Weighing the Cost vs. Benefit of Earthquake Retrofitting
Natural disasters are not only scary and dangerous - but also leave a path of economic destruction in her wake. In fact, a new report by the US Geological Survey and FEMA reveals that earthquake damage costs the United States a whopping $14.7 billion annually.
Despite this staggering fact, in Seattle alone, over 1,000 unreinforced masonry (URM) buildings remain vulnerable to seismic events, with little or no retrofitting to protect them. Considering that Seattle has an 86% chance of undergoing a damaging earthquake in the next 50 years, the need for earthquake preparedness has never been more urgent.
So why aren't all buildings retrofitted with these stats? Well, it is a decent amount of time and money property owners have to invest, as well as potential disruptions to their business. Plus, Seattle still lacks mandates or ordinances to enforce it. However, putting it off or not retrofitting isn't necessarily the right solution - it can lead to costly damages.
So it comes down to the question - Is the cost of earthquake retrofitting worth it? Rife Masonry is here to break it down with facts and the professional opinion of a retrofit contractor.
This guide will go over the costs, potential risks of not retrofitting, and the benefits to help you make an informed decision.
How Much Does Earthquake Retrofitting Cost
The first hurdle for most property owners considering earthquake retrofitting is the upfront cost. The cost of retrofitting can vary widely based on several factors, including the age of your building, its square footage size, current structural integrity, location, access, and other elements. For commercial properties, these expenses often range between $5,000 - 10,000 or more for a seismic retrofit, depending on the complexity and size of the project.
In addition to the upfront costs of the project, there can also be some additional costs, such as shutting down operations for a time period or moving out tenants. So yes - earthquake retrofitting can sometimes be a big commitment in terms of time, money, and energy - there is no denying that. But considering that Seattle has an 86% chance of experiencing a damaging earthquake in the next 50 years, there’s no getting around the need for it.
The Cost of Not Earthquake Retrofitting
Choosing not to retrofit your commercial property comes with risks—many of which carry significant financial consequences.
Liability for Damage and Injury
If your commercial building is not properly retrofitted and someone gets hurt during an earthquake, you could face legal liability. Should tenants, employees, or visitors sustain injuries or worse, you may find yourself in court, potentially being held negligent for failing to reinforce the property. The legal costs and settlements could far exceed the initial investment you’d make in retrofitting.
Potential Loss of Income
An unretrofitted building is far more likely to suffer severe damage during an earthquake, and the fallout can be catastrophic for your bottom line. Consider these scenarios:
- Your Building Becomes Unusable: Significant structural damage could render your property unsafe, inhabitable, and unusable. This means you won’t be able to carry on with your business and lose out on potential revenue.
- Damaged Merchandise: If you own a retail business, your inventory may become destroyed or damaged during an earthquake, further dampening revenue streams.
- Evacuated Residents: If you own an apartment complex or multifamily housing, your residential tenants will need to move and find alternative housing if your building becomes uninhabitable.
All of these scenarios could hurt your operational income.
Payment to Fix Damages
The most obvious cost of not retrofitting is the amount you will have to pay in damages if an earthquake happened. The cost of this will obviously depend on the extent of the damage and the size of your building, but it can range anywhere from $10,000–$100,000.
Other Economic Benefits of Earthquake Retrofitting
Beyond preventing disaster-related losses, business closure, and lawsuits, earthquake retrofitting offers plenty of financial benefits that make it a smart investment for property owners.
Lower Insurance Premiums
Insurance companies are always evaluating risk, and a retrofitted building is far less likely to sustain significant damage during an earthquake and be slapped with a lawsuit. Many providers offer reduced premiums for seismically retrofitted buildings, potentially saving you thousands of dollars over time. Be sure to connect with your insurer to discuss how retrofitting could influence your policy.
Higher Property Value
When buyers are looking for buildings to purchase, they don’t want to have to worry about retrofitting it - it’s a pain on their part. So, when the time comes to sell your property, the additional safety features can enhance your property’s market value. It signals to potential buyers that you’ve taken proactive measures to ensure the durability and longevity of your property.
Compliance with Building Codes
Many local governments are tightening regulations on older properties to meet updated seismic safety codes. Getting ahead of these mandates by retrofitting your building ensures compliance, saving you from costly penalties or required upgrades in the future. Rife Masonry, for example, has extensive experience helping property owners meet building code requirements.
Grants or Tax Breaks
Many local governments and organizations are in the business of giving tax grants or tax breaks for property owners to retrofit their buildings - specifically historic buildings. Local Seattle examples include grants from the Washington Trust for Historic Preservation, which supports retrofitting historic buildings along Seattle's waterfront. Additionally, property owners can take advantage of the Federal Historic Tax Credit, which covers up to 20% of seismic retrofit costs for buildings listed on the National Register of Historic Places. These incentives help offset the financial burden and make retrofitting more affordable.
Is Earthquake Retrofitting Worth It? Weighing the Costs Against the Benefits
Now that you know how much earthquake retrofitting costs, what costs you can incur if you don’t retrofit, and what financial incentives are in play, let's weigh the costs VS. benefits to see if it's “worth it”.
Not Retrofitting:
- There are no upfront costs.
- You won’t have to shut down operations for the retrofitting process.
- High potential for major structural damage and significant financial losses in the event of an earthquake.
- Exposure to legal liability, including costly lawsuits and settlements, if damages harm tenants or others.
- Prolonged loss of income due to operations being shut down after a disaster.
- Potential for your building to collapse.
Earthquake Retrofitting:
- There are upfront costs and downtime during the retrofitting process.
- Enhanced safety for your building, tenants, and belongings during an earthquake.
- Reduced damage means lower repair costs, minimal downtime, and quicker revenue recovery post-earthquake.
- Financial benefits such as lower insurance premiums, access to grants, and eligibility for tax breaks.
- Peace of mind knowing your property is better protected from the risks of an earthquake.
So yes, the reasons for retrofitting outweigh the reasons for not. But, the most important factor is the likelihood of a damaging earthquake striking Seattle - 86 percent. It's a near certainty.
Plus, Seattle has been working on adopting mandatory retrofit requirements for URM buildings. The ordinance (still under consideration as of late 2024) would:
- Require seismic retrofits within specific timelines.
- Establish different compliance deadlines based on the building's risk category and use.
So, while there are no requirements yet, they are in the works, and as a smart business owner, commercial property owner, or owner of a historic building, you should invest in seismic retrofitting now and be prepared. By acting now, you have the opportunity to protect your investment, your tenants, and your bottom line.
If you work with an experienced and reputable retrofit contractor, they will come up with a seamless project schedule that will minimize disruptions to your business.
Let's Retrofit Your Commercial Property Today
If you’re ready to safeguard your property against the next big earthquake expected to hit the Seattle area, Rife Masonry is here to guide you every step of the way. Reach out to our expert team for an estimate, and together, we’ll create a retrofit plan that protects your most valuable asset.