As the previous post alluded to, commercial property shoppers can get lured into a hasty deal without doing proper homework first. One of the first things potential buyers look at is the price tag. Their head start to swim with possibilities and profit margins, and they become blinded to the proper step work which must be done before purchasing any new piece of real estate. Many times commercial real estate can look pretty on the outside, but have hidden issues which must be properly checked before signing anything.
Many times the seller will acquire their own appraisal which can leave out many defects that the building may actually have. Many real estate sellers have their own appraisal people who may color the description and leave out important data. It is imperative that you have your own appraisal and inspection done before moving to the bargaining table. Just like a residential piece of property, there could be things wrong that are difficult to see through a casual walk through. But the same care must be applied to commercial real estate as well.
The structure is the first place you want to start. Many buildings were built with a foundation only specified for a certain number of stories. As years went on they added additional levels without further strengthening the base. So it must be well documented how many floors of a building the structure can hold, and to make sure they have not crossed that limit. Some owners don’t operate with the most scrupulous motives, and you can’t take it for granted that everything is on the up and up.
Ventilation is another important factor. Just like with the structure, new additions are constantly added without the proper ventilation to support the size of the building. Air flow is very important to the health of the tenants as well as the structure itself. If moisture that accumulates in the building can’t dry properly because of decreased airflow, it could cause mold in the walls which could rarely be seen. But in turn affects the health of the office workers and can lead to legal liability. While a walk-through will only give you the surface schematics of your structure, you must do your due diligence to acquire the blueprints and have them properly inspected by a competent HVAC contractor. The owners of S&S Heating and Air do a number of industrial inspections before they work on any building. Once when they were completing a heating repair in Radnor, PA , they found wings with fewer vetilation ducts than the rest of the building. Anyone in the field knows that these matters cannot be overlooked.
Even though I’m listing safety as last, it is probably the most important factor. Fires are not common in office and industrial buildings, but it is still a serious matter that new owners must face. As mentioned before, when new buildings are built they are usually up to code with the structure originally set. But as time goes on, and they expand and grow, it must be made sure that the new additions follow the same guidelines. For example, are exits easily accessible from all parts of the building? There’ve been many cases where the main staircase was in one part of the building, but nowhere near the new wings or additions. That poses a potential threat if the tenants need to get out in a hurry. Not having the proper fire escape procedures set in place can also cause huge legal issue if someone gets injured. And it’s not just fire, if there is any medical emergency in the facility, is there a way for people to get in and out quickly and safely?
Once again these are some of the things that new potential buyers often overlook, but are crucial things that must be considered when investing in a new piece of commercial property. A little homework can save you tens of thousands of dollars in lost revenue, as well as legal implications.