Posted by Purchasing or leasing commercial property is a major investment that requires careful due diligence. While the financials and location may seem ideal on paper, the physical condition of the building itself plays a huge role in determining if the investment will pay off in the long run. This is where commercial building inspections come in.
Thorough commercial building inspections by qualified professionals provide an unbiased assessment of a property’s structural, electrical, plumbing, roofing, HVAC and other systems. They help identify issues that may not be noticeable upon a casual walkthrough. Catching these problems early on can prevent major headaches, safety hazards and unexpected repair costs down the road.
In this comprehensive guide, we’ll explore why commercial building inspections are so critical for commercial real estate transactions. We’ll also cover the types of issues inspectors look for, the various inspection services available, and tips for choosing the right inspector.
Why are Commercial Building Inspections Important?
There are several key reasons why a commercial building inspection should be a non-negotiable part of any commercial real estate purchase or lease:
Reduce Risk
A thorough inspection mitigates risk by uncovering defects, maintenance issues, code violations, and other problems. Without an inspection, you would have limited recourse for these issues after acquiring the property. The inspection report provides important documentation and leverage for negotiating repairs or price reductions prior to finalizing the deal.
Avoid Costly Surprises
Seemingly small issues can balloon into major expenses if left unaddressed. Faulty wiring, leaky roofs, outdated HVAC systems, structural cracks and other flaws become more problematic and costly the longer they are ignored. Identifying them upfront allows you to factor repair costs into the transaction.
Meet Legal and Insurance Requirements
Lenders usually require a professional inspection to secure financing. Insurers also depend on inspection reports to underwrite new policies. Deficiencies or code violations uncovered in the inspection can impact loan terms or insurance rates and coverage.
Inform Negotiations
The inspector’s report provides an objective third-party assessment of the property’s physical condition. This allows you to back up requests for repairs, credits or price reductions during purchase negotiations. Stadiums, auditoriums and other public venues may require additional liability insurance for known defects.
Establish a Repair Baseline
Documenting the property’s condition at the time of purchase helps resolve any disputes with the seller about what repairs were pre-existing versus new. Photographs and detailed notes in the report provide a paper trail of deficiencies for future reference.
Assess Improvements Needed
The report may recommend upgrades to lighting, HVAC, plumbing, accessibility, safety features and eco-friendly building standards. This helps you budget for improvements and develop a short-term or long-term plan to modernize the property.
Meet Regulatory Requirements
Local ordinances may require a commercial inspection prior to a sale or occupancy permit approval. The inspector will check for compliance with zoning laws, fire & building codes, environmental regulations and other rules. This helps avoid citations or fines down the road.
What Does a Commercial Building Inspector Check?
Commercial building inspectors cast a wide net in thoroughly assessing the property. While the exact scope varies case-by-case, the following are examples of what gets reviewed:
Structural Integrity
Inspectors examine the foundation, floors, walls, roofing, doors, windows and exterior finishes for signs of shifting, cracks, water infiltration or other deterioration. This includes checking for design flaws, outdated or damaged materials, and deficient repairs.
Electrical Systems
All components of the electrical system are reviewed for safety and functionality. This encompasses the service panel, wiring, outlets, switches, junction boxes, lighting fixtures, emergency lighting, backup power sources, etc.
Plumbing
Inspection of the water supply lines, drainage systems, fixtures, water heaters, sprinklers, backflow preventers and other plumbing is conducted to identify leaks, clogs, rust, faulty parts or improper installations.
Heating and Cooling
The HVAC equipment – including furnaces, boilers, air conditioners, ventilation and more – is evaluated for age, capacity, energy efficiency and proper functioning. Ductwork and chimneys are also examined.
Life Safety
Fire detection, alarm and suppression systems are reviewed to ensure proper coverage and operation. Other life safety features like emergency lighting, exit signage, egress routes and fire separations are checked.
Roofing
Inspectors thoroughly examine the age, condition, drainage and maintenance of the roof system. This includes membrane roofing, flashing, skylights, gutters and downspouts. Evidence of leaks, ponding or structural issues is identified.
Site Conditions
Parking lots, sidewalks, fencing, landscaping, drainage, exterior stairs, accessibility, signage, security features and other site elements are reviewed. Compliance with zoning setbacks and environmental regulations is also checked.
Interior Finishes
The inspector examines walls, floors, ceilings, doors, windows and other interior finishes for damage, leaks,Trip hazards and other deficiencies. They may also note cosmetic issues affecting appearance or functionality.
Building Exterior
The building facade including siding, trim, paint, veneers, windows, pedestrian/vehicle entrances and loading docks are visually inspected for damage, water infiltration and needed repairs.
ADA Compliance
Accessibility features are reviewed to identify any improvements needed to comply with the Americans with Disabilities Act (ADA) requirements. This includes parking, building access, restrooms, signage, door hardware and more.
Zoning and Code Compliance
The inspection verifies that the building’s physical usage, occupancy, construction type, fire separations and other elements adhere to local zoning ordinances and building/fire codes.
As you can see, commercial inspectors leave no stone unturned in evaluating the physical condition and legal compliance of the property. The resulting inspection report provides a wealth of objective data to inform your investment decision-making.
Types of Commercial Building Inspections
Commercial real estate transactions generally warrant a range of specialized inspections tailored to the property type and systems involved. Common types of commercial inspections include:
1. Standard/General Building Inspection
A generalist inspector performs a top-to-bottom survey of the overall property’s condition. This provides a baseline assessment encompassing structural, electrical, plumbing, HVAC, roofing and other major systems. General inspections are a smart starting point for any commercial building purchase.
2. Heating and Cooling Inspection
HVAC specialists conduct in-depth examination of all mechanical systems including furnaces, boilers, air conditioning units, ductwork, piping, fuel storage, ventilation and related components. Their report focuses on functionality, efficiency and remaining useful life.
3. Fire and Life Safety Inspection
Certified fire inspectors thoroughly test fire detection, alarm and suppression systems. They also review emergency lighting, exit routes, fire separations, hazards, evacuation plans and other fire code requirements. This is especially critical for assembly occupancies.
4. Roof Inspection
Qualified roofing contractors inspect roof coverings, flashing, parapets, drainage, skylights, sheathing and structural elements for defects, leaks, condition and estimated life span. They can identify necessary repairs and replacements.
5. Environmental Site Assessment
Environmental consultants perform soil, water and air sampling to check for contaminants like asbestos, lead, radon, fuels/oils, and other hazardous materials. This identifies potential abatement needs and liability exposures. Phase I assessments are a common lender requirement.
6. Zoning and Code Compliance
Specialized inspectors audit the property’s physical usage, occupancy classifications, fire separation ratings, accessibility, egress and other elements for conformity with local zoning laws, building codes and ordinances. Lenders or local officials may require these reviews.
7. Engineering Assessment
Structural engineers provide an expert evaluation of the building’s foundation, floors, walls, roofing, stairways and other structural components. This identifies issues needing repair or reinforcement for safety and longevity.
There are also more niche inspection services covering building envelope, elevators, security systems, pools, parking garages, underground storage tanks and more. In general, every major system warrants inspection by qualified experts prior to acquisition.
Tips for Choosing a Commercial Building Inspector
Not all inspection companies are created equal when it comes to commercial real estate. Follow these tips to identify competent, thorough providers:
Seek Licensed Professionals
In many states, commercial inspectors must hold specific licenses – especially for fire life safety, roofing, engineering, and environmental assessments. Check for proper credentials from reputable organizations.
Verify Experience
Look for companies with five years inspecting similar commercial building types. Hospitality, healthcare, industrial and other specialized occupancies require expertise inspecting those unique systems.
Request References
Reputable firms will provide client referrals upon request. Follow up with references to learn if the inspector was knowledgeable, thorough and provided a clear, detailed report.
Ask About Their Process
The inspection scope and practices can vary greatly by firm. Inquire about their typical process, use of technology, report formats and turnaround time to assess quality.
Compare Service Offerings
Look for full-service providers that offer all commercial inspection types in-house without subcontracting. This simplifies project management.
Review Sample Reports
Ask to see a sample report to evaluate the level of detail, organization, media and overall quality. User-friendly reports add transparency.
Consider Certifications
Seek inspectors carrying certifications like ASNT Level III, ACI Concrete Field Testing Technician Grade I, and ICC Fire Plans Examiner. These demonstrate advanced training.
Check Insurance Coverage
Only use inspectors carrying adequate general liability and professional errors & omissions coverage. This protects you from mistakes or oversight in their work.
By carefully vetting providers using these criteria, you can select a trusted partner for thorough, clear-cut commercial inspections.