Post written by: Kristin Taylor
Commercial real estate can be a life changing investment. But with great responsibility, also comes great risk. That’s why cautious and smart investors do their homework first, exploring and understanding their options for real estate insurance to protect themselves and their assets in the event of an accident.
Commercial real estate buildings often house retail shopping centers, office complexes, restaurants and possibly even manufacturing facilities or distribution centers. Property owners and managers stay busy tending to their current portfolios, managing tenancy rates and keeping their spaces occupied.
Obviously, if properties have high vacancy rates, it can be difficult for building owners and property managers to turn a profit. Knowing this, real estate owners must take the proper steps to prevent future vacancy, and ensure ongoing success.
Accounting for Vacancy Following an Insurable Loss
What if one of these properties suffered an insurable loss, such as a fire or possibly weather damages that deemed the building to be untenable for an extended period of time?
As expected, the owner’s insurance policy would step in to repair the building as it was before the loss, making the property available again for tenants. Sounds great doesn’t it? But what about the tenants who lost the building space when the fire or weather damages occurred? These tenants probably didn’t shut down their business or shops for the entirety of the building’s restoration. So, they have likely set up shop elsewhere.
Unfortunately, after dealing with the hassle of moving once and notifying their customers of the change in location, they could be hesitant to move back to their original space. Perhaps they are weary of confusing customers, or perhaps they don’t want to incur the additional costs of a second move. Whatever reason, the original space may now be left vacant.
How to Recover From an Insurable Loss
Real estate property owners can seek property insurance that will also account for the aftermath of a property loss, not just the disaster itself. When property insurance provides coverage for expenses to regain tenants, building owners and property managers don’t have to stress about details like real estate broker fees, advertising fees, and other unexpected out of pocket costs to regain occupancy within their units.
Have you dealt with the loss of a tenant following damage to commercial real estate property? How did you prepare for vacancy, and regain tenants to the property? Feel free to leave a comment or question in the section below.
Photo credit: Blue Marlin Construction