The pandemic has reshaped the real estate and construction market as many offices became vacant with workers going remote and companies rethinking their square-footage needs. At the same time, urban dwellers fled their apartments for the suburbs. As things begin to normalize, developers are looking to leverage the thousands of unused and vacant properties across the country – which presents a perfect opportunity for retail agents to get in on the ground floor of insuring properties as they transition from vacant buildings to renovated and new uses.
Vacant offices, for example, are being converted to residential rentals while department stores or large spaces in malls and shopping plazas left vacant are converting into warehousing, distribution, e-commerce, light manufacturing, offices and other uses (with the caveat that they are properly zoned by the respective municipality). A shopping center in Hollywood, for instance, is getting a $100 million face-lift that includes converting under-used retail spaces into offices. Bankrupt department stores (struggling pre-COVID due to the rise in e-commerce) are being converted. Lord & Taylor in Manhattan, as one example, is set to house office workers for Amazon. Some developers are even looking to convert hotels into continuing care retirement communities.
According to an article in the New York Times, based on data provided in the fall by CoStar Advisory Services, in retail alone at least 7,700 stores totaling 115 million square feet were expected to close last year. In addition, 172.7 million square feet of Class A office space is expected to come online this year. All this vacant space is ripe for property conversions and developers – and retail insurance agents are standing ready to cover their risks.
Property Coverage While Empty
Vacancy clauses in Commercial Property policies typically include coverage exclusions for buildings vacated or unoccupied for a defined period of time. This is where Vacant Building insurance steps in. Coverage is provided for physical damage to the property, including against hazards such as fire, wind, hail, water damage, vandalism, and other perils not specifically excluded. Distinguished’s Vacant Building policy provides coverage for commercial buildings that are 30% unoccupied; residential properties must be 100% unoccupied. Policies are available for commercial buildings up to 50,000 square feet with up to $5 million in property TIV limits for 3-, 6-, and 12-month periods.
Property Coverage While Under Construction
Once the vacant property is ready for construction – whether a rebuild or renovation, you can easily transition to providing Builder’s Risk insurance. Builder’s Risk insurance will provide coverage for new construction, remodeler’s risk, and betterments for commercial, residential, and mixed-use properties. The policy protects the property owners, real estate developers, and general contractors who have an insurable interest in a construction project. It will cover materials, equipment, and fixtures being permanently installed.
With Distinguished, you’ll be able to provide your clients with a range of policy terms and transitional real estate coverage for Vacant Building and Builder’s Risk insurance, switching between both policies with ease and flexibility. You’ll serve your customer’s insurance needs throughout the transitional real estate lifecycle of his or her property.