The average vacancy rate for offices nationwide in the second quarter of 2018 was 12.2%, while 12.1% of retail spaces and 7.8% of industrial spaces were vacant, according to the website Statista.com.
Unfortunately, when buildings stand vacant they become susceptible to a variety of problems.
There are roughly 31,000 fires in vacant buildings annually, resulting in dozens of deaths, hundreds of firefighter injuries, and an average $642 million in property damage.
Problems Can Quickly Mount
- With no security on the premises, the building becomes a target for vandals. Vacant buildings frequently wind up with broken windows and graffiti-covered walls.
- Fixtures and materials inside the building, such as copper piping, may attract thieves.
- Vacant buildings can become convenient hang-outs for young people or shelters for the homeless; they also can become centers of criminal activity, such as drug dealing.
- Trespassers smoking on the premises, decayed wiring, arson, and production of illegal drugs like methamphetamine may cause fires in vacant buildings. In addition, automatic sprinkler systems may be shut off, allowing fires to spread, and lack of security prevents early detection.
- Toxic substances remaining on the premises may leak and contaminate soil and groundwater.
Safeguard Your Building
- Visit the property at least weekly, or hire a property management company to do so.
- Clear the exterior of scrap wood, paper, cardboard and brush.
- Remove any toxic substances that could contaminate the area or harm police or firefighters.
- Maintain sidewalks and parking areas in good condition, and clear them of snow and ice.
- Erect obstacles to keep vehicles and pedestrians out of parking areas.
- Hire security to watch the building at night. Turn on exterior lighting.
- Maintain heat or drain the plumbing system to keep pipes from bursting, but keep at least a minimum temperature in areas protected by automatic sprinkler systems.
- Maintain electricity supply to emergency lighting and exit signs.
- Shut off utilities, except where necessary to power desired lighting and alarm systems.
- Maintain fire detection systems and link them to a central station monitoring service.
Buildings that are more than 70% vacant for more than 60 days also lose some important insurance coverage.
If the building is largely vacant, the standard commercial property insurance policy reduces loss payments by 15% for most causes of loss and does not cover others at all, including vandalism, water damage, glass breakage, and theft.
For an additional premium, the building owner may be able to purchase vacancy permit coverage, which reinstates some or all of this coverage for a specific period of time. An alternative – vacancy changes coverage – can reduce the minimum occupancy that the building must have before the insurance company will consider it vacant from the standard 31%.
We can work with you to get the coverage you need.
A vacant building is never a good situation, but with the proper precautions, the owner can maintain its value and keep it secure until new tenants move in.
Produced by Risk Media Solutions on behalf of AmCom Insurance Services. This article is not intended to provide legal advice, but rather perspective on recent regulatory issues, trends and standards affecting insurance, workplace safety, risk management and employee benefits. Please consult your broker or legal counsel for further information on the topics covered herein. Copyright 2018 all rights reserved.