When investing in commercial buildings, real estate investors are need a high quality commercial building inspection, often called a Property Condition Assessments.
When asked to do a Commercial Building Inspection, I start by trying to understand the client’s goals. Are they ordering the report for a lender? Do they want a 100% detailed inspection or a walk through? Has the seller made any significant disclosures? Are there other stakeholders such as equity sources or partner who need to understand the condition of the building? Once I understand the goals I propose the appropriate level of diligences, which can range from a walk-through inspection by a senior building inspector to a team of engineers and specialist digging into every aspect of the building.
Either way, the Property Condition Assessment Report which includes a discussion of the following building systems:
– Building Envelope;
– HVAC Equipment
– Mechanical, Electrical, and Plumbing;
– Paving, Drainage, Landscaping;
– Fire Suppression and Security Systems;
– ADA Compliance.
A PCA report typically includes two important tables: an Immediate Repairs Table; and a Replacement Reserves Table. The Immediate Repairs Table is a schedule of all failing or worn out systems requiring attention in the next 90 days. The Replacement Reserve table will typically estimate the building’s capital replacement schedule for the next twelve years.
When I dispatch a team of engineers and building systems specialists, I call the report a Property Condition Evaluation. These reports typically range between $5,000 and $25,000 and are appropriate for large complex assets. The most common specialist to add is that of a structural engineer. The structural engineer will produce a structural report or a Probable Maximum Loss Report, when in seismic zone 3 or 4.
Other specialists that add great value are an HVAC specialist, an elevator specialist and a roof specialist. The specialist typically produces reports that are ultimately included in the appendix of the master PCE report.
The specialist does thing that are beyond the scope of our building inspectors. For example, the HVAC specialist will turn on the air conditioning system in the dead of winter. The specialist opens up the systems being inspected and collects parametric data. The result of the more detailed inspection is a very detailed report with specialty reports in the appendices. Partner Engineering’s project manager and field inspector is almost always a registered engineer or very senior building inspector.
Our Property Condition Evaluations save the client significant money in most engagements. Often clients are able to negotiate price reduction or other consideration that is 10 times our fee. Our work typically pays for itself!