When looking at industrial real estate listings, it’s important to do your due diligence. Commercial real estate is a significant investment, and you don’t want any unwanted surprises after you make your purchase. Here are just a few items that can be initially identified as red flags upon a cursory review of the property. This is not an exhaustive list, but it can be observed by even the most untrained eye. Keeping these in mind could save you a lot of time and money on extensive due diligence that may not be necessary on a dud property.
1. Ensure adequate ceiling height
In an industrial space, your tenants are probably going to require ceiling heights of at least 15 ft (even better? 18 ft) to meet their needs. Anything less than that makes the space nearly impossible to utilize for industrial purposes, such as storing and stacking equipment.
2. Assess the roof condition
Look for any signs of leaks, such as ceiling discoloration or even buckets on the floor. A roof replacement on a commercial property can be wildly more expensive than that of a residential home. A surprising but accurate hack for this? Check out the building’s roof on Google Earth.
3. Keep a lookout for cracks and settling
Do a quick but thorough walk of the interior and perimeter of the building and look for any cracks in the walls or floors. Large cracks in the concrete can be a sign of serious structural problems.
4. Make sure the building is accessible via truck
In an industrial space, it’s almost always a necessity for trucks and heavy equipment to be able to load supplies in and out of the building. This may seem like an obvious point, but you would be surprised at how many spaces are less than accessible. A loading dock that is trailer height is preferable.
5. Beware of environmental contamination
Red flags for potential contamination include:
- Stains on the floor
- Obvious spills
- Unlabeled containers of waste and/or raw materials
Environmental contamination is always a risk in industrial properties. Look for a space that is clean, carefully kept, and tidy.