Empty buildings under guard

Squatters beware. Just because a property is vacant doesn’t mean it’s not being watched.

Take Edens & Avant. The Columbia, S.C., developer owns 140 properties from Boston to Miami, including 14 in the Atlanta area. Properties are centered around grocery-anchored tenants, such as the Publix shopping center in Toco Hills, Lenox Marketplace and Merchant’s Walk in East Cobb. Even when one is vacant, the developer operates “business as usual.”

“We keep our vacancies well-maintained,” said Joe Edens III, Edens & Avant property manager. “We are routinely on the properties and have security where appropriate. We keep our properties clean.”

Maintenance is especially important because vacancies can be more expensive to insure than occupied property, experts say. Premiums and deductibles are higher and policies more restrictive because of greater susceptibility to damage, said David Cohen, senior director of real estate for California-based Fireman’s Fund Insurance Co. “On an unoccupied building, you may see a surcharge of 20 to 25 percent.”

His company recently paid $3 million for a claim because a valve in a restroom broke and leaked for four days before being noticed. “It went from the ceiling to the ground floor and did a lot of damage,” he said.

And while vacant property is not as valuable to owners as buildings with rent-paying tenants, “the cost to rebuild or replace has not necessarily decreased,” said Tim Ehrhart, real estate segment manager of the Chubb Group of Insurance Cos. in New Jersey.

The insurance industry has seen a double-digit increase in damages to vacant properties due to theft, fire and frozen pipes over the past year, he said.

“It could be a situation where kids come in and are playing around and get injured,” he said. “Or trespassers come in, set a fire to cook or get warm and the building burns down.”

Rates are based on loss experience and typically are adjusted when policies are renewed, said Dave Colmans, executive director for the Georgia Insurance Information Service, a trade association for property and casualty companies that do business in Georgia.

“Risk goes up substantially when you start losing tenants, especially lots of tenants,” Colmans said. “It’s a significant concern for property owners ….You could start getting into a situation where insurers might not want to take the risk at all.”

Office vacancies reached 17 percent in first quarter 2009 in metro Atlanta; industrial stood at 17.6 percent and retail nearly 10 percent, according to Jones Lang LaSalle, a real estate services firm.