January 6, 2020

What Does a Commercial Property Condition Assessment Include?

A commercial property condition assessment can provide a wealth of crucial information for anyone interested in (or concerned about) the current state of a property and its surrounding site.

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A commercial property condition assessment, or PCA, is both standard operating procedure and a practical necessity for any party interested in purchasing a commercial property. It's important for building inspectors, construction professionals, real estate agents and prospective buyers to understand exactly what goes into this kind of assessment, why it matters, and which situations might naturally call for it.

What Is a Commercial Property Condition Assessment?

A commercial property condition assessment is a comprehensive evaluation of the commercial property prior to its purchase by a new or current. You also refer to it by the abbreviation PCA, or as a "multifamily residential property inspection" (in the case of an apartment complex, for instance), "commercial property inspection" or "commercial building inspection." 

A PCA may emphasize specific aspects of the commercial property to suit the particular needs and concerns of the interested party. A buyer might be primarily concerned with the general structural soundness and construction quality of the property, or there might be a need to focus on specific technical issues. Health and safety concerns might drive a PCA performed on a multi-family residential property. 

When Are Commercial Property Condition Assessments Needed?

Commercial property condition assessments may be requested for a variety of reasons. 

The current owner of a property may simply a thorough knowledge of the property's current condition to determine whether repairs or maintenance are due. A prospective buyer may schedule a PCA to check for any construction, electrical or plumbing problems that might be lurking undetected (or unannounced by the seller).

Large companies engaged in major real estate purchases may perform PCAs on all their prospective purchases as a matter of routine to make sure that they're getting the best return on their investment. Purchasers may also have PCAs conducted as part of their effort to ensure that the site meets the requirements of the ADA (Americans With Disabilities Act).

What Is Included in a Commercial Property Condition Assessment?

Commercial property condition assessments conform to an industry standard known as ASTM E2018. This standard specifies four major steps that each assessment must include:

  • Document Review and Interviews - This initial stage of the PCA involves examining as many documents related to the property's construction as possible, from architectural specifications and safety test results to certificates of compliance. Interviews and/or written questionnaires can bring out additional details from the current owner or manager of the property.
  • Walk-Through Survey - This stage of the assessment involves a thorough in-person walk-through of the property by a qualified inspector. The inspector will evaluate such basic construction aspects as the plumbing, electrical system, HAC system, roof, structural frame, exterior building envelope, fire protection measures and site location. Some PCAs may also include such "out of scope" details as ADA accessibility, pest issues, mold infiltration and FHA requirements.
  • Opinion of Costs to Remedy Physical Deficiencies - This prepared opinion consists of a list of problems noted by the inspector during the walk-through, along with estimates of the necessary repair costs. Some of these necessary repairs are categorized as immediate requirements, while others allow up to one year for the fixes to be made.
  • Property Condition Report (PCR) - The PCR is the final product of commercial property condition assessment. It is a comprehensive document that sums up and breaks down the entire assessment process and its findings, from the initial information gathering to the walk-through and any estimated repair costs. It's common for a PCR to include photographic evidence of construction or site problems in support of the written documentation.

As you can see, a commercial property condition assessment can provide a wealth of crucial information for anyone interested in (or concerned about) the current state of a property and its surrounding site. By gathering, processing, and responding to this information, construction personnel, real estate agents, and current/future owners can make certain that the property is ready to fulfill its purpose as safely, reliably, and cost-effectively as possible.

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