As a property investor, determining the type of commercial/industrial building best suited for your business is already a challenging task. Various criteria must be taken into account while picking the property of your choice. The most important one is choosing a lot that fits your business needs the most as it is volatile to the company’s future growth. A retailer will ensure that the bare necessities such as parking space, attractive décor and space are met. However, from an assessor’s point of view, the building’s reliance, longevity, and environmental impacts are most important.
While purchasing a property that requires a loan from the bank, the bank will likely ask you to get a building condition assessment and an environmental site assessment before your loan can be approved. If the property has not been maintained over the years, the assessor will notice, and the possibility of the loan not being approved is higher.
Here Are A Few Tips And Tricks To Use When Choosing The Right Location For Your Next Investment Property:
Before purchasing a property, it is essential to ensure that your business’s operations don’t break any environmental or zoning bylaws and regulations. Every province has its own rules. Therefore, asking a commercial advisor or a lawyer is a safe bet. However, simply finding out if your business’s operations would be considered commercial or industrial is a great start. The regulations determine how that land should be used, where operations can occur, and what type of building is allowed. The most common overlooks happen when new zoning bylaws come out, and the owners are unaware. Keep up with changes in zoning bylaws, and prior to purchase, make sure appropriate permits for the buildings exist, especially while buying an older lot.
However, if the lot is empty and your plan is to construct a facility of your choice, then a building permit will determine if your goals meet the bylaws. A building condition assessment determines the overall condition of the building and entails a cost evaluation of long-term and short-term fixtures. Some things your assessor will evaluate are topography, exterior, interior, roof, structural, electrical equipment, RTU/HVAC, insulation/ventilation, plumbing, elevator and life safety/fire protection.
Also Read: Difference between Phase 1, Phase 2, and Phase 3 Environmental Site Assessment.
Environmental regulations, on the other hand, are harder to detect. The biggest problem is if the subject property or its immediate neighbouring properties have been deemed a contaminated site presently or previously. A contaminated site is a property that has been polluted from unacceptable waste disposal methods, spills, leaks, and improper handling of chemicals etc. To the point where it is hazardous to human health or the environment in general. They are dangerous as they can seep into the soil undetected and cause significant casualties if a fire or explosion occurs. Any manufacturing business that produces oil, chemicals, and plastics such as auto repair or auto service shops etc., has the potential to be hazardous to the environment.
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If the business owner is selling the property, they must perform an environmental site assessment to determine whether the subject property is ready for sale. It is then their responsibility to perform the cleanup. Therefore, a buyer must ensure that the property has been inspected. If not, then any future catastrophes caused by previous activities will be the buyer’s liability, even if you didn’t own the building when the activities were taking place. Your assessor will conduct a historical review of the property, conduct interviews, investigate the site, and report its findings. Any spills, stains, storage, and handling of chemicals etc., will all be evaluated. Unlike a Building Condition Assessment, the longevity of the building isn’t the point, more so the impacts of the operations and if there are currently any threats or risks anticipated.
If contamination is predicted, then Phase 2 Environmental Site Assessment will be recommended, which is a much more intrusive investigation that requires collecting samples, drilling, lab testing etc. It is significantly pricier than Phase I ESA. If contaminants are found, then a Phase III remediation plan will occur before any purchases can go through. This can sometimes take years to complete.
Also Read: A comprehensive Checklist of Phase 1 Environmental Site Assessment
The process of making the right decision can be overwhelming and highly time-consuming. However, prioritizing due diligence in every stage can take away future stress. Choosing the right location should not just depend on what will grow sales and be appealing to the consumer. It should also be dependent on the safety of all parties involved. Therefore, recognizing the reason why bylaws and assessments are placed can make life easier.
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