The Benefits of Digitizing Commercial Building Inspections (with Examples)

From the humble garden style property, to the trophy high rise, to the logistics fulfillment and distribution center, the inspection is a fixture of owning and operating commercial real estate.

Inspections form the basis for prioritizing maintenance work and capital investments.

Without knowing the current state of things, owners would be flying blind. It would be impossible to follow an investment thesis without understanding the capital and operating requirements of your assets.

And yet, with all that rides on inspections, many portfolios still perform this function on clipboards.

In addition to being unnecessarily time consuming, every inspection is (or should be) valuable data collection. When done on pen and paper, that data cannot be aggregated or analyzed effectively, ultimately wasting time and money.

This is likely a primary reason that owners miss their capital budgets by $12B annually.

The Inspection

There has never been an inspection performed that found nothing that could be improved.

There are always cases where “band-aid” solutions are technically working, but shouldn’t continue to be relied on.

There are always cases of aging infrastructure, where there’s a small change of a very large problem occurring.

There are always cases of clogged filters, degrading facades, and potential safety hazards.

Inspections are so tricky because doing a good (meaning thorough) job almost necessarily means that most of the report will be skipped.

Moreover, many issues identified are not isolated. If you want to replace part of the facade, you’ll have to repaint the entire thing. If you want to upgrade the HVAC, you’ll need to upgrade the electrical infrastructure. If you want to replace old pipes, you’ll disrupt tenants, etc.

Fortunately, the challenges inherent in inspections lend themselves to the digitization and automation available through technology.

Let’s dig into three real-world examples.

Asset Management in Global Investment Portfolio

This portfolio has 250 buildings, across a number of different property types, spread across North America.

The Director of Operations needs to coordinate a range of property management companies to arm asset managers with information for budgeting purposes.

They want it to be standardized, so they’ve come up with an inspection checklist. 

Every year, they send it as an editable PDF to each property, which can be filled electronically and submitted through their property management system.

In practice, these PDFs are often printed, filled in by hand while performing the inspection, then scanned and uploaded.

Asset managers then go through each line manually, comparing flagged items with what they see in their five year capital planning spreadsheet.

On the road to putting together a finalized budget, there are invariably questions for the property management team, often performed via email and directly in meetings.

This past year, in order to keep up with ESG reporting requirements, the investment firm added technical waste, water and energy audits.

The process fell apart almost immediately, as IT struggled to integrate the new data sets. Their process simply was not designed to be flexible.

Now, this portfolio has digitized their annual inspection. It is performed annually on a mobile app by property management teams and the data flows directly into their capital planning software.

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Mike McNamara

Mike McNamara

A Las Vegas Realtor since 2008. Mike has a wide range of knowledge around all things Las Vegas.

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