Developer Jeff Lamkin knew the risks when he paid $250 million for 63 acres of an island off the Texas coast. But he saw only upside in the quaint little beach town of Port Aransas.
Over the next 10 years he built Cinnamon Shore, a village of luxury vacation homes fortified by the latest hurricane-proof construction methods. Then Hurricane Harvey blasted ashore, leaving behind $125 billion of devastation along the Texas coast. It was the test every coastal investor dreads. But Cinnamon Shore passed with flying colors.
“To the left of us and to the right of us was total destruction,’’ Lamkin said. “But we had better construction, and so we just held up really well.’’
At a time when climate change is being linked to the rise of monster storms, Cinnamon Shore helps explain why real estate developers are still willing to thumb their nose at Mother Nature, with residential sales along the Gulf Coast increasing 60 percent over the last five years – almost twice the rate of the nation overall, according to Attom Data Solutions.
Panama City, Florida, ravaged by Hurricane Michael last month, is the latest example of the potential costs, yet developers like Lamkin still say it’s worth it.
Rising Investment
Vacation beach towns like Port Aransas and Panama City are increasingly dependent on new building methods to protect against catastrophic storms. As older structures get wiped out, they’re replaced by stronger construction that cushions against the next disaster, emboldening developers to keep investing. Buyers are on track to sink about $2 billion into Gulf Coast homes this year, based on the mean selling price, according to Attom Data. That would be up from $1.8 billion last year, and a 12-year high.
Developers aren’t deterred by rising insurance rates, which are largely passed along to buyers and renters, or by more expensive building requirements. Higher costs have simply “forced more expensive development” on the coast, said Charles Watson, a disaster modeler with Enki Research in Savannah, Georgia. Increasingly, coastal beach towns cater to the vacationers who can afford it.
A year into Port Aransas’ recovery from Harvey, Cinnamon Shore remains Lamkin’s most successful beachfront venture, with “solid returns on every level,’’ he said. This year will go down as the project’s best yet, with $40 million in sales for homes ranging from $750,000 to $3 million.
Starting Phase II