After months of searching for a new space, you have finally found the building at the size, location and terms you wanted. While the lawyers from both sides are negotiating the lease, you are in what is termed “the due diligence period.” You have taken our good advice and had a test fit done, had a scope of work developed and then priced by a friendly contractor, and even ordered a Phase I Environmental Study to be sure your landlord will not be remediating the site while you try to run a business. That should cover it, right? Wrong!
Here’s why:
The hardest part about due diligence is trying to determine what you don’t know. There are three (3) ways to lower your risk, to better understand what you’re getting into:
- Commission a Facility Condition Assessment (FCA): This is a systematic approach undertaken in accordance with ASTM standards by architects and engineers that identifies a multitude of concerns as well as the priority and costs to address them. In some ways this is akin to having a home inspection, except the risk of a business disruption due to an undetected building problem is much worse.
- Secure a Code Analysis: This will indicate what work will be required to bring portions of the facility up to code as part of any remodeling you will need to do. In some cases, perspective tenants are more surprised about what grandfathered conditions do not need to be addressed than what ancillary work is required.
- Order an Energy Audit: This will highlight what the energy costs are likely to be as well as what investments can be taken that will lower energy costs over a payback period that is shorter than the lease. The landlord may be willing to share in these investments.
Comments