It is essential to complete a full due diligence assessment prior to purchasing a commercial property.
What is Due Diligence?
Due diligence is a comprehensive, complex and critical stage in any commercial real estate acquisition, known as Property Condition Assessment (PCA). The second part of due diligence is the Property Condition Report (PCR), which helps eliminate many surprises and unexpected issues.
How Does The Assessment Work?
The PCA should include four components:
- Documentation review and interview facilities and maintenance staff
- A walk through survey of equipment
- Preparation of opinions of probable costs for repairs and replacements
- Property Condition Report
What Does The Assessment Cover?
- Site and grounds- pavement, curbs, loading docks, walks, landscaping, irrigation, site drainage, exterior lighting, walls, fencing/railings, signage and exterior amenities
- Structural systems- foundations and structural framing of walls, columns, intermediate floors and roofs
- Building envelope- roofing systems, exterior finishes, stairs and steps, exterior doors and windows
- Mechanical systems- electrical, heating ventilation, air conditioning, plumbing and conveyance systems
- Interior building components – interior finishes of common areas and tenant areas
- Regulatory compliance- life safety and fire suppression systems
Overall the assessor’s PCR will provide a short paragraph specifically stating the purpose the PCR should serve and the scope will Identify the improvements that need to be completed, a capital budget and the life expectancy on each piece of equipment.
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