What impact has COVID-19 had on commercial properties? The word from REALTORS's Commercial Real Estate Trends and Outlook is that there has been a decline in sales and leasing transactions and an uptick in vacancy rates. It surprises no one that the retail and hotel industries are bearing the brunt of this. On the positive side, the industrial and multifamily residential markets are thriving.
Additionally, the pandemic has caused several new things to happen. According to Colliers International's Midyear 2020 Top 25 Office Markets Report, net absorption has turned negative for the first time in a decade. At the same time, vacancy saw the largest quarterly increase in the same period.
Vacancy happens but when a commercial property remains vacant for too long, it can cause problems for owners and property managers.
Many things can happen to a vacant commercial property. One of those is they can bring in unwanted visitors and lead to bigger problems for the building.
A vacant property can turn into an invitation for criminals, the homeless, squatters, and rowdy teens. When any of these groups discover the empty property, they go to town on it in different ways.
Criminals may think a gold mine awaits them in the building. It depends on the property and what it has. Some things they look for are copper piping, wiring, and other fixtures. They steal these items for reselling.
If your commercial property has a rooftop with easy access, it puts your building at a high risk for problems. Thieves could climb to the top of the building to steal the roof-mounted HVAC units. Or they could injure themselves in the attempt and it becomes a liability issue.
The homeless see the empty property as a place to call home. They find cover from the weather. They seek out running water for bathing and drinking. They do not leave until forced to do so. As prospects drive past the property, they may notice the transients and lose interest in the property.
Teens and adults in their early 20s see the property as the place to hold a party. Some may try to convert the property into a canvas for graffiti. Some use vacant buildings for anger management by breaking everything in sight.
It could also turn into a spot for dealing and using drugs. Eventually, it could lead to worse crimes. A hotel in Dallas was a hot spot for drugs and death. A few people overdosed in the hotel. They were discarded elsewhere like trash.
That hotel saw crimes beyond drug dealing and using. It was also a place where human trafficking and murder took place. It’s no wonder why a judge referred to it as a "hotel of horrors." To top it off, it was across the street from an elementary school.
When a property is neglected and not maintained, it can lead to many problems including making it a liability risk. If the property isn't up to code, there may be exposed wires and a dusty sprinkler system that does not work anymore. A single spark could cause a fire. Partiers, vandals, and criminals could do something to set it off.
Even though they are trespassing, unwanted visitors could potentially sue you for any injuries that occur on the property. It is very possible for the business behind the commercial property to be responsible for the crime.
With no one on the property, who is going to spot problems and call them in? Flooding can happen with no one using the sink or restroom. It could be caused by inclement weather, plumbing problems, or frozen pipes. A neglected building may be damp. When it's damp, it's an invitation for mold.
Besides humans, what other living things love an empty building? Rats, bugs, wild animals, and other animals seeking a new home find empty buildings perfect for their needs. There are no humans around to shoo them away.
All that said, what is an owner or property manager to do? Two options. Occupy it and protect it.
You may already be trying to lease the property and not getting any bites. Could it be because no one is interested in its current configuration? If this is a possibility, you could give the vacant property a new lease on life. Some property management companies are repurposing their vacant commercial property into a logistics or industrial space according to a CBRE report.
More than 20 projects have converted almost 8 million sq. ft. of space into close to 11 million sq. ft. of industrial space since 2016. They'd either repurpose an existing property or tear it down to meet a client's detailed industrial building requirements.
The best properties to convert are vacant, free-standing big-box stores near population centers. Clients like them because they usually have plenty of parking, overhead doors, docks, and clear heights for industrial use.
Moreover, the client may require three-phase power. To put that in context, most U.S. households support 110 volts and some 220 volts for higher-powered appliances. There is another option called three-phase power, which is 233 volts as some industrial machines need the extra voltage.
Vacant or not, it is important to secure your commercial property to prevent damage and deter crime. If you're looking to find tenants, security is a highly sought-after feature.
This may have you thinking about hiring a security guard. However, a security guard doesn't offer as many benefits as a video surveillance system does. Besides, video cameras can catch a lot more to deter crime and minimize damage.
Security guards put a big dent in the budget. Even so, they also don't always do their jobs.
Tenants may be willing to pay more for security like video surveillance. When the building already has it, they do not have to worry about hiring a security company to install video cameras. You can use that as a selling point.
Remote video surveillance is more than just having cameras posted around on your property. Video analytics and trained monitoring operators watch over the entire perimeter. If the analytics detects one of its many programmed scenarios is happening, it alerts the operator who checks it out and acts on the information.
What action the operator takes depends on the scenario. If it's a trespasser, the operator could issue a warning through an on-site speaker. By the way, the operator is nowhere near the property. That's another advantage. They will not be complicit in internal theft like security guards can be.
If the audio warning and the sight of cameras do not stop the intruder, the operator will call law enforcement and keep them informed of the intruder's movements.
As stated before, humans are not the only threat to a vacant property. Frozen pipes and hot water heaters can cause flooding. Even if you have an on-site security guard, the person may not be in the vicinity. By the time the guard arrives, the damage could be done.
Video cameras simultaneously watch the entire property including the roof. If a monitoring operator sees something happening, like a broken pipe or leak, they can alert the property contact, ideally before too much damage is done.
Although the incident in this video did not take place in a vacant property, it illustrates how the security solution can work.
Vandalism, the homeless, trespassing, theft, and flooding can cause significant damage to a vacant commercial property. Video surveillance can help prevent crime and limit the damage. It could also potentially lower your insurance premiums.
How do you ensure you get the right video surveillance system? Here is an article to help you choose the right video surveillance service. It includes a checklist of questions to ask. One video surveillance system does not work for all businesses. The setup varies based on location and industry. Be sure to work with a company that has experience with yours.
Another advantage of working with Stealth Monitoring is that we have established relationships with police departments around the country. They put a higher priority on our calls because they know we're reliable. Our team can also work with your insurance company to try to negotiate your premiums.
Video analytics paired with our highly trained operators watch over your electrical equipment, utility meters, parking lots, alleys, roofs, and any other vulnerable spots around the perimeter.
The owner, property manager, and any other authorized personnel can access the camera feeds from anywhere using any connected device. You won't have to make any onsite visits, and this helps to keep you safe. To stand out from other properties, property managers market the video surveillance system.
When you work with Stealth, you can rest easy knowing you have the proper technology to proactively protect your property. We'll deliver a solution that will help to speed your ROI. To learn more about how video surveillance can protect your commercial property, contact us.