BUILDING SURVEYING FOR PROFESSIONALS PODCAST
COMMERCIAL SURVEYING WITH GRAHAM CARDOE
Host: Welcome to the Cardoe Martin Podcast Building Surveying for Professionals, giving you a detailed and technical view of the world of Building Surveying. This will be our first Podcast in 2020 AC that’s after Covid, things have changed to the way we live and the way we work and despite the clear facts that a paradigm shift has occurred our buildings still repair and preventative maintenance, leaks still need to be fixed and the human remains at the heart of our built environment, keep safe and best wishes to you and your family and community from all at Cardoe Martin as you join us once again for a journey through time and materials as we investigate world of commercial building surveys. Now in this episode we have managed to draw back a regular guest onto the show so please give a warm welcome to Cardoe Martin’s Chairperson, Graham Cardoe. Welcome Graham it is good to have you back on again.
GC: Thank you it is a pleasure.
Host: (0.48) What I’d like to do first is just tell us a little bit about what you’ve been up to during the lockdown we are all experiencing at the moment.
GC: Well obviously it’s been a challenging time for everyone and most of my communications have been by telephone or over the internet but I’ve been able to keep in touch with the team and obviously beyond hand as Chairman to deal with technical or other queries that arise and I’ve continued with my APC training of two of our surveyors which has progressed well and so I’ve adapted to the changes and so have my colleagues, so far, so good.
Host: (1.21) Turning to the questions so I am interested to understand what is a commercial building survey?
GC: A commercial building survey is a detailed inspection of a building, usually by a building surveyor and typical buildings would include offices, warehouses, factories, hotels, shops and shopping centres and the inspection covers the structure of the building and external areas including roofs, walls, cladding, drainage, car park loading areas and the inspection would also extend to internal areas, ceilings, walls, floors and services installations and the findings following the inspection incorporated into a written report with recommendations and the report also includes results of quite a few investigations such as Local Authority enquiries to establish that there is Planning and Building Regulations Consent and the result of specialist testing for instance, asbestos and harmful concrete additives, technical information about the building would also be included such as floor loading capacity which is important particularly to certain types of tenant, specialist reports upon contamination of the site and reports on services installations such as air conditioning and lifts and also guarantees and warranties. There may be guarantees for underpinning or piling or damp proofing and tanking and also warranties from the design team and the contractor that actually designed and built the original building.
Host: (2.44) So just thinking about the actual floor load so I remembered a job I did maybe 5 or 6 years ago, it was down at Canary Roof and there was a fire safe and there were several of these things in this kind of random admin room and from I understand from people you’d been there a while is that they’d had to reinforce the floor of this office block at great expense in order to take the weight of the fire safe is that wall you mean by floor loads?
GC: Well in a simple way yes, I mean obviously if there are large point loads on an office floor you’d need to take steps to reinforce the floor but for instance in a warehouse or a factory an industrial company may be looking to bring in heavy items of plant and an engineer would be required to design the supports for that plant before they could be sure they could take a piece of that building and I mean it is that kind of thing that’s important, but also in warehouses the range of tenants that would take a warehouse would be reduced if the floor loading capacity wasn’t adequate and particularly in older warehouses they’re not capable of sustaining the floor loadings necessary for heavy racking and loading so it’s an important area to cover in any building survey.
Host: (3.54) Is the lack of crossover then, I’m guessing if you were an 18th Century Grade warehouse in the centre of London then I could understand is the cut off saying like 1960’s/1970’s that when the standard really came into and you could expect if you were to get a property that you’d be okay with that sort of age or is it really much the newer stuff?
GC: Well partly the older properties tend to have inferior loadings, your right going back to the 60’s but also the loading capacity of the ground is relevant, so certain types of ground will be capable of taking like higher loadings and other types and obviously the ground bearing capacity can be improved by piling and other structural solutions but those solutions have not always been adopted in certain properties so it’s an important area to investigate and establish and often it has to be done because there’s no historical record by a structural engineer who takes a core sample to establish the depth of the slab and what reinforcement is present but an assessment of the loading can be given.
Host: (4.51) Okay that sounds interesting. Moving on though so what is the difference between a residential and a commercial building survey? I’ve had one on the house done before as people will know who have listened in previous recordings but if I’ve a commercial building what am I likely to see that’s different, is there behavioural difference notes, survey results are different?
GC Well obviously a residential survey would just cover properties that people live in, flats, houses and care homes, a commercial survey would cover buildings used for commercial purposes like the ones we’ve just mentioned warehouses, factories, offices and the like and I think I’ve just run through the sort of information that you’d require from a commercial building survey in terms of just not the condition of the building but also the technical information regarding the building so I think a survey on a commercial building is more complex, there’s a lot more detail involved whereas a residential survey would focus predominantly on the condition of the structure and the external/internal finishes and the like.
Host: (5.50) Okay that’s really interesting so when would I need to get one, this commercial building survey on my commercial unit saying we’re heavy plant?
GC: Yep but I mean there are several situations where you’d need a commercial survey so when purchasing a building either as an owner/occupier or as an investor such as a pension fund, when taking a Lease of a building especially a Lease where you have a full repairing liability, also when disposing a building so it’s important to gather information and documentation and also be in readiness to respond to any purchaser’s enquiries or queries regarding the building, there may be historical construction aspects of the building that may be queried by a purchaser’s surveyors and it’s important to have the paperwork and the responses ready for that sort of situation, it’s also possible to require a commercial survey after acquisition as defects often become evident after acquisition or shortly after construction is completed and before the building has had the time to stand the test of time, yeah. So a building surveyor would advise upon cause, the liability, the solutions and the cost of resolving those sort of problems after construction was completed.
Host: (7.14) So it sounds like to be a commercial building surveyor is much more complex than to be a residential building surveyor but are there any other specialists that are needed to carry out a comprehensive survey and why are they involved and what sort of things do they do?
GC: Well the need for a specialist in commercial building surveys is influenced by the complexity of the building and the client’s requirements so I think a lot of commercial buildings are far more complexed and domestic or residential buildings and so it’s a different skill set that’s needed really by building surveyors. For instance a manufacturing company may wish to install heavy plant, as we’ve just discussed, and an engineer’s advice may be required. A previous industrial user may have contaminated the site around a building due to the processes they’ve been undertaking and testing and advice could be required for an environmental consultant, there may be concerns regarding the adequacy and lifespan of these services installations such as electrical, mechanical, lifts and air conditioning plant, an incoming industrial user may be concerned about the adequacy of the electrical supply to a property to serve all their machinery etc. so it’s possible to obtain specialist advice upon many aspects of a building, it’s a similar principle to going to your GP who may refer you to a specialist for a detailed assessment of a specific problem.
Host: (8.38) Moving on from that then what is covered within these different types of commercial surveys so I’m thinking acquisition, occupiers, vendors those sort of things?
GC: Okay well let’s consider owner/occupiers first, the purchase is usually partly for investment for possibly a private pension fund but an owner/occupiers also concerned that the property is fit for purpose and it can be occupied safely and legally so they’re concerned about state of repair, possibly that the roof doesn’t leak but they’re also concerned about the property being safe in terms of means of escape, flooding risk, asbestos, Local Authority Consents that are in place so they’re the main concerns that owner occupiers would have. Another type of purchaser would be a pension fund, now pension funds typically purchase freehold properties subject to a tenant occupying and paying rent and being responsible for repair and that’s known as a full repairing liability and pension funds typically are concerned with matters that affect the investment value and saleability of the property and they usually have a check list of minimum requirements, now we’ve already talked about floor loadings but obviously that’s important from a pension funds point of view because if a property has inferior floor loadings then it may restrict the range of users that could occupy the property particularly warehouse and heavy storage type users.
Host: (10.03) Yeah that makes sense, yeah and then the markets narrower so you can charge less I guess or if it’s a bit too niche then you’ve got strike harder to locate the right tenant?
GC: That’s right. They’d also be concerned about possible presence of flammable thermal insulation which can make properties uninsurable unless they’re approved by the Loss Prevention Council, there may also be harmful materials in the construction, concrete additives and the like which can affect the value and saleability of the investment and I although, as I’ve said a lot of pension funds would expect the properties to be occupied by tenants on a full repairing basis they are nevertheless concerned about the state of repair because the tenant may go out of business and leave them with the bill and they can’t re-let the property until the property’s been put into a reasonable state of repair.
Pension funds are also keen to establish that the property is in compliance with Planning, Building Regulations, Listed Building Consents and free from site contamination, and another key area that the pension funds look for are Design Team Warranties from the original design team and contractor for the building so that they have some protection in terms of negligence by those companies at the time of construction. A pension fund will also be keen to establish that there were warranties from the design team for the original construction of the project which they could rely on despite them not being an original party in the construction project and a building surveyor who highlight all of these issues with the client.
Another type of situation where you would require a commercial building survey is when a vendor is looking to dispose of a property, information needs to be gathered to ensure a smooth sale so documentation and consents and Test Certificates, Guarantees etc. all need to be obtained and obviously if there are any construction or repair issues outstanding with a building that a client owns it’s important to get professional advice on them because they’ll probably come up as queries as part of the purchasing process and I remember being involved in a situation it was a survey of a retail warehouse and I was acting for a purchaser who was part of the bigger portfolio and there was a lot of cracking to the floor of the warehouse which obviously raised concerns in my mind but it took several weeks for the vendor to get the information out of archives and we did resolve the situation but very interestingly some money was paid to the tenant who was in occupation to put this defect right and it was never undertaken so that created another problem to be negotiated between the parties which was eventually done but it’s an example of how problems like that unless they’re addressed can cause a delay to a deal, forewarned is forearmed basically in that situation is the key.
Another type of building survey which is very relevant for commercial tenants is a survey for lessees particularly where they’re taking on a full repairing Lease and its incredible how many commercial tenants don’t realise that they will be liable for repairs which were present at the start of their Lease because the definition of repair generally includes an obligation to put in repair and there are ways of limiting this liability so there’s a useful role to be played by commercial building surveyors in terms of advising lessees in that situation.
Host: (13.48) Excellent thank you Graham, so next question really is one quite interesting for me, I want to buy a commercial building and the vendor has already had a survey completed do I really need my own survey? This kind of sounds like I’m going to buy a car and the car’s been down to a proper garage and to be assessed prior to me buying it or is it being done by the bloke’s mate and therefore am I going to have to do my own to just make sure it’s been done properly, what are your thoughts?
GC: Well I think the first thing that you have to establish there is what was the purpose of the vendor’s survey, an acquisition, pre-acquisition survey in which case is it out of date and if it is out of date then a reinspection will be required and they’ll be a fee chargeable for that reinspection. If it was a vendor’s survey to facilitate a sale, then the survey will be biased towards sale rather than acquisition so it is important to remember the person who pays the piper that calls the tune so the nature of the instruction to the surveyor is key so I would expect to want to see the letter of appointment setting out the brief to that surveyor. It is also important to establish liability which would then need to be extended formally to the new purchase and the adequacy of the surveyor’s insurance is also important so in summary it’s possible to use a previous survey in some situations but there are more potential pitfalls than advantages and instructing your own building surveyor is the safest option.
Host: (15.16) It would seem to me that maybe there’s a service that perhaps other building surveying companies will provide, that do a review of everything that you’ve mentioned from the insurances due to the lesser appointment because as an average possible owner of this commercial building it’s unlikely I’m going to understand the nuances of an appointment letter, and certainly the insurers as well so is that something building surveyors will provide, that kind of review facility?
GC: Yes, I am sure they would, I think rather than allowing the client just to muddle their way through I would certainly advise the building surveyors appointed to comment on the adequacy of any documentation of that type that the vendor produces?
Host: (16.00) So Graham thanks for that, these all sound rather complicated and I’m in a bit of a hurry, how long does it take to get a commercial survey?
GC: Well let’s just take a step back from that I mean I use to do a lot of survey work for an international record company and they were requiring smaller record labels which included their property assets and the company secretary said to me once, “Graham your survey don’t cost me anything in fact they always save me money because I can renegotiate terms and the sale price etc.” that’s an example of the importance of getting a survey and how for that client he didn’t feel it really cost him anything. In terms of timing the building surveying survey and report are generally completed well before the lawyers are ready to exchange but don’t instruct a surveyor two days before you’re due to exchange which unfortunately some clients do and that just puts the whole process under too much pressure.
Host: (16.58) Lovely thank you, so what are the risks if I do not get a commercial survey before selling, taking a Lease, or perhaps purchasing a commercial property?
GC: Well in the worst case you won’t be able to sell or occupy the property I mean I was involved in a situation where this has happened, where an entire floor of offices had to remain vacant because the legal agreement with an adjoining property allowing a secondary means of escape into the property had expired and the property could become unsaleable or only saleable at a significantly reduced price due to non-compliance. There could be harmful construction, materials or construction defects present or items of disrepair and the risk to leaseholders is that they take on a lot of repairing liability at the start of the Lease and obviously that puts them under considerable financial pressure as the Lease expires.
Host: (17.57) So there’s quite a few points you’ve just made there, which one would you say in your experience is the most severe, what have you come across the most that has posed problems either financially or risk management wise I suppose to a business organisation?
GC: Well I mean all of those factors can be pretty serious to a company I mean if they take a Lease on a building and they can’t occupy it then that’s pretty serious stuff and I mean I’ve been in various end of Lease dilapidations claims for significant sums of money where the tenant has been concerned about being unable to cope with the claim and fortunately we’ve managed to negotiate a satisfactory settlement but the initial claim can come as a quite a shock and so I think to be prepared for all of these issues prior to committing to either purchasing a building or taking a Lease is so important and we go back to the record company, company secretary saying “Your surveys don’t cost us any money Graham” and there’s so many times that you can save the client money or they can alter the way that they’re proceeding with a deal to take account of what you’ve found so it’s a key area of advice that I would recommend all commercial tenants and owners take heed of.
Host: (19.26) Lovely thanks Graham, so you have sold me on the commercial building survey I’m going to get one but how do I go about actually getting one booked up?
GC: Well Chartered Building Surveyors with experience of undertaking commercial surveys those are the individuals that you need to approach, Cardoe Martin the company I’m Chairman of would be pleased to assist and provide quotes for any building surveys of commercial and any other property.
Host: Lovely thanks Graham, so you have been tuned into Cardoe Martin’s Building Surveying for Professionals Podcast, thanks for listening and thank you very much to Graham Cardoe for joining us today.
GC: Thank you it has been a pleasure.
Host: And for sharing all your experience and knowledge all about commercial building surveys. Cheers Graham.