How Commercial Building Owners Can Save While Improving Earthquake Safety

In these uncertain times, it can be uncomfortable to consider the disasters that might still be looming but have not yet struck. Earthquakes, for one, are a fact of life for people living in California and other states where fault lines converge. They strike without warning, can occur at any time, and can leave behind costly destruction and even death. 

The cost of an earthquake retrofit may be a lot to consider for your commercial building or mixed-use development. However, the costs to repair earthquake damage, and the priceless loss of human life as a result of delaying a retrofit is far worse. 

Owners of commercial buildings and mixed-use developments should understand the vulnerabilities of their real estate investments, particularly for multi-tenant buildings such as soft-story buildings.

What Is a Soft-Story Building?

In the past few decades, recent earthquake disasters have shown that soft-story buildings have a greater vulnerability. A soft-story building is usually a structure composed of wood framing with an open ground floor for retail storefronts or parking, topped with multi-tenant residences. This construction method is prevalent for mixed-use developments, particularly in cities where land is in high demand, and building up is more cost-effective. 

Unfortunately, despite their popularity in modern commercial real estate developments, this style of building is also more susceptible to earthquake damage. These buildings often lack the strength they need to prevent leaning or collapse in the event of shifting ground from an earthquake. 

A primary example that advocates refer to when encouraging earthquake retrofitting is the magnitude 6.7 earthquake that hit the Northridge neighborhood of Los Angeles in 1994. At Northridge Meadows, an apartment complex with 163 units, a collapse precipitated by the earthquake crushed first-floor apartments, and 16 people were killed. It was the deadliest case of apartment collapse in the 1994 quake, although almost 50,000 apartments were damaged or destroyed, and approximately 60 percent were soft-story buildings. 

As a result of the Northridge quake and its damage, Los Angeles instigated an ordinance in 2015 for required retrofits to prevent future loss of life for the California city’s most vulnerable structures. The directive covered over 13,000 “soft-story buildings,” which are defined as: 

  1. Wood-frame structures that were built or permitted before January 1st, 1978
  2. Structures with a ground floor for parking or other open space
  3. Buildings with four or more residential units

What Does an Earthquake Retrofit Entail?

Retrofitting a commercial building involves adding new features and technology to old or outdated systems such as power plants and energy efficiency, as well as improving the structural integrity and strength of the building. It also entails modifying the structure to enhance their resistance to ground motion, soil failure, and other results of seismic activity. 

The process of retrofitting a commercial building first requires the preparation of building plans, followed by applying for necessary permits. Property owners should hire a licensed structural or civil engineer or architect who specializes in seismic retrofitting to develop an appropriate plan. Once approved, the retrofit project may take four to 12 weeks to complete, depending on the scope and size of the project. 

How Much Does an Earthquake Retrofit Cost?

It is somewhat tricky to place a blanket projection on costs to retrofit a commercial building or development, mainly because projects will vary widely depending on the size, level of seismic hazard or risk, and the work necessary to upgrade and strengthen the construction. For this reason, the commercial property owner should consult with a licensed civil or structural engineer or architect and preferably, one who specializes in seismic upgrades. 

From an analysis by the Community Action Plan for Seismic Safety (CAPSS), however, a broad range of commercial building retrofit costs is between $60,000 and $130,000. The costs will, of course, be higher for larger buildings. 

If you can’t afford to retrofit your commercial property, there may be financing available. For example, the city of San Francisco offers a public financing option through AllianceNRG/Deutsche Bank. This option is for property owners who wish to finance either mandatory or voluntary retrofitting projects for seismic upgrades.

Retrofitting may also impact your tenants, and there are resources available to help them, mainly if they will experience hardship as a result of the retrofit project. 

Reasons to Retrofit Your Commercial Building for Earthquakes

There are several essential reasons why earthquake retrofitting is crucial for commercial building owners to implement for their more vulnerable buildings, such as soft-story structures. Beyond protecting your real estate assets, and more importantly, your tenants’ lives, the cost-benefit of earthquake retrofitting weighs in favor of making your building more structurally safe: 

  • Retrofitted buildings are more likely to be usable after an earthquake
  • Earthquake retrofitting may prevent having to shut down a building after an earthquake
  • Construction costs are higher after earthquake events
  • The cost of repairing earthquake damage to a building is four times higher than building a more durable structure from the outset
  • Commercial property owners may qualify for decreased costs for insurance and liability policies after retrofitting their buildings

Opportunities to Save on Earthquake Retrofitting

Not surprisingly, many state and municipal bodies in California responded to the ordinance by creating programs to incentivize commercial building owners to retrofit their real estate developments for earthquakes. One such initiative is the Seismic Retrofit Cost Recovery Program in Los Angeles, which allows building owners to recover up to 50% of retrofit costs after completing the project.

However, few commercial building owners have taken advantage of this and other rebate programs for earthquake retrofitting. Only a year ago, the Los Angeles City Council found that only 14 percent of approximately 15,000 soft-story buildings complied with the 2015 ordinance. 

The low level of compliance is particularly alarming because California has been awaiting “the big one” for more than 100 years. According to the U.S. Geological Survey, Los Angeles has a 31 percent chance of experiencing a magnitude-7.5 earthquake within the next 30 years. If the Northridge earthquake was just a magnitude-6.7 and at least 57 people died, many due to soft-story buildings, what might we expect from a magnitude-7.5?


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