Holding down the fort

As the recovery from the worst economic slump in living memory continues slowly, the various property sectors are displaying differing rates of recovery. While prime office space is being snapped up, industrial spaces are languishing with a general lack of demand for purchase or renting.

With around 20 percent of the UK’s warehouses and factories unoccupied, owners need to ensure that appropriate care is given to these spaces while they wait for the market to pick up. In the meantime, one of the most important things that must be done is to take all necessary precautions that these vacant buildings are secure.

Mark Dunham, commercial property underwriting manager at Aviva, says: “It is important that property owners apply risk control measures at the time a building becomes unoccupied so that the key risks of arson, malicious damage and escape of water are minimised. The level and quality of the risk management put in place will influence the availability and cost of insurance cover and can be a condition of cover being provided.”

While defects within an unchecked and poorly-maintained property can result in damage, Mr Dunham warns that with the current state of unoccupied buildings, the biggest concern for owners should be the risk of malicious damage and arson. “Each year there are around 9,000 fires in unoccupied buildings. Where these are located in secluded areas such as out-of-town industrial or retail parks, the need for adequate security is paramount as they are particularly vulnerable to attack,” warns Mr Dunham.

 Vacant buildings, particularly in secluded areas, open up the potential for opportunistic criminal activity occurring.

“Common problems with unoccupied properties include theft of the fixtures and fittings, especially non-ferrous metals, fly-tipping and occupation by squatters or travellers which is why it is important to monitor the site frequently to ensure the property remains adequately protected,” Mr Dunham explains.

In response both to damage to buildings and the perceived risk of building-related crime, insurance group Aviva and SitexOrbis, the UK’s leading provider of integrated property and security services, offer the following advice to help property owners ensure their unoccupied building is safe and secure.

When it becomes apparent that no lease deals are on the horizon for a building, it is advisable to inform your insurance company that the property is empty. This is important, as your insurance may be invalid if you fail to tell the insurer that the property is due to be unoccupied for a period of time. Most policies will require you to undertake measures to secure and protect the building and minimise the risk of damage and it is likely that this will be a condition of cover under your policy.

Allocating responsibilities is the first step to ensure a building is kept free from damage. By delegating responsibility for each specific aspect of unoccupied property management to an individual, rather than an individual trying to tackle all aspects, will make sure that all elements are addressed successfully and not passed over. Explaining to everybody concerned – and if needs be documenting – who is responsible for what will produce a more formal arrangement to ensuring a building is secure.

Make sure you can account for all the keys and list key holders. In areas that experience frequent damage or that are seen as a particular risk, it may well be worth informing both the police and fire services about the building’s status. In addition, it may also be useful to give a copy of the key holder list to the police in case of the need for speedy entry to the property.

Cutting off all utilities supplies is crucial to preventing potential damage. Turning off the electricity , gas and water supplies at the mains curtails the main sources of damage to a property. If the mains supplies are easily accessible it may also be an idea to chain or padlock the appropriate valves and taps to prevent them being turned on again.

Owners who do not to shut down their utilities risk not only damage as a result of utilities failing, but also the prospect of squatters making the property a residence. If this occurs, it can take months to receive and serve the necessary court papers to evict them, during which time they may cause damage to the property.

To prevent this, keep the building looking as occupied as possible. Arrange for all mail to be forwarded or check regularly to prevent build up. If an external power supply is available, ensure there is sufficient outside lighting to deter trespassers. If this threatens to compromise the electricity shut-off, solar powered lights, which charge during the day and glow at night, can provide a cheap alternative.

Other security measures should also be considered as means of securing the building. Erecting a perimeter fence or hiring security guards may induce cost in the short-term but will prevent damage that may affect the building’s long-term future. In addition to this make sure that existing security precautions are up to scratch. Ensure that measures such as locks, grilles, CCTV and alarms are in good working order and can not be breached. It is often worth asking an expert (or even the police if available) to review all security measures to assess their effectiveness.

An expert may also be able to advise on the building’s health and safety compliance as well.  

As part of checks to the property, clear away all rubbish, particularly combustible materials such as gas cylinders. It is important not to leave anything that could be used to start a fire or which might appear to be of value inside or outside the building. This again may impact on insurance, where it might be required to establish risk assessments on the property. A fire risk assessment would certainly be required under the Regulatory Reform (Fire Safety) Order 2005.  

Often your insurers will insist on undertaking a survey when advised that a property is going to be unoccupied for any length of time as this allows them to assess the building’s condition and provide advice and guidance on how best to protect the property.

It is crucial that the property is well maintained and that any damage is tended to immediately. If it is left untouched it can easily worsen and become more expensive to fix. It could also become dangerous, potentially compromising the building’s health and safety requirements. Equally, one piece of visable damage left for a period of time can give the impression that the building is uncared-for. This can result in further acts of vandalism or damage occurring at the property.

Lastly, owners should attempt to be ordered and routine in their property management. Arranging a weekly inspection, keeping a log that includes details of any required repairs and maintenance, along with the arrangements made for these to be attended to, will ensure that the building is kept in good order.

Though the current lack of demand for industrial space may be disheartening, ensuring that a property is properly maintained and kept free of damage will ensure that when the market does pick up, owners stand a better chance of leasing or selling.