PhillyDeals: Insurers may use Irene to boost rates

It's not as bad as we had thought,"

Michael Tiagwad

, boss at the commercial insurance agency

Conner Strong & Buckelew

in Marlton, said early Monday.

Claims from Hurricane Irene were still accumulating, but "mostly it's been residential losses," not big business claims, Tiagwad said. "We were prepared for much wider-spread power outages."

Insured losses from Irene could total $2.6 billion, Kinetic Analysis Corp., of suburban Washington, told Bloomberg News, with total damage about $7 billion, half as much as feared before the storm.

Insurance stocks such as Radnor-based Lincoln National Corp. rose sharply Monday, and not just because damage was less than it was plotted to be.

Analysts such as Paul Newsome, at Sandler O'Neill + Partners L.P., in New York, urged clients to buy property insurers such as Allstate Insurance Co., on the theory that well-publicized damage from Irene and last spring's storms will make it easier to raise insurance rates, after a cycle of flat prices.

"Insurers are hyping Hurricane Irene for higher rates with even more vigor than the Weather Channel hyped it for higher ratings," even though annual storm damage is supposed to be baked into rates already, complained J. Robert Hunter, insurance director for the Consumer Federation of America.

Beyond the loss of lives and property, Irene repairs will help the weak economy, wrote David Kotok, boss at Vineland- and Sarasota-based Cumberland Advisors: "Billions will be spent on rebuilding and recovery," juiced by "a flow of federal financial assistance, [that] will put some people back to work, at least temporarily."

Philadelphia-based landlord

Liberty Property Trust

is preparing to start work next month on more than two million square feet of new warehouse space along Pennsylvania's free interstate highway corridor.

That includes a 972,000- square-foot distribution center near Carlisle off I-81, and 1.2 million square feet near I-78 in the Lehigh Valley, close to East Coast ports and markets but away from congested I-95 and turnpike tolls.

The buildings have no tenants, so far. But Liberty's existing 18 million square feet of warehouses, in the arc from Allentown to Hagerstown, Md., are "99 percent leased," and tenants are looking for larger spaces, Bob Kiel, senior vice president at Liberty, said.

Cheap labor has given upstate Pennsylvania an edge over New Jersey as a distribution center, Kiel said. While earlier warehouses typically employed fewer than 100 workers storing goods in crates, new "pick-and-pack" centers that fill Internet orders are more labor-intensive: Amazon.com's new Hazleton operation employs 1,500 year-round, up to 3,000 in the months before Christmas.

Investors, too, are betting on a warehouse revival. "There's a lot of pension funds and other investors looking to put money in industrial real estate," Philadelphia property broker Jerry Ziff said.

Liberty has mostly been selling office properties and buying warehouses in its recent deals - except its Aug. 3 agreement, with an unnamed investor, to pay $40 million to the labor-union-backed Multi-Employer Property Trust, for the lot at 1800 Arch St., next to expanding Comcast Corp.'s Liberty-built headquarters.

That deal ended a long-shot proposal by an affiliate of Hill International, of Marlton, to build the 1,500-foot American Commerce Center on the site, which Multi-Employer bought four years ago for $32 million. Promoter Garrett A. Miller left Hill last month to join Matthew McManus's NAI Bluestone, the Philadelphia-based development-loan consultant.

NAI has lately been raising cash to build apartments, including $21 million for Bart Blatstein's Tower Investments' Erbe in Northern Liberties (via the Fannie Mae-backed Greystone lending group); $17 million for Federal Capital Partners and 806 Capital to turn the former Robert Morris office building, just north of Comcast Center, into 111 "luxury apartments," and $20 million to help Media-based Capital Health Group L.L.C. build 228-unit Woodbury Mews for seniors in Woodbury.