The growth of online shopping, business losses from severe weather and theft, and COVID-19 shutdowns have left storefronts across North America vacant,1 causing serious insurance challenges for shopping centers and strip malls. 

The decline of brick-and-mortar retail has created a lot of empty space in shopping centers and strip malls. Even well-maintained retail centers with stable tenants are facing a property insurance market in which prices are rising and supply is declining. 

But there is promising news: Consumer spending has risen, including at retail locations, creating opportunities for well-run shopping centers and strip malls to thrive.2 That means shopping center owners and operators who embrace creative insurance solutions can find lower prices and better coverage. 

Assessing risk for shopping centers and strip malls 

Insurance claims at retail properties have gotten larger and are more frequent, thanks in part to organized retail crime sprees.3 In 2020, theft cost retailers $68.9 billion in stolen products,4 and in 2021 that number rose to about $100 billion.5

In addition, the commercial property insurance market is reeling from catastrophic events such as floods, windstorms, hurricanes and fires. Global catastrophe losses are expected to reach $112 billion for 2022,6 having a significant impact on coverage availability for retail centers.

Insurance underwriters are being particularly selective in granting policies: Shopping centers and strip malls in high-crime areas, that have a large number of vacancies, or aren’t maintained properly will find it difficult to find coverage.

However, those property owners that are proactively trying to lease their properties and are keeping their properties clean and safe with strong security will have better coverage options.

Better shopping mall and strip mall insurance options 

Commercial real estate owners and operators can benefit from new and creative insurance solutions, often designed specifically for well-run retail centers. 

Here are several options for shopping centers and strip malls that can help owners and operators attract tenants and improve their coverage:

  • Landlords offering a limited rent-free period to attract new tenants after an insured loss.
  • Payment for tenant relocation and expenses for moving back to help keep tenants after an insured loss.
  • Enhanced replacement costs for historic buildings.
  • Warehouse legal liability coverage for when the owner must insure the tenant’s property.
  • Premium savings through common area maintenance (CAM) premium chargebacks based on square footage. 

Contact HUB’s real estate experts to learn how HUB’s approach to shopping center and strip mall insurance solutions can improve coverage and lower costs.

 

1 CNBC, “UBS expects 50,000 store closures in the U.S. over the next 5 years after pandemic pause,” April 13, 2022.
2 Deloitte, “The future of shopping: Creating customer value with retail real estate,” October 8, 2021.
3 CNN, “Why some US cities are facing a spree of ‘smash-and-grab’ crimes,” November 21, 2021.
4 Retail Industry Leaders Association, Study: Retail Theft Balloons to Over $68 Billion, November 18, 2021.
5 Forbes, Shoplifting Has Become a $100 Billion Problem for Retailers, November 22, 2022.
6 Reuters, Global natural catastrophe 2022 insured losses seen at $112 bln, December 30, 2022.