Vancouver Commercial Real Estate Podcast

What is a commercial inspection and do you need one? Commercial inspector Conall Barr shares with us his inspection process, when you should call an inspector, and how an inspector can save you $250,000 on your new commercial purchase!

Who is Conall Barr?

My journey to commercial inspections started back when I was building houses. I worked in Japan doing multi-family building and then did some construction here in Canada. Friends kept asking me to look at their houses for them and I thought, “I should get paid for this!”

So about 24 years ago I did the courses to become a home inspector. But commercial real estate always interested me. So 15 years ago I did the commercial courses and it’s been a journey ever since.

How is the building process different in Japan compared to building in Canada? 

I had an export business when I was working in Japan. Someone would send in the blueprints, I would calculate the materials needed, ship them to Japan, and then I would go over there and build. It was usually simple two-storey apartment buildings. We’d put three up right next to each other very quickly.

The building work I did in Surrey was helping someone else construct houses. So I wasn’t the main contractor on site. The biggest difference was the money. With the commercial projects, people just wanted to get them up as fast as possible so they could make money. But with some of the residential projects, there was more leeway. With one log cabin I worked on, we would stop in the middle of the day for a barbecue!

What is the commercial inspection process? 

There are different types of inspections that can happen. There’s a team approach, where I would come in with a team of HVAC, roofing, electric and plumbing specialists. All of those people charge me a fee and give me a summary of their speciality’s inspection. I would then compile those summaries and present it to the builder. But that type of team inspection is rarely done.

Most people just want a preliminary inspection. So that’s where I would come in and point out potential issues. I would look at the exterior, the roof, the internal structure, and take brief looks at the electrical and the plumbing. The biggest thing I look at is the HVAC system. I would go up to the roof to check the filter system and look for problems. 

I would then compile a report for the buyer. They want to know how much they’ll have to spend on repairs if they buy the building. Unlike with a residential inspection, they don’t care about the little details. They want to know how expensive it will be.

With the report, they could go get their own estimates for repairs or I could help them get pricing information. The buyer could then bring in a specialist to fix the specific issues, rather than bringing in a team of specialists from the beginning.

Are there documents buyers should be looking at besides the inspection report? 

With a recent job, I discovered by looking at the blueprints that a specific wall that is required around a furnace wasn’t put in. I wouldn’t have known that without looking at the blueprints. So having a set of blueprints is very handy.

There are other documents that can be helpful for your inspector to have. Unlike residential, there are no depreciation reports required with commercial real estate. Your inspector provides that information.

Cory: Thanks to an inspection Conall did for us on a property, which involved going through a very tight crawl space under the building, we were able to go back to the sellers and point out the immense maintenance work we’d have to do. It ended up saving us $250,000 and just goes to show the importance of having your building properly inspected.

How do you go about conducting a commercial inspection? 

One thing I like to do is go where people don’t go. Because if no one is going there, that’s where problems can fester. That’s how I found the crawl space that Cory was referring to.

Often, I can go online ahead of time and understand what kind of building I’m dealing with. But sometimes I’ll get there, discover something new and end up spending an hour in a crawl space! So I just have to start winding my way through and taking note of what I find.

When is the best time for someone to get in touch with a commercial inspector? 

The sooner, the better. If a buyer gets a hold of me early on, I can give them an idea of how long the inspection will take and when they’ll receive their report. That way, they can incorporate those timelines into their buying process.

Cory: We typically advise clients that once they get a property under contract to reach out to their environmental inspector, appraiser and commercial inspector. You should get your Phase 1 environmental report back within a week. You can then engage your commercial appraiser and have that report in a few weeks. At the same time, you’re working on your financing. You’d then bring in someone like Conall for a commercial inspection 7-10 days before subject removal.

What areas do you work in? 

I work from Kelowna to Vancouver Island. I have even done inspections in Whitehorse and the Queen Charlotte Islands. But generally, I focus on the Lower Mainland.

Cory: Working with a good commercial inspector and having a relationship with that inspector is worth the extra money to bring them in when you’re spending this much money on a commercial property. You’ll get the level of comfort you’re expecting from their report.

Residential VS commercial inspectors: What’s the difference? 

It’s a completely different skill set between residential and commercial inspectors. A lot of commercial inspectors will do the home inspections, but residential inspectors won’t do commercial.

It’s a completely different mindset when you’re writing a report for a commercial inspection versus a residential one, and it’s a completely different customer.

When you’re working with clients consistently, they get used to your style of reporting and know where to find the information they need. It’s easier for clients to get used to one format and stick with that.

For commercial inspections, you do need to complete special training. You then have to get out there and start experiencing things.

Can you share a memorable story from your work as a commercial inspector? 

I was once in a building during the summer that had a roof leak. But it hadn’t rained for a week! I went up to the roof and noticed they had the air conditioning going but the filter hadn’t been changed in ages. None of the air could get through so it was creating frost, melting, dripping down into the ducts, and then leaking into the ceiling. The whole air handler had to be replaced.

In that case, it was a situation of both neglect and an older air handler. Unfortunately, no one went up to change the filter, which is an easy fix. But it was a hard roof to get up on, so I understand. Still, maintenance is important.

Should people bring commercial inspectors into a building after they’ve bought it to advise on maintenance?

If people would have their buildings regularly inspected to see how their maintenance systems are holding up, that would be very beneficial. You could have a commercial inspector come through every 10 years, or even more often, to make sure everything looks good.

Is there ever a good time to forgo a commercial inspection?

Never! With a pre-sale, you would still have an inspector going through as they’re building the property. So you could check it off your list or you could bring in your own commercial inspector for a second opinion.

Even if there’s not a problem found during the inspect ion, you have that report to compare your building to down the road. You can say, “Oh that has changed” or “The crack has gotten much larger” because you had an inspection done at the beginning. 

Cory: Sometimes buyers make the mistake of thinking they don’t need an inspection but nine times out of ten, it bites them in the end. A commercial inspection is worth every penny because the value of the property you’re buying and the cost of the repairs could be huge.

The 6 Pack: Getting to Know Commercial Inspector Conall Barr

Favourite band?

Aerosmith!

Go to karaoke song?

I don’t do karaoke. I’m fluent in Japanese, so it’s actually not pronounced “kair-ee-oh-kee.” When I lived in Japan, they made me sing Beatles songs at karaoke one time. But I was so bad they had to have people come up and sing with me to drown me out.

Share a book recommendation for our listeners

I like Stuart Woods’ novels. He gets right to the point, which I like.

Where in Japan do you recommend people visit?

Okinawa is a tropical island in Japan. They basically have a different language there! It’s a lot like Hawaii but most people don’t know about that area. It’s tropical and doesn’t feel like traditional Japan.

What would your last meal be on death row? 

My dessert would definitely be cherry cheesecake. I’d go with a kobe steak – that melts like butter!

What advice do you have for someone buying commercial real estate? 

Use William Wright Commercial!