Investing in commercial real estate can be tricky. Here are some lessons learned from a disaster.

After Katrina, the New Orleans commercial real estate market was turned on its ear, and it became a lesson for investors all over the country to learn.

Immediately after the killer storm, many business owners scrambled for industrial space. They were knocked out of commerce and needed a place from which to operate. Lower lying areas flooded, and older properties were destroyed by the winds. Inventory was ruined, and records were lost.

The population had scattered, so there were no workers to man restaurants, to repair roofs, or to "gut" properties (clean out debris, tear out walls, remove soggy carpet, pile up trash outside, and fight the mold). There were no workers because there was no place for them to live and no food for them to eat. Clean water was hard to come by, and the heat and humidity each exceeded 90% every day.

It took longer than expected to "restart" the city.

Luckily, many sections did not flood, so people in those areas began to try to function normally. I was one of the lucky ones, because my home was largely spared, and my records were intact.

In the early months, I received thousands of calls from people who needed help. Mainly, it was from people looking for commercial real estate locations. After the surge of warehouse demand came the people who were looking for places for showrooms. Quite often, they planned to import from China large containers of inexpensive housing items such as cabinets, floors, fixtures, etc., and they needed a place to put them and sell the goods.

We ran out of locations quickly, but noted that the better locations went first - and for top dollar. The supply and demand curve was at work as you might expect.

It was sometime before other retail locations got up and running. Surprisingly, many of the mom and pops were first to open. The nationals waited for the population to come back before renovating and reopening their stores. For instance, many of the fast food stores are still closed nearly two years after Katrina, but the local "po-boy" shops are enjoying tremendous business.

During the aftermath of the storm, we had little telephone communications. Everyone over the age of 17 learned a new trick: text messaging. I don't know why our cell phones would easily text message whilst not working to place calls, but they did.

Perhaps that is one reason why the New Orleans commercial office market was slow in recovering in the "B" and "C" markets. Small business owners learned that they could operate from afar with the new technology at hand, and no longer needed a physical address from which to do business.

My family ended up in Atlanta where calls to my business phone in New Orleans were forwarded to my cell phone, I had internet access, I could text on my cell phone or via an email program, and the fax machine worked. I set up shop on a little table in a basement, and stayed busy all day long for weeks. Why did I need a big office downtown any more?

Later another interesting phenomenon occurred: People called by the score to look for a "good deal". Entrepreneurs from as far away as the Ukraine and China contacted me and scoured our market looking for well placed properties that could be rebuilt. They believe(d) that they could buy for pennies on the dollar, the sellers could keep the insurance proceeds; and after putting the property back into commerce, the property would be worth more than it was before.

I sold lots of these properties, and the owners were right. Now they have excellent investments that offer good returns to them and New Orleans has buildings that are in better shape than prior to the storm.