Thanks to millions of jobs lost and thousands of facilities shut down during the recession, empty or partially vacant buildings are becoming increasingly common in both cities and suburbs. Office vacancy rates in most cities topped 10% in 2008 — and are projected to hit 16.7% this year.
Compared with the multitude of risks that come along with managing a fully functioning commercial building, one might conclude that a vacant property would present substantially fewer hazards. However, vacant properties face unique hazards that, unless properly managed, could lead to costly losses at a time when money is already tight for building owners. Even though these buildings are unoccupied, by no means, should they be left unattended!
If you own vacant commercial property, make sure to evaluate your exposure to such losses as:
- Undetected Damages: When everyday functions are removed from an office building or retail property, small hazards like an exposed electrical wire or a slow water leak are less likely to be corrected and can quickly snowball into much larger problems. An average of 14,900 fires a year (40 a day!) occur in vacant buildings, causing more than $118 million in direct property damage.
- Crime and Liability Risks: When tenants move out of a building, property owners might be tempted to reduce security or surveillance activities to cut costs. However, the owner can be held liable for such activities as arson or theft from criminals attracted to the vacant premises.
- Environmental Red Flags. A facility used to store chemicals or other pollutants must have these materials removed or adequately stored to prevent leaks or seepage. Building owners can be held liable for cleanup if hazardous materials contaminate nearby groundwater or natural resources (including wildlife). Manufacturers, dry cleaners and medical facilities are especially vulnerable to these types of risk.
To help you prevent or reduce claims from vacant properties, our risk management specialists are available to recommend a variety of loss control measures.