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THE MAGAZINE OF CORPORATE REAL ESTATE STRATEGY & AREA ECONOMIC DEVELOPMENT
ONLINE INSIDER
A Site Selection Web Exclusive, December 2011

Gimme (Fallout) Shelter
SHELTER
Cold War shelters like this one were short on comfort and long on drab.
Construction is spiking way up these days for companies that manufacture fallout shelters. But the industry still maintains its way-low profile.
R
Pictured is the cozy interior that Air Force engineers created for the crew’s underground living quarters at an Atlas F missile site in upstate New York.
Pictured is the cozy interior that Air Force engineers created for the crew’s underground living quarters at an Atlas F missile site in upstate New York.
Silohome

attling and groaning like the ghost of Jacob Marley, the global economy feebly hobbles forward, setting the tempo for a construction industry that largely continues to limp along at its own sluggish pace. Yet there's one building blitz afoot that's quietly unfolding in the underground real estate market — a market that's literally underground.

The unlikely seed for all that growth is the fallout shelter. Yes, that musty relic seemingly marooned forever in the 1950s and '60s has roared back to life. And that's spurring many shelter-makers to expand their operations and hire new workers to keep pace with demand that's, well, exploding.

Case in point: Hardened Structures. Based in Virginia Beach, Va., the 20-year-old construction management firm also builds schools, treatment plants, courthouses, prisons and large public-sector capital projects. Lately, though, Hardened Structures is building a whole lot of shelters.

"The shelter segment of our business has grown by 40 percent since 2005," says Brian Camden, a principal at Hardened Structures and a licensed civil engineer. "This year so far our shelter business is up about 200 percent over last year. We've added some architects and we've expanded our network of global affiliates.

"Our shelter business has handled some pretty big projects lately. Earlier this year, we installed a shelter in the Adirondacks that cost the owner [US]$90 million."

Camden looks at shelters through an engineer's eyes. His focus is centered on client-driven construction and project implementation. Accordingly, he's not at all fond of the term "fallout shelter" and the apocalyptic freight it carries.

"We don't do fallout shelters here," Camden emphasizes from his office. "What we make are reinforced structures." Still, he allows a little later, "Most of our customers still call them bomb shelters anyway."

By whatever name, the paramount concern for shelter-makers is that a lot of folks right now want to get one of the things, and some of them are forking over tall stacks of Benjamins to make sure that their underground space is built out just the way they want.

The impact of that demand surge is also registering at Radius Engineering, which specializes in fallout shelters. President Walton McCarthy says that business has never been better at the Terrell, Texas-based firm, where the corporate slogan is "The Future Belongs to Those Who Plan."

"We've doubled our business in each of the last five years," says McCarthy, a licensed mechanical engineer who founded Radius in 1978. "I've had to add a second plant, and we're planning on adding a bunch of new employees."

Radius sold $31 million worth of shelters last year, he says. The new hires may swell to the point that the company has four times as many workers as the approximately 60 employees now in place, he adds.

MCCARTHY
Radius Engineering President Walton McCarthy
Portal Publishing

As at Hardened Structures, Radius has handled some sizable projects during its sales surge, McCarthy says. One of them is a $41-million shelter built for 750 people. McCarty says that client confidentiality precludes any mention of the development's location or its ownership.

Small Sector, Big Projects

The shelter industry as a whole is probably still small. Not that you'd ever really know. The industry's penchant for secrecy makes precise quantification impossible.

Companies who make and install shelters have their own industry association, The American Civil Defense Association (ACDA), which was created in 1962. (One early board member was Edward Teller, "the father of the atomic bomb.") But ACDA Executive Director Sharon Packer, who's also co-owner of Utah Shelter Systems, declined to specify the current number of member companies. Four years ago, though, she told a reporter that 400 companies were represented in the ACDA.

Whatever the industry's size, some shelter-makers are building some very big structures.

There's Del Mar, Calif.-based Vivos, for example, where the corporate slogan is "Just Remember . . . It Wasn't Raining When Noah Built His Ark." Vivos in late 2010 started construction on a large interconnected shelter near Barstow, Calif. The company is refurbishing a one-time U.S. government fallout structure, turning it into a $10-million "shelter condo" for 134 people. For $50,000, adults can buy a "reservation agreement." They can add children at $25,000 a pop.

Build-out for Vivos turnkey units, however, won't begin until reservations hit an unspecified "critical mass," says developer Robert Vicino. Once construction is completed and all fees for reservations are transferred from escrow, buyers will take over ownership and governance of the condo complex, he explains.

Another large shelter project that's underway is the Survival Condo Project in central Kansas. Melbourne, Fla.-based developer Larry Hall is creating that 14-story, 40,000-sq.-ft. (3,716-sq.-m.) "luxury apartment tower." Contractors have already completed a 200-ft. (61-m.) steel frame inside a "nuclear blast-hardened hole," says Hall. "Structurally, the frame is like a skyscraper." The going price is $1.7 million for each floor, which covers about 2,800 sq. ft. (260 sq. m.), an area that Hall says is appropriate for housing six to eight people.

From Silos to Shelters

Other high-end fallout shelters, however, are well past planning; they're ready for immediate occupancy. Ironically, quite a few are located on sites that once housed silos for U.S. Air Force nuclear-armed intercontinental ballistic missiles.

One such development sits outside Denver on a 210-acre (85-hectare) site that was once home to a Titan 1 missile silo. That property is for sale, priced at a "firm" $2.8 million with "full cash at closing." The tract's value as a ripe potential site for a large shelter development rests in its 45,000 sq. ft. (4,180 sq. m.) of underground space — a topic about which seller 20th Century Castles is deeply knowledgeable. The company's owners, married couple Edward and Dianna Peden, live in their own refurbished Atlas E missile site near Topeka, Kan.

In upstate New York, there's even a kind of shelter subdivision, Adirondack Airpark Estates, which sits on the former site of an Atlas F missile silo. That development is ready for move-in — well, sort of ready. To date, there's only one finished home on the property, a refurbished 20-year-old structure. Surrounded by the Adirondacks, the 1,800-sq.-ft. (167-sq.-m.) house includes a living area with fireplace, a master bedroom suite, two bathrooms, a wraparound porch and an airplane hangar. Owner Silohome Developers, based in Westbrook, Conn., describes it as "a mountain getaway."

Below the house, though, sits a far larger chunk of living space — and it's really a getaway. Lying 125 ft. (38 m.) beneath the house is a 2,300-sq.-ft. (214-sq.-m.), two-level concrete and steel shelter — the onetime Launch Control Center, which the Air Force fitted out as the crew's living quarters in the event of a nuclear attack. Considerably more cushy than the main house above ground, the launch center includes Jacuzzi-studded marble bathrooms, a formal dining area and an entertainment room.

Still farther underground at the Adirondacks property lies an additional 12,000 sq. ft. (1,115 sq. m.) of usable space (which hasn't been refurbished). That space is inside nine different structures that are stacked beneath the control center, one atop the other. The Air Force used those areas for storage.

Air Force engineers designed that tall stack of subaltern space to stand up under severe poundings, says Adirondack Estates co-owner Bruce Francisco.

"The shelter's entire steel superstructure hangs from a gigantic spring suspension system that's designed to absorb the shock of a direct nuclear hit," he explains.

Silohome Developers has put the development on the market. The two cousins who co-own Adirondack Estates want to sell it and then dissolve their partnership, Francisco says.

So for $1.76 million, you can get the whole shooting match: the house; all 11 levels of underground shelter space; a nearby log cabin; an airport runway with a plane hangar, and enough land to build about 25 additional shelter-equipped homes on individual eight-acre (3.2-hectare) sites.

Customization Drives Up Shelters' Sunken Costs

Buying a shelter, however, doesn't necessarily require either a morbidly chubby wallet or genius-level safecracking skills.

Hardened Structures, for example, has one prefab steel shelter listed for about $19,000. The company, however, modestly bills that structure as only a "storm shelter," indicating up front that the unit isn't designed to provide maximum protection. In addition, space is sparse inside that particular shelter, which measures 6' by 6' by 12' — roughly equivalent to the volume of most elevators.

Perhaps the least expensive shelter extant is the $1,500 EcoShell built by Monolithic Dome Construction (MDC). An Italy, Texas-based nonprofit, MDC builds and installs its EcoShells in less developed nations, touting earthquake resistance as a prime virtue. During earthquakes, the structures move with the ground instead of collapsing, the company says.

In many parts of the world, a shelter providing that protection is a giant step forward from residents' typical living quarters. Several years ago, MDC built and installed 70 EcoShells to reconstruct an earthquake-leveled village on Indonesia's Java Island. MDA has also installed EcoShells to house schools, libraries, cafeterias, gymnasiums and auditoriums.

But prefab models can't fill the needs of many of today's buyers. They want more — a lot more. Many want to extensively customize the new space they're buying, shelter manufacturers report. Since they just might need to stay inside for extended periods, those customers want a living area with plentiful creature comforts. Consequently, buyers are often designing their shelters with full, well-equipped kitchens; home theaters; top-of-the-line bathrooms; hot tubs; small personal gyms, and separate walled bedrooms.

Shelter customization is what really starts the money meter running in fast-forward.

"About half of our customers go with customized shelters rather than prefab units," says Hardened Structures' Camden.

Per-square-foot customization costs generally run from $200 to $600, he adds. So for, say, a 1,500-sq.-ft. shelter, those figures compute to a unit cost of $300,000 to $900,000. And that price tag doesn't factor in essential expenditures for transporting and installing the shelter.

Fit for a King

Given the shelter industry's close-mouthed nature, trying to get particulars about individual customizations is like trying to hold mercury in your hand. And shelter owners aren't the types to covet a spread of their new homes in the likes of House Beautiful or Architectural Digest.

Companies selling condo-like units, however, advertise many of their standard amenities. Some of those lists are so long that readers may need to take a mental deep breath before diving in. They're so lengthy, in fact, that one could wonder whether it's humanly possible to provide all that at the unit's list price. Vivos, for example, on its website catalogues this wealth of promised amenities awaiting unit buyers:

"Every co-owner is provided clothing, bedding, toiletries, hygienic and medical supplies. Each facility is outfitted with deep underground water wells for a continuous supply of fresh water, fuel to power the generators for a minimum of one year, extensive medical equipment, security devices, survival gear, books, educational and entertainment materials, gym equipment, tools, spare parts, radios, computers, televisions, safes, off-road vehicles, non-hybrid seeds, farming tools, hunting and fishing equipment, and much more."

Yes, there is actually more. Each group unit in the complex will have a wine cellar, a theater and even "a medical and dental facility," says Vivos. Those medical facilities, the company explains, will be staffed by "those members that are already medical professionals. . . . Roughly 30 percent of current member applications are from individuals within the medical field."

Undoubtedly, though, a number of elaborate shelters that are equipped with an array of amenities dwarfing that list are already in place. Some offer such extravagant luxury that they're fit for a king. Jordan's King Abdullah II, in fact, has reportedly built a large customized shelter for his family. (Further details about that royal structure are about as likely to surface as the Loch Ness Monster. Suffice it to say, though, if that shelter's total cost were made public, it could conceivably incite an "Occupy"-style riot.)

Square footage that's so lushly appointed is eons removed from the fallout structures of the '50s and '60s. With their bare concrete falls, those Cold War-era shelters were usually furnished as sparsely as monks' bedrooms, equipped with ventilation systems that were rudimentary or nonexistent and lit by a single forlorn bulb hanging from the ceiling. They looked about as inviting as a mausoleum.

Buyers Belie Stereotype

People who purchase shelters are often characterized, kneejerk style, as wild-eyed backwoods paranoiacs who've fried their brains sniffing conspiracy theory fumes. That's not the case, says Camden.

"The typical customer we get is very well-off financially," he explains. "They're also very highly educated. I'd say that on average our customers have at least a master's degree."

Like customers, shelter-makers are often labeled with their own negative stereotype, Camden notes.

"People in the this business used to not even give interviews because we got so gun-shy," he says, "Every time we did an interview, they'd end up making us look like extremist nuts. That changed a little after 9/11 and a little bit more after Hurricane Katrina. But we're still dealing with that stereotype."

An informational vacuum helps perpetuate such stereotypes. The industry goes to considerable lengths to keep its profile about as low as the subterranean shelters it makes.

That guardedness is not without good reason. Shelter owners understandably don't want the world to know they have a fully stocked safe haven. It boils down to a chilly calculus of survival: The more people who know about your shelter, the more people who may one day end up desperately clawing at your door when the ca-ca hits the fan.

"We've got to keep things confidential in order to protect our clients," says McCarthy. "Being secretive defends our customers."

Shelter-makers try to maximize confidentiality by making their installations as inconspicuous as possible. And you can't successfully be inconspicuous if you're always talking about how you're being inconspicuous.

"No comment," Camden says when asked what steps his company takes to keep installations unobtrusive.

McCarthy will discuss tactics in general terms.

Choosing the crew to install the shelter is one way that some companies protect their client's confidentiality, he explains. Crews are imported from out of town, which lessens the chance of a shelter's location spreading by word of mouth. In some cases, he adds, companies even bring in installation crews from other countries — many of them knowing no English. Weekend installations, for example, often draw less attention than they would during the work week. What's more, most government agencies are closed on those two days.

The Shelter Next Door

Many Radius customers site their shelters on vacant properties at remote locales that aren't near heavily populated areas, McCarthy says. Camden says that Hardened Structures' customers typically install their shelters to connect to their primary residence. He adds, though, that the company is selling a lot of shelters lately in Appalachia "because that's a very rural area."

A number of shelters, though, have been installed in heavily populated areas out in plain sight, and they haven't drawn a whiff of suspicion.

After all, what was there to suspect? One day a construction crew shows up and they start building a new house on that vacant lot next door. Oh yeah, you remember, that new couple is planning to move in over there early next year. Looks like they're puttin' in a big pool and a real roomy basement. Those two must be pretty smart. And they do seem awful nice, don't they?

Except that nice new couple just could be quietly building a mini-fortress.

"One of our most popular installations goes in at the same time we're building an entire new house," Camden explains. "It looks like any regular house, only it's really not. We install a bunker underneath the house and stock it with food and supplies. And we build an emergency exit in the house so the owners can get downstairs quickly."

Hardened Structures is also often racheting up those homes' protection quotient in the project construction that unfolds above ground, Camden explains. Some Hardened Structures customers are specifying that they want the main residence to have a ballistic "Level 8" exterior. That hardened protective layer is fire resistant. And the exterior is strong enough that it can't be penetrated by bullets fired from an automatic weapon — even one blazing away directly in front of the house. Spraying lead through the windows won't work either; they're made of bulletproof glass.

The Mayan Doomsday

So what's the primary catalyst in the increase in shelter sales?

There's no one answer for that; there are many. Buyers are motivated by a diverse array of fear factors. Some are obvious dangers, ones that have been front-page news of late — tsunamis, earthquakes, terrorist attacks, tornados, diseases named for animals, nuclear accidents, hurricanes, forest fires, power outages and more.

Other dangers are more obscure. For one, solar storms — which actually do exist, with one that happened in 1859 widely considered as the most devastating on record. If one hit today, it might conceivably shut down the entire power grid. That in turn might trigger nuclear plant meltdowns.

And then there are safety concerns based on more ethereal notions. One of the most influential of those concepts traces back in part to the prophecies made by the likes of Nostradamus and Edward Cayce. The predominant driver, however, is the 5,125-year-old Mayan calendar. That calendar, some are convinced, points to Dec. 21, 2012, as The End of the World as We Know It — or TEOTWAWKI, as it's called in some apocalyptic circles.

On that day, the ancient Mayan calendar will end, the believers contend. And that, they say, will trigger cataclysmic upheavals that could range from the reversal of Earth's polarity to a total ecological collapse.

The notion of 2012 as el muerte para el mundo has gained wide enough credence that it's spawned a cottage industry. You can buy books about that end game and t-shirts trumpeting the date; you can watch TV specials about it, and you can pay to attend seminars about it. In 2009, that Mayan date was the basis for an entire movie, "2012." (The movie's promotional catchphrase: "We Were Warned.")

Many observers, though, argue that there's no solid evidence that TEOTWAWKI is fast closing upon us. The Mayan calendar, they contend, doesn't actually end on Dec. 21, 2012; it only resets and starts anew. All the brouhaha about that day, they believe, will end up being another unrealized doomsday prediction. Dec. 21, those naysayers contend, will be remembered as much like Y2K or even the prolifically prognosticating Rev. Harold Camping (who of late has seemed to be resetting his own calendar).

Most shelter makers include some 2012 information on their websites. Vivos seems to give the prophecy the most prominent play. The company's home page prominently displays a clock face. Beneath it, the time between now and Dec. 21, 2012, inexorably counts down, with second after second evaporating into the past.

On the other hand, more worldly concerns are often motivating many Hardened Structures' customers, says Camden.

"The reason I hear most about why our customers are buying a shelter is the fear of economic collapse and the chaos that would ensue," he explains. "I'd say that about half of our customers mention that."

'Client's Priority, Our Priority'

Hardened Structures doesn't get involved in championing or opposing any particular doomsday prediction.

"That's not the business we're in," Camden explains. "It's not our job to get wrapped up in those kinds of scenarios. What our priorities come down to, really, are what each of our clients' priorities are. That's what our company's philosophy is, and that's what our company's philosophy will always be."

Sounds eminently sensible. Even so, though, don't shelter builders still have to be able to work their way through the complex web of thoughts, fears and emotions that motivate customers?

Definitely, Camden says. His company tackles those issues by sitting down early on with each client and talking at length. That process facilitates both the company and the client getting a solid grasp of some essential issues, including: who and what will be inside the shelter; the specific threats and hazards that clients want to ensure that the shelter can withstand; and how long the occupants want to be able to live safely and comfortably inside.

"What we figure out in the course of that process is what the shelter needs to do to give the client peace of mind," Camden says. "Once we've got that all worked out, then we do the work that we've been trained to do … the work that we've been doing for a long time now.

"From that point out," he adds, "it's just a construction job. It all boils down then to just physics and engineering."

A crew lifts a prefab shelter and begins to position the structure to be lowered into its underground site.
Radius Engineering


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