the construction industry in the region. Recovery work has exploded in earnest, and workers are everywhere trying to restore our region.
With the Katrina recovery as a lesson, here is what we know will be the silver lining of Ida:
Federal Money – The New Orleans MSA and the surrounding region suffered the level of building and public infrastructure damage caused by Katrina, and thus we expect the money coming in will undoubtedly have a positive impact on the economy.
National Exposure – The press after Katrina served us well. The post-Katrina boom was so powerful that we basically plowed through and effectively ignored the Great Recession of 2008. To nearly everyone’s surprise, New Orleans-proper boomed, and the city came back stronger than ever. Now we have the opportunity to promote a successful return to order, and a message of durability due to the effectiveness of the now battle-tested levee system. We can also do this with the backdrop of the pandemic, which has crippled our local tourism and hospitality interests.
Demands on Real Estate – The demand situation this time stands to be even more impactful, in large part due to the significant dearth of inventory the market endured pre-Ida. The pre-Ida market conditions for commercial real estate were less strained, but the residential markets had reached a nearly full state. The strength of the pandemic-driven residential markets will only be powered higher by the recovery.
Is this a great time to be in the aggregates business in south Louisiana? We are sure of that. Watch for the prosperity as the recovery unfolds.
Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers and acquisitions. He has a career spanning almost five decades, and volunteers his time to educate the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at [email protected] Follow him on Twitter @allenvillere.