Active Construction Sites Are Climate Risk Blind Spots: Lessons from Hurricane Ian

Most conversations about climate resilience in commercial real estate (CRE) development happen when designing new structures to withstand future storms or when repairing or retrofitting existing ones after disaster strikes. Far less attention is paid to the in-between stage: the active construction site. 

This blind spot creates significant risk for CRE developers today. Forty-five percent of construction projects globally now face weather-related delays, which translates to billions of dollars in additional costs and revenue losses. 

To better understand the financial impact of climate events on active construction sites—and how to mitigate risk going forward—The Epicenter editors interviewed Joe Rozza, Chief Sustainability Officer at Ryan Companies. 

In September 2022, when Hurricane Ian made landfall on Florida's west coast as a Category 4 storm, two Ryan Companies senior living projects were mid-construction. Roofs weren't fully sealed. Windows weren't yet watertight. Systems were partially installed, materials staged and waiting their turn.

According to Rozza, Hurricane Ian was responsible not for a one-time setback or loss but a chain reaction—one that uncovered a critical learning opportunity for how CRE leaders should think about climate risk during the construction phase.

When Construction's Careful Choreography Falls Apart

“Construction sites are highly choreographed events," says Rozza. Electrical, mechanical, plumbing, carpentry, roofing—each trade arrives on site in a precise sequence, timed to the availability of materials and the completion of prior work. One delay cues the next.

"When you perturb that choreographed thing with an event like a hurricane," Rozza says, "there's a cascading effect."

At both Ryan Companies Florida sites, wind-driven rain entered through incomplete roofs and unfinished windows, soaking drywall, mechanical systems, and interior finishes. Work that had just been completed by one trade had to be redone before the next could proceed.

The damage spread backward and forward through the schedule, touching trades that hadn't even arrived yet and undoing work that had already passed inspection. In other words, a one-time event caused issues on multiple dimensions for a wide range of stakeholders.

First-Order Impacts: Immediate Damage

The first-order impacts of Hurricane Ian on Ryan Companies’ projects were direct and familiar: water intrusion, damaged materials, and the painstaking work of cleanup. In some cases, walls had to be reopened so saturated drywall could be removed and mechanical systems reinstalled. Mold remediation followed. Power outages across the region meant bringing in temporary generators just to keep work moving, adding cost and complexity while the clock kept ticking.

Second-Order Impacts: Schedule Shockwaves

Outside of immediate repair and restoration, schedule delays stretched to 70 days. "In the world of construction, that's huge," Rozza says. Material pricing guarantees—often negotiated months in advance to lock in costs—began to expire. As schedules slipped, fixed costs transformed into variable costs, with material expenses jumping 5 to 20 percent. 

Meanwhile, materials ordered pre-Ian were still arriving. "You've got all this inbound material," Rozza says, "now you've got to go and store it." Storage costs mounted, logistics grew more complex, and coordination across vendors became harder to manage.

Third-Order Impacts: Compounding Risk

After a big storm, construction collides with forces far beyond the job site. Ian hit during the post-COVID inflationary period, when supply chains were already strained and price volatility was the norm. That context amplified every delay and renegotiation. 

Insurance coverage added another layer of friction. As is often the case, the amount insurers paid for damage did not match the true cost of repair, particularly once material price escalations were factored in.

All in all, the price tag was steep: one project recorded $3.5 million in total insurance claims, with roughly $1 million paid out of pocket by Ryan Companies. The second project incurred about $1.6 million in total insurance claims, with $620,000 also paid out of pocket by Ryan Companies.

What the Risk Mitigation Playbook Changes

A recently published Risk Mitigation Playbook (previously reported on by The Epicenter)—that was created by a coalition including The Resiliency Company and Ryan Companies—helps CRE stakeholders manage physical and transition risks and offers a way to anticipate these disruptions rather than react to them. Had its recommendations been available for Ryan Companies’ Florida projects, Rozza says, the outcome could have looked very different. 

Below are several recommendations from the playbook for stakeholders like Rozza, each of which applies to active construction sites:

• Conduct site-specific risk assessments: Before construction begins, teams should evaluate how physical climate risks might affect means and methods, in-progress work, and worker safety. Those risks can then be built into schedules and mitigation plans, rather than treated as improbable disruptions.
• Align insurance coverage with potential climate risks: With risk mitigation guidance, like what the playbook offers, Rozza says, “we would have bought some of the newer insurance products around parametric insurance,” which pay out based on storm conditions rather than assessed damage, providing faster liquidity and avoiding valuation disputes. In retrospect, Rozza says, Ryan Companies could have had a more intentional conversation about the coverage they were buying and the risks they were taking on. “We were carrying the force majeure risk,” says Rozza, referring to liability for natural catastrophes. “We should have insured on that.” 
• Build climate risk into scheduling and material contracts: Accounting for potential storm delays upfront—and extending material pricing guarantees two or three months beyond anticipated completion dates—can reduce exposure when weather intervenes.
• Harden construction sites: The playbook encourages proactive hardening of active construction sites, even if it means deviating from the usual sequence. Prefabrication, better material protection, and early-stage fortification can limit how much unfinished work is exposed when storms arrive. As Rozza puts it, understanding risk can “justify actions that may be a little bit out of that sequence of highly choreographed maneuvers."

Protecting the In-Between

Ryan Companies' experience with Hurricane Ian demonstrated that construction is a distinct phase of climate vulnerability, one with its own hazards and economics. Proactive strategies, like those in the Risk Mitigation Playbook, offer a way to anticipate the ripple effects of disruption and keep the choreography from unraveling the next time a storm arrives.

"You might have slightly more upfront costs to manage the risk," Rozza says. "But you've got to think about what you're saving on the back end."

Read more in the Risk Mitigation Playbook.

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