Purchasing commercial real estate can be a major investment, so it’s important to perform thorough due diligence before finalizing the deal. A comprehensive inspection by a qualified commercial real estate inspector can uncover issues that may affect the value and function of the property.
If you’re looking to purchase commercial real estate in Portland, ME, here are some key considerations when it comes to inspections:
Choosing the Right Inspector
Not all inspectors have the same skills and experience. For commercial properties, you’ll want to hire an inspector who specializes in commercial real estate, not just residential. Look for an inspector who:
- Has extensive experience inspecting all types of commercial properties, including office buildings, retail centers, industrial facilities, etc. Ideally, they will have inspected similar properties to the one you are purchasing.
- Holds certifications from organizations like ASHI (American Society of Home Inspectors) or InterNACHI (International Association of Certified Home Inspectors) for commercial inspection.
- Understands commercial building codes, zoning regulations, and ADA compliance.
- Can evaluate specialized systems like elevators, HVAC for large buildings, fire suppression systems, etc.
- Offers thermal imaging and mold testing.
- Will delve deep into reviewing past inspection reports, building plans, and permit history.
Thoroughly vet inspectors before choosing one. Verify licenses, read reviews, ask for references from previous commercial clients. A more experienced inspector will do a better job identifying issues.
Inspection Components
A standard home inspection doesn’t cut it for commercial properties. Commercial real estate inspectors in Portland ME need to evaluate many complex systems and features most residential inspectors don’t encounter.
A typical commercial inspection will include:
Site Condition:
Assessing the property’s exterior elements such as parking lots, landscaping, drainage, signage, fencing, exterior lighting, and more.
Structural Frame:
Analyzing the foundation, roof, walls, doors, windows, and structural integrity.
Exterior Building Envelope:
Identifying issues with siding, windows, doors, trim, eaves, chimneys, and exterior finishes. Checking for water intrusion points.
Roofing:
Inspecting roof condition, age, warranties, and remaining useful life. Checking for leaks, damage, pooling, and proper drainage.
Interior Finishes:
Evaluating flooring, walls, ceilings, lighting, bathrooms, kitchen, and overall wear and tear.
HVAC:
Assessing heating, ventilation, and air conditioning systems. Checking for proper function, age, capacity, and maintenance history.
Plumbing:
Checking water supply and drain lines, fixtures, water heaters, sprinkler systems, backflow preventers, and more.
Electrical:
Evaluating wiring, breakers, panels, outlets, lighting, exit signs, and emergency lighting. Checking for capacity and code compliance.
Conveyance Systems:
Inspecting elevator function, maintenance records, and compliance certificates.
Life Safety:
Testing fire alarms, sprinklers, fire extinguishers, emergency lighting. Checking proper egress routes.
Zoning:
Confirming property use complies with municipal zoning ordinances.
Compliance:
Verifying ADA compliance, occupancy limits, and required permits and certificates.
Optional Testing: Mold, lead paint, asbestos, and environmental hazards testing as needed.
The inspector will provide you a comprehensive written report summarizing their findings from the inspection. This allows you to make an informed decision about moving forward with the purchase, negotiating repairs or price, or walking away.
When to Perform Inspections
Aim to inspect commercial buildings twice:
- Before Purchase Agreement: Hire an inspector to do an initial walkthrough and identify any major red flags before you submit an offer. You can make the inspection contingent on signing the purchase agreement.
- During Due Diligence Period: Do a follow up comprehensive inspection during your due diligence period after the purchase agreement is signed. This gives you grounds to terminate the contract if serious issues are uncovered.
Schedule inspectors to review the property when systems are up and running—not shut down for vacations or holidays. For example, make sure the HVAC is on to test functionality.
What to Look for in a Commercial Building Inspection
Experienced commercial real estate inspectors in Portland ME look at many details the untrained eye may miss. Here are some key things they focus on:
ADA Compliance Issues:
Visual and physical accessibility for disabled tenants and customers. Entryways, bathrooms, hallways, doors, elevators, parking, signage, and alarms must meet ADA standards. Retrofitting can be extremely costly if violations are found.
Fire and Safety Systems:
Well-maintained, code-compliant alarm, sprinkler, and emergency lighting systems are critical. inspect water pressure and test emergency generator function. Make sure egress routes are properly marked and unobstructed.
HVAC:
Check HVAC age and capacity to ensure it meets the property’s needs. Test air quality and venting. Look for cracks or corrosion in cooling towers. Make sure systems were properly maintained.
Roofing:
Evaluate roof age, material, drainage, warranties, and remaining life span. Look for water damage, moisture, ponding, or leaks that may lead to mold. Check for adequate insulation in ceilings.
Plumbing:
Thoroughly inspect bathrooms for leaks, mold, proper ventilation, and water pressure. Check for pipe corrosion and adequacy of shut-off valves.
Electrical Systems:
Check panels, wiring, and load capacity. Test emergency lighting, exit signs, and backup power sources. Ensure code compliance.
Parking Lots/Grounds:
Look for drainage issues, cracks, landslip areas, fence condition, and exterior lighting. Snow removal needs and costs should be reviewed.
Industrial Properties:
Require additional inspection of heavy loading docks, cranes, production areas, containment areas, and equipment.
Retail Properties:
Need special attention to display areas, security systems, cash wraps, and specialized lighting or power requirements.
Office Properties:
Focus on telecom systems, backup power for data systems, modular wall systems, kitchens, and restrooms.
Using the Inspection Report
The inspector’s report provides an objective overview of the commercial property’s condition to inform your purchase decision. Use it to:
- Negotiate repairs or price reductions for significant issues. Require the seller to fix problems or lower the purchase price to cover future repair costs.
- Understand future maintenance and upgrade costs. Factor in upcoming costs for HVAC replacement, roof repairs, parking lot seal coating, etc.
- Identify immediate hazards. Safety issues, code violations, or major defects will likely require immediate repair upon taking ownership.
- Cancel the deal. If the inspection uncovers deal-breaking problems, you can exercise your right to terminate the purchase contract.
- As a baseline. The report establishes a baseline to compare changes in the property condition over time.
- Apply warranties. Use inspection documentation to claim repairs under warranties or home protection plans if applicable.
- Negotiate service contracts. Knowing the condition of systems allows you to negotiate appropriate service contracts.
Overall, a quality commercial inspection reduces risk and provides essential information to make a smart investment in your Portland, ME property purchase. Partnering with a knowledgeable local inspector protects your interests and sets you up for success.
Finding the Right Portland ME Commercial Inspector for You
Performing thorough due diligence through professional inspections is absolutely essential when investing in commercial real estate. Partnering with knowledgeable, local commercial real estate inspectors in Portland ME can give you invaluable insights that minimize your risk and support a smart purchasing decision. Use these tips to choose the right inspector for your next commercial property acquisition.