Apr 09, 2012

Improving Due Diligence in Corporate Real Estate

By Don Catalano

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Due_Diligence_in_CRECorporate Real Estate Due Diligence is an essential part of making the right decisions regarding company’s real estate investments.  Due diligence may be unpleasant, time consuming and tedious, but it is absolutely essential to avoiding very costly mistakes.  And especially with the proposed changes to FASB lease accounting hanging in the balance, this has never been as key an issue in corporate real estate as it is today.  Due diligence for corporate real estate can be improved in a number of ways; here are a few:

Take Advantage of Technology

Due diligence can involve the review of many important documents, perhaps even tens of thousands of leases for larger companies.  A secure website can be used where the documents are loaded and made available as needed to all persons involved.  This can be safer and more efficient than your typical email.  Web conferencing tools like GoToMeeting and WebEx can be used to conduct said reviews online.  And these tools allow you to share screens and record sessions for better collaboration.

Technology and Commercial Real Estate

 

Assign the Right People

Corporate real estate due diligence involves a team of professionals carrying out different aspects of the due diligence.  You have your lawyers, appraisers, inspectors, engineers and others involved in evaluating a potential real estate purchase or lease.  A civil engineer may be able to assess the structural soundness of a building but you will need an electrical engineer to assess the electrical system and a mechanical engineer to assess the climate control system. By assigning the right people to the right job, you are covered and can rest assured that the task will be properly completed.  The last thing you want is to stretch your team out too thin or have people completing tasks that they do not fully understand.

 

Allow Sufficient Time

Corporate Real Estate due diligence is a time consuming process, not allowing adequate time or starting late and rushing through it can result in costly mistakes. There are certain tasks that must be completed in every case and some tasks that are completed in certain situations so the project must be scoped properly with adequate time allocated to each task. This can be done based on past experience but there should always be some extra time for unexpected events or contingencies.

Other Commercial Real Estate Due Diligence articles:

Four Due Diligence Tips for Commercial Real Estate

Defining Due Diligence in Site Selection

Simplifying Site Selection with Technology

 

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Topics: corporate real estate

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Don Catalano

Don Catalano

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