How often as a commercial real estate professional do you read a brochure or fact sheet on a property and assume that all of the data that is provided is accurate and verified?
While we would like to assume that everyone in the industry is as thorough and professional as we are, you know that it can be very easy for a detail to get overlooked.
Many times this can be a matter of subjective opinion or just taste. One person’s “spacious skyline view” can be another person’s average size space looking out over a parking lot and the building next door.
Other characteristics or conditions are much more important, zoning, flood zones, building setbacks, etc. One of these items that is very important but not always verified is ceiling height of buildings like warehouses.
We all know that industrial and warehouse buildings are sold and leased based on their ceiling height as well as square footage. This is obviously because warehouses store things vertically on shelving creating not only square footage but also cubic footage.
In one case in Texas a moving and storage company had contracted to purchase a warehouse facility that supposedly had ceiling heights that were adequate to stack their eight foot high storage containers 3 levels high. The building had been inspected by several parties during the closing process, however no one took a tape measure and measured to actual clear ceiling height.
Upon closing of the sale the moving company began emptying their old warehouse and moving into their new locations. After moving a few truckloads of containers to the warehouse they began stacking them as they are normally stored. Only at that time did they realize that the ceiling height was to short to be able to stack their storage units 3 levels high. This was essentially causing the company to loose 1/3rd of their total storage space.
When someone took a forklift and a tape measure they confirmed that the building ceiling height was about 2 feet shorter than what they were told it was in the sales brochure which had been prepared and provided by a national real estate company. In this case it required damages to be paid including surrender of all real estate fees earned by brokers representing the transaction.
The obvious lesson here as Ronald Reagan once said “Trust but verify” is a good policy when it comes to the objective details in a real estate presentation.
When it comes to your commercial real estate financing contact Liberty Realty Capital Group to discuss your project and how we can help with your funding needs.