CCIM Central Canada Chapter. Richard Weldon, P.Eng., LEED AP Carson Dunlop Weldon & Associates Ltd. October 5,

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1 Minimizing Risk When Purchasing or Leasing CCIM Central Canada Chapter Richard Weldon, P.Eng., LEED AP Carson Dunlop Weldon & Associates Ltd. October 5,

2 Who We Are CDW is a consulting engineering firm specializing in Property Condition Assessments of Commercial properties Established in 1978 Performed 1000 s of PCA s

3 Presentation Overview 1. Introduction 2. Purchasing VS Leasing 3. Structures 4. Roofs 5. Electrical

4 Presentation Overview 1. Introduction 2. Purchasing VS Leasing 3. Structures 4. Roofs 5. Electrical

5 Introduction What are the risks?

6 Introduction What are the risks? Unknown deficiencies that cost $$$

7 Introduction What are the risks? Unknown deficiencies that cost $$$ Unknown deficiencies that are a safety concern

8 Introduction What are the risks? Unknown deficiencies that cost $$$ Unknown deficiencies that are a safety concern Not knowing capacity of systems (e.g. size of electrical service)

9 Introduction What are the risks? Unknown deficiencies that cost $$$ Unknown deficiencies that are a safety concern Not knowing capacity of systems (e.g. size of electrical service) Vagueness in lease that causes litigation

10 Introduction No building is perfect But how imperfect is it? Deficiencies can be related to: Poor design Poor construction (workmanship) Poor materials Not code compliant Aging systems

11 Introduction We will review common deficiencies found at low rise industrial/office and high rise commercial buildings We will not consider environmental concerns

12 Introduction Deficiencies commonly found: During due diligence period Pre-purchase Pre-lease Pre-listing Post-lease

13 Presentation Overview 1. Introduction 2. Purchasing VS Leasing 3. Structures 4. Roofs 5. Electrical

14 Purchasing VS Leasing Whether buying or leasing the condition of the building is a concern Deferred maintenance and Capex items need to be known Lenders may not finance a purchase without a building condition report When entering into a lease, the lessee is likely going to be responsible for maintaining the building as a prudent owner would

15 Purchasing VS Leasing Leasing has other potential risks Vague leases have potential for litigation Owner s expectations of required maintenance Defining normal wear and tear Additional rents for amortized capex items amortization periods advantageous to owner

16 Presentation Overview 1. Introduction 2. Purchasing VS Leasing 3. Structures 4. Roofs 5. Electrical

17 Floor Slab Cracking & Settlement Most industrial buildings have cracked floors primarily due to concrete shrinkage and/or minor settlement Slabs constructed with control joints are less likely to crack The concern is settlement that affects usability of the space

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19 Floor Slab Cracking & Settlement The remedy: Rout and seal cracks with epoxy or urethane, as required - $20 per linear foot Localized slab replacement where settlement is excessive - $15 to $20 per square foot

20 Floor Slab Cracking & Settlement If necessary, borehole or ultra sonic investigations can be carried out to determine if slab will likely need major repairs or replacement

21 Impact Damaged Steel Structures/Missing Steel Bracing Found primarily at industrial buildings Forklifts operators sometimes think they are race car drivers Steel bracing not originally installed, or removed during modifications Impact damage to columns more critical near mid point greater risk of buckling

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25 Impact Damaged Steel Structures/Missing Steel Bracing The remedy: Repair damaged column by welding steel plate onto it Cost < $1,000 Replace column or section of column if not repairable Cost $4,000 to $8,000 Provide bracing where required Cost $1,000 to $5,000

26 Lower 5 feet of column been replaced

27 Weld joint at new section

28 Cross bracing removed for new door

29 Parking Garage and Balcony Deterioration Water & salt on suspended concrete slabs Reinforcing steel in concrete expands as it corrodes Expanding steel cracks and damages concrete Concrete repairs are expensive

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31 Parking Garage and Balcony Deterioration Where this is found: Every building with multi-level parking structures or parking structures that extend beyond the building footprint Buildings with balconies

32 Active water leakage below. Note rust colour from rebar corroding.

33 Exposed steel is never good! Through slab replacement required

34 Replace every other balcony. Then use new balcony to support forms

35 Parking Garage and Balcony Deterioration The remedy: Detailed review required Concrete repairs as required Cost $20 to $50 per sq ft Provide or replace membrane Cost $5 to $20 per sq ft depending on whether there is landscaping overburden to deal with

36 Hostile Environments A facility that creates a hostile environment should be inspected by a structural engineer that is familiar with that type of environment

37 Examples Hockey arenas Metal plating facility Dry cleaning facility Frozen food storage Any high humidity environment

38 High humidity

39 Metal plating facility environment

40 Damaged Walls Wall cladding too close to ground because of landscaping or asphalt replacement Cladding absorbs moisture and eventually spalls from freeze/thaw Can be found at any building

41 Weep holes in brick veneer Weep holes obstructed no through wall flashing

42 Masonry at grade will spall due to freeze/thaw

43 Damaged Walls The remedy: Repair/replace damaged wall/cladding as necessary Remediate below grade cladding during future landscaping/asphalt renewal

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45 Presentation Overview 1. Introduction 2. Purchasing VS Leasing 3. Structures 4. Roofs 5. Electrical

46 Roofs The Problem: How much time do we have today? Age, workmanship, out of sight & out of mind, phenolic foam, etc. Expect to find need for repairs Realize the roof of a low rise building is the most expensive component that an owner should expect to replace

47 Roofs General Cost of roof covering is less than 5% of the building cost Of all litigation related to building construction, roofing problems make up 60% - 80% Mistakes are not immediately apparent Leaks usually appear at edges and penetrations

48 Causes of Roof Failures Poor Design Poor Workmanship Age & Weathering Lack of Maintenance Materials Trapped Moisture Roof Traffic

49 Roofs Fully Adhered Systems Built-up asphalt & gravel, modified bitumen Watch for blistering ridging exposed membrane

50 Blisters

51 Ridging

52 Roofs Partially Adhered or Loose Laid Systems EPDM rubber, PVC, TPO Watch for shrinkage causing tenting wind up lift

53 Tenting of PVC

54 PVC shrinkage

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59 Roofs Phenolic Foam Causes membrane ridging Corrodes steel when it gets wet Manufactured in Canada from the mid 1970s to 1994

60 Phenolic foam reddish brown

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64 Roofs Dealing with the Issues How to deal with it: Ask for roof reports & maintenance records Know by building age & roof deck type if phenolic foam should be a concern Consider staged roof replacement Only use membrane overlay if existing membrane is confirmed dry - scan

65 Thermographic Scan Can be done where insulation is below membrane Roof surface scanned with infrared camera equipment Done at night, looking for warm areas on roof Warm areas may correspond to wet insulation

66 Thermographic Scan Wet insulation absorbs more heat during the day and gives off more heat at night Warm areas marked with spray paint for follow up with cut tests Heating equipment, light fixtures, etc. may give false readings Cost - $1,500 to $5,000

67 Leak at drain Saturated insulation panels Wall flashing leak or heater

68 Presentation Overview 1. Introduction 2. Purchasing VS Leasing 3. Structures 4. Roofs 5. Electrical

69 Electrical Knowing the Correct Service Size The Problem: Not knowing how to determine the correct electrical service size May need specific service size for process primarily a concern for industrial buildings Listing could be incorrect = liability

70 Electrical How to Determine the Service Size Call the utility provider Hire or ask someone like me Prelisting property condition assessment

71 Electrical How to Determine the Service Size Service size is determined by the weakest link in the power supply to the building

72 Electrical How to Determine the Service Size Need to know size/rating of: 1. Main building transformer 2. Cables feeding power to building 3. Fuses or interrupter in main disconnect 4. Main disconnect switch or main switchgear

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75 Item Life Cost to Repair/Replace Roof Membranes 20 to 30 years $7 to $15/sq ft Exterior Wall Sealants 5 to 15 years $4 to $5/ linear ft Balcony Repairs Concrete & Railings Parking Garage Membranes 20 to 30 years $1,500 to $5,000/unit Exposed 15 to 20 yrs Under landscaping 20 to 30 yrs $6 to $9/ sq ft $20 to $30/ sq ft Parking Garage Concrete Repairs Exposed 25 to 40 yrs Under landscaping 20 to 30 yrs $25to $50/ sq ft $25 to $50/ sq ft Boilers Domestic Hot Water and Heating Water 20 to 30 years $50,000 to $150,000 per boiler Rooftop HVAC units 15 to 20 years $2,000 to $2,500 / ton Windows and Doors 25 to 40 years $25 to $50/ sq ft Main Building Transformer 30 + years $50,000 to $150,000 Asphalt Paving 20 to 30 years $2.50 to $3.50 / sq ft

76 Thank You! QUESTIONS? Richard Weldon, P.Eng., LEED AP