|By Sean Marshall|
“The aim of technical due diligence is to provide a thorough understanding of the condition of a property or development and to facilitate precise capital management”. Watts Group PLC – www.watts.co.uk
Prior to entering into a commercial building lease or purchase decision, investors require independent and accurate technical information on the property or development, in order to make informed and potentially cost saving decisions. This will enable new owners and occupiers to concentrate their efforts on running their business, in the knowledge that they have significantly reduced the potential for disruptive and costly surprises with their building(s).
For the non-technical investor, the amount of information that should be considered can appear daunting. Prospective purchasers and leasees will have particular building requirements. It is important to understand at an early stage, the intended use of the building. With this in mind, a desk top exercise should consider important basic data including, inter alia, the date of original construction, the original plans and TA consents, environmental reports, the building’s square meterage or net lettable area and the date, plans and consents of any significant modifications to the building. The maintenance records of all the mechanical and electrical (M&E) services, including items such as lifts, HVAC, fire sprinkler and any sub station electrical plant should also be considered.
Following a desk top analysis, a thorough building survey is carried out assisted by M&E consultants and structural engineers where required, in order to assess the current condition of building elements such as the roof, exterior envelope, internal finishes, external landscaping and M&E services. Armed with this technical information, it is possible to inform clients of potential capital and maintenance costs and with life cycle costing analysis, when these costs are likely to accrue. More typically, clients can now be informed as to the dollar value they may wish to negotiate off the asking price.
In countries around the World, particularly in the UK, independent technical due diligence is a professional service that is carried out by qualified building surveyors. It should be considered a fundamental requirement of commercial property ownership or occupation.