Purchasing commercial property is not only expensive, but it also requires a great deal of consideration and research before a purchasing decision can be made. Investors, insurance lenders, portfolio lenders, and commercial mortgage-backed security (CMBS) lenders routinely order property condition assessments (PCAs) in order to learn more about a property or before entering into a purchase agreement.

Here are four things a commercial inspector will focus on during the inspection.

The Five Major Systems

Commercial buildings generally have five major systems: electrical, mechanical, heating, plumbing, and air conditioning/ventilation. They're checked to make sure these systems are in good working condition. If a system is not up to par, the inspector estimates the cost of repair (or replacement) in the report. Fire safety systems, building alarms, and sprinkler systems are also checked.

The Exterior

A building’s exterior includes more than its outer walls – it also includes parking lots or structures, landscaping, and roofing. The inspector determines whether the building is structurally sound and highlights any necessary repair costs. Inspectors may rely on insight from roofing experts, construction contractors, building code inspectors, or other outside experts to fully inspect the exterior health of a building.

The Interior

This portion of the inspection serves two purposes: to check that interior spaces meet local building codes, and to check for safety-related risks and hazards. The inspector looks at the building’s walls, floors, bathrooms, offices, kitchen spaces, and similar areas. This portion of the inspection illuminates any need for interior renovations (especially if anything within the building is not up to code).

The Building’s Documentation

Commercial building inspectors review many documents during the inspection process. They may review appraisals, building plans, citations, certificates of occupancy, construction permits, evacuation plans, environmental studies, fire safety system records, floor plans, maintenance records, and surveys. These records reveal the true cost of owning the building and help the investor determine the value of the property.

An inspector’s findings will be compiled in a final Property Condition Report (PCR). It includes written evidence of observations, as well as photos for clarification. It also includes any recommendations from the inspector on how to conduct corrective action or request follow-up testing by a specialist. In most cases there’ll be a cost estimate for repairs and future replacements.