Whether you’re a current property manager or looking to invest for the first time in real estate or commercial properties, you’ll have to complete certain assessments along the way. Assessments are a vital part of understanding your current and prospective properties — and how you can maximize a certain property’s efficiency and profitability.
But, when it comes to scheduling assessments, it can be confusing to know which ones you need. Good facility and property managers will likely offer several ways to review your properties, and you may be overwhelmed by all the options available to you.
Don’t worry — when you work with CTG Real Estate Services, Chris Gardner will walk you through every step of the assessment process and help you understand exactly which processes are necessary at different parts in your journey. Schedule a consultation with him today to get started.
In the meantime, we’ve broken down some of the biggest differences between the two most common assessment reports: property condition assessments (PCA) and facility condition assessments (FCA).
What are Property Condition Assessments?
Property condition assessments go by many names. You may have heard them called property condition reports or commercial building inspections. They are often completed before the purchase of a commercial real estate project as part of the due diligence process when a property changes hands.
During a PCA, a commercial real estate space goes through a thorough inspection. Professionals will inspect any new and proposed improvements and all systems of each building on the property. If there are any failing or damaged building systems or life safety issues, they will be noted in the inspection. Current capital needs will be noted, as well as expected long-term capital expenses based on the useful life of the current building systems and components. The assessment will allow for professional recommendations regarding future issues to the prospective buyer, so they are well aware of what risk and liability they are taking on when purchasing a commercial real estate space.
Property condition assessments usually involve the inspection of:
- Site and grounds
- Structural systems
- Building envelope
- Interior building components
- Mechanical systems
- Regulatory compliance
A completed report will be provided to buyer and seller so both parties are aware of the property’s current condition. However, if you’re new to investing in commercial real estate, you may not know what to look for in a property condition assessment.
This is where a professional such as Chris Gardner comes in. As part of his turnkey real estate solutions, he will guide you through every step of purchasing a real estate space for your needs, including walking you through the process of obtaining a property condition assessment for potential developments.
So, before you start any assessments on a potential real estate buy, contact a professional. And remember this most important difference — property condition assessments are used before a property changes hands.
What are Facility Condition Assessments?
On the other hand, you may have heard of another kind of property assessment — a facility condition assessment. The name is similar to the property condition assessment, but the goals of the two investigations couldn’t be more different.
Contrary to PCAs, FCAs are completed either after a property changes hands or when a long-time owner of a real estate property wants to reevaluate their space. Facility condition assessments are necessary to help owners understand the physical condition and value of their assets, develop capital budgets, and prioritize resources. A facility condition assessment is usually completed by a team of one or more specialists.
Every facility manager will have different priorities, but most facility condition assessments will identify:
- Routine and/or deferred maintenance
- Systemic deficiencies
- Remaining useful life of all major building systems
- Capital replacement needs
- Overall system compliance with the original design/engineering intent
- Compatibility with contiguous systems
- Prioritized list of repairs
- Total building replacement cost
From here, facilities managers can create management and maintenance plans for the real estate space. Only by understanding the current state of systems and predicted expenses in the future can an efficient plan be created. Clients will appreciate having a plan for future repairs and maintenance that reduces costs and increases productivity as much as possible.
Something else to note about the difference between PCAs and FCAs: While a property condition assessment is typically a one-time document, a facility condition assessment is often a living document, updated with new data as time goes on. Therefore, finding the proper method of data delivery with an FCA is incredibly important. The data represented in an FCA is important over a long period of time and can play a huge role in the way that a facility manager approaches a certain property.
Wherever a real estate investor is in the process, obtaining property condition assessments and facility condition assessments will be critical to creating a profitable plan for that development’s future. Fortunately, there are real estate professionals to guide you through these processes. To learn more about the assessments required in buying and selling commercial real estate spaces, please contact CTG Real Estate Services today.