The advantages of vendor technical due diligence

The necessity to access capital quickly during times of economic turmoil for those who have finance available locked in built assets is a common theme. In such cases, an asset that is transaction-ready can be more appealing to purchasers and there are significant benefits to being ready to transact by having a full suite of professionally prepared survey reports in place.

How does technical due diligence give you an advantage when selling commercial property?  

In a challenging economic climate, the property market has been likened to a school disco; there is a pause as investors and developers stand around the edges, waiting for the first person to step onto the dancefloor.

Some investors will hang on for what they see as the right time and market conditions to dispose of assets, but in the current economic climate, ‘the perfect conditions’ are difficult to come by. Taking the plunge and being one of the first to start dancing by bringing an asset already prepped for sale to the market has its advantages.

It takes only a small number of property-owning organisations to strut their stuff before others follow, and the dancefloor, or market, gets busy. And just as you would put on your sharpest outfit for the school disco, assets can be appropriately dressed and ready to dance by undertaking vendors technical due diligence.

What are the benefits of technical due diligence (TDD)?

Vendors technical due diligence is not a new concept, but it does have significant benefits. The most obvious being that it expedites that sales process because purchasers can make an informed decision more quickly without having to spend money on surveys and inspections.  A vendor would have to wait months for a potential purchaser to organise and undertake their own due diligence, particularly when dealing with portfolios of buildings.
 
Having a professionally prepared, detailed, and reliable suite of surveys available means that a purchaser does not have to invest time and money to undertake their own technical due diligence. But this is contingent on the quality of the reports produced, as a purchaser is unlikely to rely on a poorly prepared survey which will lead to delays. 
 
Technical due diligence used to be referred to as a commercial building survey; but that is just one part of a range of specialist inspections required to ensure that a thorough review of a built asset is undertaken. Typically, a full technical due diligence includes condition surveys, ESG assessments and mechanical and electrical surveys. There should also be a thorough investigation in to repair costs and an assessment of whether these are recoverable or nonrecoverable under the lease terms.  They can also include a host of specialist inspections depending on the age and nature of the building. 

How can Carter Jonas make a difference when selling your commercial property?

Recently Carter Jonas was recently instructed by a large global logistics client to assist with the disposal of a 70,000 sq. ft warehouse which did not align with their UK portfolio strategy. Carter Jonas managed the entire technical due diligence process which included undertaking the condition survey and cost investigation, and an area referencing exercise. We also appointed and managed various specialist investigations including a Phase 1 Environmental Assessment.  

From point of instruction to completion, the entire process was completed in three weeks. This enabled our client the flexibility to market the property within their desired timescale with confidence that a potential purchaser could rely on a thorough suite of professionally prepared surveys.  

Getting a building ready to sell is the equivalent of being one of the first onto the dancefloor. It means there is space to make some moves, and the wall flowers will gravitate towards you.

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