Commercial Property Condition Assessment

Jacksonville, Orlando & Daytona Commercial Inspections

Buying, selling, leasing and managing commercial property is a complex endeavor. The Property Condition Assessment is probably the least understood, yet one of the most important components of the pre-purchase or pre lease, due diligence process. The property inspector is generally the least expensive member of the team; yet they typically provide the greatest return on your investment (if properly qualified).

What do you really know about the condition of the building? How many code compliance inspections are needed? Are your cost reserves for maintenance adequate? Are the balconies or fire doors in compliance? Is your health and safety plan current and compliant? Is the facility ADA compliant? Are you properly assessing risks? Are you missing ways to lower your property insurance expense? Are your tenants maintaining the facility? When will the roof need replacement? Are there indoor air quality complaints? What maintenance expenses are you incurring in the NNN lease?

The field of property condition assessment and facilities management is evolving. In response to the ever changing risk management practices of insurance carriers, legal threats from ADA or indoor air quality complaints, and code compliance changes, professional building inspectors are challenged to understand more than the simple building dynamic. Simply knowing best construction practices is not enough –

What Do We Include in a Property Condition Assessment?

  • A complete visual inspection of all primary components.
  • A thermal image of any area or component of concern
  • A cost reserve schedule for primary components of the building
  • Documentation of deferred maintenance
  • Visual inspection and documentation of all fire systems readiness status
  • Documentation of fire door compliance
  • Documentation of ADA deficiencies
  • Parking lot and lot lighting
  • Roof and parapet walls
  • Emergency lighting
  • A visual inspection of the storm water drainage system
  • Signage
  • A BuildFax Complete Property History report (where available)
  • Review of owner furnished service records

You Want an Inspector – What Are Your Options?

Data Jockeys

Today, property owners/managers are targeted by data jockeys offering slick brochures and Ipad apps.  Each sells the ease of data collection and the ability to easily retrieve data or share reports. 

They are basically all the same.  They are all based upon statistical data derived from unproven sources.  You can obtain the same data with a Google search, but you would have to write your own report.  That is their unique selling proposition; the busy manager can publish a slick report, full of statistically derived data, in an hour.  Caveat emptor – your budget may be in jeopardy when the data does not reflect the unique requirements of your facility. 

modelThink about the historical use of statistical data in property assessment.  A recent example is the real estate bubble of 2007.  Certified property appraisers across the nation, utilizing statistical data, determined the value of a property should reflect the input demanded by the lender.  As there was little need for actual site time, and as the valuation could be prepared in about 45 minutes, the market fee for an appraisal on a small commercial facility was less than $500.  Drive by appraisals became commonplace, every appraisal used the same statistical data and nearly every appraisal was over-stated.

Now consider the same approach to PCA’s where the cost reserve for HVAC or roof replacement is factored in based upon unproven statistical data.  The report may recommend an allowance for reserve but it absolutely cannot tell you when the expenditures are needed or, in fact, if they are needed.  The data jockey cannot tell you there is moisture intrusion in the west wall, mold growth in the AC plenum or the stormwater system needs $40,000 in repairs. They typically provide a lot of useless filler such as local crime statistics, public protection classifications, taxes or wildfire risk; basically information which is readily available on the internet. In case you don’t know, the wildfire risk for most urban buildings is slight.  Garbage In – Garbage Out.

poser inspectorsThanks to the effort by a couple of national home inspector associations in securing state licensure for home inspectors, the minimally qualified, if at all, “licensed home inspector” now believes themselves empowered to inspect commercial structures.

Like the data jockeys, they walk through the building, take a couple hundred photos and show you what they believe to be “defects”.  Next, they recommend you have the HVAC, the electrical, the windows, the doors, the parking lot and most everything else inspected by a “licensed professional”.  Most of these “inspectors” have never been involved in commercial construction, of any type building.  In Florida, only a licensed Division I Contractor, a licensed Professional Engineer or Architect is allowed to assess a commercial building or offer repair estimates.

Architects are great at designing buildings and in some cases they are the best resource in evaluating design flaws.  Engineers are great at their discipline.  Neither is trained to assess a completed structure and neither has ever constructed a building.  Architects/engineers design – builders build.  Typically, your building inspection will be assigned to a lower person in the firm such as a technician or EIT/AIT.

Very few firms have full-time building inspectors on staff.  Therefore, the inspection becomes one dimensional and somewhat similar to the data jockey approach.

qualified inspectorMost truly qualified commercial building inspectors have a long background in building construction.  Some may come from public building departments.  Additional certifications such as ICC Commercial Building Inspector, Mold Assessor, Certified Indoor Environmental Consultant, EIFS/Stucco Inspector by AWCI or EDI, NFPA Fire Inspector, ADA/Safety and underground utilities knowledge will provide additional value in protecting your investment.  The inspector with the qualifications should conduct the physical inspection.

The Property Condition Assessment is a vital component of the investors pre-purchase, due diligence process.

Why We Are Different Form Other Commercial Property Inspectors?

The Building Inspector Typical Inspector

What standard or protocol should be used to inspect a commercial building?

ASTM E2018-08 is the only inspection protocol recognized by the American Institute of Architects and accepted by many commercial lenders. 

Where do you get your cost data?

We primarily use cost data from known local sources which is compared to data derived from RS Means, Xactimate, E2Value and Marshall & Swift.  Adjustments are made to reflect the mean cost with proper allowance for target inflation.