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Commercial Property Inspection: What to Expect

A commercial property inspection is one of the strongest lines of defense for an investor. If you’re looking to buy, a good inspection can reveal whether you’re getting a good deal or not. We’ll look at what it covers and how you can use the results to your advantage.

Managing Expectations

Before diving into the details of a commercial property inspection, you should know that an inspection does have limits. The inspector won’t be able to make any structural changes to the building or grounds, so there will be some blind spots even for the most experienced of property inspectors.

That being said, the inspector knows exactly what to look for. It’s rare that a building will have major issues without having any symptoms. For instance, the inspector might not be able to see that the foundation is cracked below the surface of the ground, but they can examine the condition of walls, doors, and windows to see if there are any leveling problems. A commercial property with a crumbling base will usually have major cracks and its entryways are often difficult to open and close.

Exterior Inspection

The inspector is looking at the outside of the building as well as the grounds for both cosmetic and structural problems. They’re looking at the condition of the handrails, the stains on the side of the building, and the condition of the paved areas.

An exterior inspection is important not only for the aesthetics of the property, but also for helping property understand their commercial regulations. For example, does the building comply with ADA guidelines? Will it need to be updated to meet the latest neighborhood code changes?

The inspector will look at the parking lots, landscaping, and any additional equipment or structures on the ground (e.g., generators, sheds, etc.). Inspectors will also evaluate the condition of the roof. They might event call in the help of an expert in some instances, especially if the inspector suspects that the roof may need serious repairs or even a replacement in the near future.

Interior Inspection

The inspector will examine the interior for common flaws, including cracks, water damage, and safety hazards. They’ll also look at the condition and efficacy of the insulation, so property owners can get a better idea of what the utility bills will look like.

As with the exterior, the inspector will ensure that the building meets the standards set by local, state, or federal building codes. These codes will vary based on the location for the property. For instance, a property in California may need to improve its earthquake protection infrastructure. The inspector will look at all accessible areas inside, including crawl spaces and utility closets.

Commercial Property Inspection Documents

Many commercial properties have decades or even centuries of history, which means they will have built up an extensive amount of paperwork over the years. From permits to evacuation plans to maintenance records, these documents provide excellent insight into how the building has been treated over the years.

The paperwork will also speak to the expense of owning the property. This can, in turn, give owners an idea of how much profit they can pull out of the facilities. So if the HVAC bills are sky-high for example, owners can estimate potential renovation costs against the price of the property.

Internal Systems

From the circuit breakers to the plumbing, the inspector will check all major internal systems to ensure they’re in good working order. However, property owners need to remember that the inspector is limited to what they can see. If there happens to be a wire that’s just starting to fray buried deep in the walls, the inspector won’t be able to tell that anything is wrong unless the wire is already affecting the electrical system (e.g., causing lights to flicker).

The inspector will also be looking at the fire alarms, sprinklers, and extinguishers to ensure that the building has enough fire protection. They’ll look at the thermostats, ductwork, and water pressure and note any potential problems they see.

Property Condition Report

The property condition report (PCR) will list observations from the property inspector and include photos as evidence. The inspector will also give their personal recommendations in terms of repairs or other corrective actions. (Inspectors will often include cost estimates for repairs or replacements as well.) In some cases, you might need a follow-up visit from a specialist. For example, if the electrical system is flawed, the inspector will recommend that an electrician come by for further analysis.

The PCR is undoubtedly a great resource for would-be property owners. However, those in the industry will recommend that you personally meet with the inspector instead of relying solely on the write-up. If you attend the inspection, you have the opportunity to ask questions and get the clarification you need to feel confident about your decisions — whether you choose to buy the property or not.

Commercial Property Inspection: Summing It Up

In short, you should expect property investors to catch most problems after doing a thorough review of the property. You can also count on them to provide plenty of invaluable perspective on a building based on their personal experience. For example, a property without a lot of official paperwork might be a sign that it was poorly cared for over the years. It’s important to remember that inspectors cannot eliminate all risks attached to buying a building, however. 

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At Strategic Properties Group, we specialize in commercial property management and commercial leasing. Reach out to us for all management, leasing, and development needs in the Tampa bay area. Contact us today to learn more.