scope and focus of any due diligence of commercial real estate

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The Planning & Zoning Resource Corp.(800) 344-2944

Scope and Focus of any Due Diligence of Commercial Real Estate

Are you or your company planning to buy (purchase/finance) or develop commercial or industrial real estate?

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Here is a list of a few of the different types of commercial property:

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• Multi family• Hi-Rise Apartments• Corporate Rental Apartments• Retail Stores• Strip Center• Outlet Mall• Cluster of Shops with restaurants• Office Complex • Industrial/Manufacturing• Heavy Manufacturing• Warehouse• Health Care Park• Hotels/Motels• Resorts (Golf/Ski)• Conference, Convention, & Exposition Centers

• Depending on your objective and status as a buyer – the scope and focus of your due diligence will vary.

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• The objective will be common though; you want to make sure that you can use the property as planned after acquiring it.

Lender:

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11

A bank or a financial institution wanting to make sure that the property will be able to generate revenue (i.e. the property can be used as per future plans) to repay the loan.

Buyer: 22

An individual or entity acquiring the property for a return on investment (ROI). The ROI could be in the form of revenue generation or adding value by changing the use of the property through development.

• The property needs to be in compliance with applicable zoning ordinances with respect to usage, parking, setbacks, height, density, coverage requirements and more.

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• There must be no legal restrictions to the property’s intended use. Zoning compliance has become a major factor on the closing checklist.

• The importance of zoning compliance is especially important to the Lender who needs to know that the property can be re-constructed to the same building configuration in the event of massive casualty.

• Title insurers are especially in need of this information for it enables them to write their Zoning Endorsements (where available).

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• Plus, what Buyer does not need to know how the municipality will treat their property should their property be severely damaged by fire or other natural disaster?

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