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savills blog: What to look for when acquiring commercial property

What to look for when acquiring commercial property

When acquiring commercial property there are an array of potential risks. It is therefore important to undertake the appropriate technical due diligence.

Foundations and structure

Failure to adequately understand and design for the ground conditions and the various forces that act on a building can lead to failure by a number of different mechanisms. Settlement and subsidence can both cause significant damage or even failure of a building. Older buildings often have limited foundations (if they had any at all) while modern buildings are frequently built on challenging strata, including flood plains, historic landfill and shrinkable clay soils. While foundations are hidden, damage can manifest itself and become apparentwithin the building through cracking, sticking doors, and distortion to the structural frame.

Envelope

The building’s envelope is the outside of the property and includes the elevations, roof and glazing along with the associated flashings, seals, and so on. The purpose of these materials is to provide an insulated waterproof shell for the property, although in practice other factors, such as aesthetics, fire protection and accessibility, can influence the materials chosen. Deterioration of these elements is inevitable as they are exposed to the full force of the British weather, making maintenance and periodic replacement crucial. Failure to maintain the building envelope can lead to failure: water ingress, corrosion and rot. Understanding the maintenance requirements and costs should be understood at an early stage.

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Services

Building services are systems installed in buildings to make them comfortable, functional, efficient and safe. These include power, air-conditioning, lifts and fire alarms. In specialist buildings like hospitals these systems can be very complicated. Such systems require regular checks and the purchaser should expect to see the latest test and safety reports. Specialist input from a mechanical, electrical and plumbing (MEP) engineer may be required to gain a full understanding of the systems present in a building, their condition, anticipated remaining life span, maintenance obligations and the cost of replacement.

Accessibility

Developers, designers and owners of buildings have a responsibility to ensure that the built environment is accessible to everyone wherever it is practical to do so. However, much of the existing building stock was not created with accessibility in mind and, consequently, many buildings require significant modifications. If a purchaser intends to alter or change the use of an existing property, there may be a requirement to upgrade the property to comply with the current building regulations and statutes. Understanding these requirements and their implications should be factored into the purchaser’s decision.

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