Buying or leasing commercial real estate can be an exciting yet challenging process. As a business owner or investor, you want to ensure you fully understand the condition of the property before finalizing the deal. This is where commercial inspections in San Diego come into play.
A commercial inspection provides critical information to help you make an informed decision about a property. Keep reading to learn why these detailed assessments are so valuable in commercial real estate transactions in America’s Finest City.
What is a Commercial Inspection Exactly?
A commercial inspection is a thorough evaluation of the physical condition of a commercial building before purchase or lease. The inspection identifies any repairs needed, assesses critical building systems, checks for code compliance, and reveals any safety issues.
An experienced commercial inspector will examine all aspects of the property including:
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Structural integrity
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Roofing
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HVAC and plumbing systems
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Electrical systems
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Potential fire and safety hazards
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Compliance with ADA and zoning regulations
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Overall cleanliness and maintenance issues
The inspection usually lasts several hours. The inspector will provide a comprehensive written report detailing any concerns discovered and if repairs or replacements are recommended.
Why are Commercial Inspections Essential in San Diego Deals?
Commercial inspections in San Diego give you vital information to determine if the asking price or lease rate accurately reflects the property’s true condition. Without this objective assessment, you risk overpaying or inheriting expensive problems once you take occupancy.
You can also use the inspection report to negotiate needed repairs or request a price reduction to cover future costs. This allows you to factor renovation expenses into your business plan from the start.
In addition, a thorough inspection that uncovers no major concerns gives you peace of mind that you are investing in a well-maintained property in proper working condition. This assurance can be priceless for your finances and sanity!
When Should a Commercial Inspection Occur?
It’s highly recommended you complete a commercial inspection before finalizing a purchase or signing a lease. The ideal timeline is:
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After the Letter of Intent (LOI) is Signed: At this stage, you likely have the property under contract contingent on securing financing and completing due diligence. A commercial inspection should be part of your due diligence. If the inspection uncovers significant issues, you can then re-negotiate or walk away if needed.
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Before the Due Diligence Period Ends: Most commercial real estate contracts have a 30 to 90 day due diligence period after signing the LOI. The inspection should occur within this window so you can back out if the findings aren’t acceptable without losing earnest money or deposit fees.
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Before Taking Occupancy: It’s also smart to conduct a final walk-through inspection right before closing or the lease start date. This verifies all repairs were completed and systems are operational. If not, you can delay occupancy until satisfied.
In other words, earlier is better when it comes to commercial inspections! Don’t wait until the last minute in case unexpected problems arise.
What Exactly Does the Inspector Check During a Commercial Inspection?
Commercial inspections in San Diego are extremely thorough. The inspector examines all aspects of the property to give you a complete picture of its physical condition and identify any concerns.
Here are some examples of what’s reviewed:
Structural Integrity
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Foundation for cracks or evidence of settling
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Walls and ceilings for sagging or water damage
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Roof structure for soundness
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Doors and windows for functionality
Roof
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Age, material, and condition of roof surface
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Flashing, vents, gutters, and downspouts
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Signs of leaks or water damage
Electrical
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Main electrical panel, wiring, and circuit breakers
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Light fixtures, switches, and outlets
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Backup generator functionality (if present)
Plumbing
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Condition of pipes and water heaters
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Fixture functionality
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Proper drainage and venting
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Water pressure
HVAC
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Heating and cooling equipment age and capacity
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Ductwork, vents, air filters and flow
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Thermostats and control systems
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Energy efficiency
Fire Protection
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Fire alarms and sprinkler systems
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Emergency lighting
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Extinguishers checked and current
Site Conditions
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Parking lots and sidewalks condition
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Proper exterior lighting
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Fencing or other security measures
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Landscaping maintenance
As you can see, commercial inspectors leave no stone unturned! Their job is to uncover any issues that could impact operations, safety, costs, or compliance down the road.
Who Should You Hire to Inspect a Commercial Property?
Not just any home inspector can assess the complexities of commercial real estate. You need an inspector specifically experienced with these specialty properties.
Look for an InterNACHI (International Association of Certified Home Inspectors) certified commercial inspector. This indicates they have passed rigorous exams and meet extensive experience requirements to properly inspect commercial buildings.
Members of the American Society of Home Inspectors (ASHI) are also well-versed in commercial inspections. Both organizations require adherence to strict codes of ethics and standards of practice.
Ideally, seek inspectors with credentials related to the type property you’re acquiring. For example, if purchasing a restaurant, ask if they offer certification in hospitality inspections.
Personal referrals can also help find qualified commercial inspectors with proven expertise inspecting local San Diego properties similar to yours.
What’s Included in a Commercial Inspection Report?
A commercial inspection report serves as your property condition guide. It will contain A LOT of valuable information.
You can expect it to include:
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Overview summarizing main findings
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Detailed descriptions, photos, and locations of any issues uncovered
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Repair cost estimates and recommendations
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Information on equipment like HVAC components and their estimated remaining life
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References to applicable building codes
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Summaries of building department records reviewed
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Copies of site maps, inspection standards, and credentials
Expect a very thorough 30-60 page report! Set aside adequate time to review all components. A reputable inspector will also be available to discuss the findings in a follow up meeting or phone call.
How Much Does a Commercial Inspection Typically Cost?
Commercial inspection fees vary based on factors like:
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Square footage
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Building age and complexity
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Type property (office, retail, industrial, etc.)
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Specialized systems involved
However, you can expect to invest around $1,000 or more for a basic 5,000 square foot commercial space. Costs exceed $1,500 for larger or more complex properties.
Keep in mind that this respectable fee is modest considering how it can shield you from purchasing a money pit or uncovered safety hazards down the line. The insights gained make the cost well worth it in the end.
Don’t Skip This Critical Step!
As you can see, commercial real estate inspections in San Diego play a critical role in properly evaluating a property and making wise investment decisions.
Identifying maintenance needs, building code violations, safety hazards OR verifying a building is structurally sound and mechanically fit before acquiring saves major headaches down the road.
The small upfront fee to engage a qualified commercial inspector pales in comparison to repair bills or legal issues you may inherit otherwise. Let their unbiased assessment provide critical insight that protects your interests during negotiations and acquisition.
While exciting to find a promising property opportunity, don’t let eagerness cause you to skip this most critical step! A thorough commercial inspection in San Diego paves way for a smooth transition once the keys are yours.
