By: Reardon D. Sullivan, PE, LEED AP

Sully had the opportunity to speak to over 500 real estate professionals at the annual DC Bisnow State of the Market. Those in attendance were able to learn how engineering due diligence can save clients $$$. Have you checked under your “HOOD” lately? Find out more! [email protected]

Related Article – April 2017

It has been said that the key to selecting the best property for a tenant is “location, location, location.” I would offer a fourth: infrastructure. Specifically, a building’s HVAC infrastructure.

It has long been a trend that tenants are frequently not satisfied with their building HVAC systems. In fact, the 2013 BOMA – “WHAT OFFICE TENANTS WANT” – lists tenant satisfaction with heating and A/C at 3.34 out of 5, or 67%, which is the lowest of any building feature that was polled.

As tenant design engineers, we are often added to the real estate team after the site has been selected and the deal completed, sometimes without the benefit of a proper due diligence effort. This is similar to buying a used car based solely on looks. A proper due diligence effort will “get under the hood” and uncover performance limitations, hidden build out costs and possible project delays.

We have had the opportunity to work with savvy tenants and brokers to review potential tenant sites and negotiate how to address existing conditions so that all parties understand the fully realized project risks and costs. In a recent negotiation, we were able to secure $20/sf in additional TI allowance due to a good due diligence study.

Take away: Spend a little time and money upfront to look “under the hood” of potential real estate deals to understand the possible hidden risks before executing the contract.