Buyer’s Checklist: Purchasing Commercial Property

I’m listening to The Checklist Manifesto by Atul Gawande, it explores the power and importance of using checklists in complex systems, particularly in the medical field. Gawande argues that checklists can help to reduce errors and improve communication, leading to better outcomes for patients. He also provides examples of successful checklist implementation in various industries such as aviation and construction. One of my favorite quotes from the book: “Checklists seem to provide protection against such failures. They remind us of the minimum necessary steps and make them explicit. They not only offer the possibility of verification but also instill a kind of discipline of higher performance.”

In addition to the medical field, checklists can also be applied to the process of purchasing a commercial building. Purchasing a commercial building is a major decision that requires thoughtful consideration of various factors. To help guide you through the process, here's a checklist of the most important things to consider when buying a commercial building:

Location: Is it in a prime spot for your business? Proximity to where employees live, transportation, amenities, and potential customers is key.

Condition: Check for any visible issues like structural damage, water leaks or outdated systems. Have a licensed commercial general contractor walk the property with you as soon as possible.

Zoning and Permits: Speak to someone at the planning department and confirm its zoned for the intended use or use permits are at least obtainable.

Financials: Review current and projected income and expenses.

Lending Options: See what financing programs are available in the asset class.

Legal: Have a Real Estate attorney on hand to review any leases and certainly the purchase agreement.

Environmental: Check for any environmental hazards or liabilities associated with the building.

Future Potential: Consider the potential for growth and expansion of the building.

Compare with other options: Research and compare the building with other commercial properties that are available in the area.

Professional Inspection: Hire a professional inspector to produce a detailed report of any suggested repairs.

It's important to note that working with a licensed professional commercial real estate broker can be extremely beneficial during this process. We have extensive knowledge and expertise in the commercial real estate market and can provide valuable advice and guidance throughout the buying process. We can also help you navigate the legal and financial aspects of the transaction and can provide valuable market insights to set you up for success.

One of the best commercial real estate brokers you can work with is a SIOR (Society of Industrial and Office Realtors) or a CCIM (Certified Commercial Investment Member) broker. These are highly experienced, top-producing real estate professionals who have met strict education and production requirements.

In conclusion, buying a commercial building is a significant investment and requires careful consideration of multiple factors. By following this checklist and working with a licensed professional commercial real estate broker, you can increase your chances of making a sound investment.

Bridget Richards, SIOR CCIM