Vacant Commercial Warehouse, South Melbourne

A commercial warehouse in South Melbourne with no active tenants was referred to us through a mortgage broker at settlement. The owner needed insurance in place to satisfy the lender's requirements, but the property was vacant and would remain so while they worked on finding new tenants.

Vacant commercial properties are one of the hardest risk types to place. Without active tenants, the building is more vulnerable to vandalism, water damage from undetected leaks, and break-ins. Most mainstream insurers simply won't cover them.

We approached the market broadly, submitting to both mainstream and specialist underwriters. For vacant property risks, the key is targeting underwriters who specifically write short-term or transitional property cover rather than standard commercial landlord policies.

Each submission included the building details, the owner's plans for re-tenanting, and the current security measures in place.

Seven mainstream insurers declined the risk, all citing vacancy as the primary concern. The insurers included some of the largest in the Australian market - none were willing to provide terms for a building with no active tenants.

The owner was under time pressure from settlement and the lender's insurance requirements. Without cover, the purchase could have been delayed or the loan terms affected.

One specialist underwriter was willing to provide cover, subject to some reasonable conditions around property maintenance.

Vacant commercial properties are a niche that most brokers don't deal with regularly. Knowing which specialist underwriters will consider them - and what conditions they typically require - is the difference between getting cover and being stuck with no options.