Inspecting a commercial space before you lease

Many commercial leases make the tenant responsible for some or all of the repair and maintenance of the space, and sometimes of its building systems. Inspecting before you sign tells you what condition you are accepting, whether the space can support your operations, and what you should negotiate in the lease. It is much easier to fix a problem before signing than to argue about it afterward.

Why tenants should inspect

A commercial lease is not like renting an apartment. Depending on the lease, the tenant may be responsible for HVAC equipment serving the unit, interior plumbing and electrical, and sometimes the roof or structure. Leases often say the tenant takes the premises "as is". Without an inspection, you may inherit a failing rooftop unit, an undersized electrical service or code issues that hold up your fit-out.

What to look at

Heating, ventilation and cooling

• Age, condition and maintenance records of the equipment serving the space, such as rooftop units. See rooftop unit maintenance.
• Whether the capacity suits your use, such as a restaurant, lab, gym or office with many people.
• Ventilation and exhaust for your operations.
• Thermostats and controls, and whether they are shared with other tenants.

Electrical

• Service size and available capacity for your equipment.
• Panel condition, labelling and spare capacity.
• Lighting condition and emergency lighting.
• Signs of overheating, amateur work or outdated equipment.

Plumbing

• Washroom condition and whether fixture count suits your occupancy.
• Water heater age and capacity.
• Drains, grease interceptors for food service, and backflow prevention where required.
• Signs of past leaks or backups.

Building envelope and structure

• Roof condition above the space and evidence of leaks on ceilings.
• Windows, storefronts and doors.
• Floor loading capacity if you have heavy equipment or storage.
• Cracks, settlement and water entry in the slab or walls.

Life safety, accessibility and code

• Fire alarm devices, sprinkler coverage, extinguishers, exits and exit signs, and current inspection tags.
• Barrier-free access to the entrance and washrooms.
• Whether your intended use is allowed under the zoning and the building's existing occupancy classification. A change of use may trigger permits and upgrades. See occupancy permits vs building permits.
• Hazardous materials in older buildings, such as asbestos, that may affect renovation plans.

Communications

• Available internet providers and where they enter the building.
• Existing cabling and telecom room access.
• Mobile signal and WiFi needs, especially in basements or large spaces.

Planning the inspection

Start by asking why you need the space and what your operations require. A dental clinic, a restaurant and a warehouse each put very different demands on ventilation, plumbing, electrical capacity and floor loads, so the inspection should be scoped around your intended use, not just the general condition of the building. Share your floor plan ideas and equipment list with the inspector ahead of time. Ask the landlord for drawings, maintenance records for the equipment serving the space, recent roof reports and life safety inspection records. Arrange access to the roof, the electrical room and any mechanical rooms that serve your unit, since much of what matters is not inside the space itself. If you are comparing several locations, a consistent inspection approach makes the options easier to compare side by side.

Linking the inspection to the lease

Bring the inspection findings to your lease negotiation, with help from your lawyer and leasing agent:

1. Clarify responsibility. Make sure the lease says clearly who repairs and replaces each major system, especially HVAC equipment and the roof.
2. Record the baseline. Attach a condition report with photos to the lease, so you are not charged at the end for problems that existed at the start.
3. Negotiate repairs or allowances. Ask the landlord to fix deficiencies before possession, or to provide an allowance.
4. Plan the fit-out. Confirm what your renovations will need in permits, mechanical and electrical upgrades and code compliance, and who pays.
5. Check restoration clauses. Understand what you must remove or restore at the end of the lease.

A typical case: a café in a former retail unit

A tenant wants to open a café in a ground-floor unit that was previously a clothing store. The space looks clean and modern, and the lease offers it "as is". An inspection scoped around the café's needs finds several things a general walk-through would miss:

• Ventilation. The rooftop unit serving the space is near the end of its typical life, and there is no kitchen exhaust or makeup air. A commercial kitchen hood will need a new roof penetration, structural review and a makeup air unit.
• Electrical. The panel has little spare capacity for espresso machines, ovens and refrigeration. An electrical service upgrade is likely.
• Plumbing. There is no grease interceptor, and the washroom is not barrier-free.
• Use and permits. Changing from retail to food service may trigger a building permit, health approval and life safety upgrades, depending on the municipality.

With this information, the tenant negotiates replacement of the rooftop unit by the landlord, a tenant improvement allowance toward the electrical upgrade, and a lease clause making the landlord responsible for the roof. The condition report, with photos, is attached to the lease. The tenant also learns early that permits will add time to the opening date, and plans accordingly.

Questions to ask the landlord

• Which equipment serves only this unit, and which is shared with other tenants?
• When was the rooftop equipment installed and last serviced, and by whom?
• Have there been roof leaks or flooding in this unit or next door?
• What is the electrical service size, and how much is available to this unit?
• Are fire alarm, sprinkler and emergency lighting inspections current?
• Are there any known hazardous materials, such as asbestos, in the space?
• What did the previous tenant change, and what were they required to restore?

How ehZee can help

ehZee's commercial building inspections can assess a space's mechanical, electrical, life safety and envelope condition before you lease, and document the baseline. Because ehZee also designs communications systems, we can review the space's cabling and WiFi needs at the same time.

Common questions