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Obtain a Commercial Building Loan with a Seismic Retrofit

02 Aug Posted by in Blog | Comments
Obtain a Commercial Building Loan with a Seismic Retrofit

The current commercial real estate market in California is fairly substantial and there are several ways that commercial property owners can increase interest for their property in order to get the asking price.

One of the chief reasons why commercial real estate transactions break down is due to financing issues.  In recent years, banks have been more hesitant to lend in general; they are certainly less likely to offer commercial loans for unsafe buildings.  So why are so many buildings considered unsafe in the state of California?  Because there are major fault lines along the West Coast, seismic activity occurs throughout the state on a fairly regular basis.  For lenders and insurance companies, liability and risk are increased when steps haven’t been taken for seismic building safety.  Banks usually refuse commercial loans if they have no assurance of a property’s value and structural integrity.

Whenever a property owner decides to put a commercial building on the market, some level of preparation is necessary.  In California, this includes making sure the building’s risk has been minimized; performing a commercial seismic retrofit is often necessary to increase building strength and overall safety.  Within the last 20-30 years, technology and engineering have have been greatly improved; state and local building codes have been updated accordingly.  We now know that most buildings constructed before 1987 were not built to withstand the forces of a violent temblor; thus, improving the safety of a building with commercial seismic retrofitting is a large part of good financing preparation.  Most potential buyers find it reassuring when a building already has the components necessary for the bank to issue a commercial building loan.  Lenders who request a PML of less than 20% are often satisfied when a professional seismic retrofit has been completed.

There are several ways of improving the earthquake safety of commercial buildings to help secure a loan.  If you are a commercial property owner, consider the following before putting your property on the market.

Inspect and handle roof condensation issues.

Roof condensation is a condition that can occur in concrete tilt-up buildings with a panelized roof system.  Moisture develops at the roof ceiling area and becomes trapped there by foil insulation or other types of radiant barriers.  Unfortunately, if this situation is left untreated, it will slowly destroy the entire building.  When strong seismic activity occurs, a heavy wet roof will more than likely collapse, causing a great deal of destruction.

Repair the structural elements of the building beyond typical seismic retrofitting measures.

This includes preventing or correcting roof condensation damage by adjusting or repairing the pattern of roof nailing, replacing or reinforcing beams that are sagging from collected water on the roof, reducing the load on any key beams that are overloaded by rooftop equipment, and reinforcing or replacing aging beams that are deflecting or breaking.

Secure non-structural items and provide anchor and strapping systems in the building.

This includes inspecting and securing all equipment in manufacturing plants, racking systems that store equipment, ceiling grids, light fixtures, and fire sprinklers.

Complete a seismic retrofitting process to improve earthquake safety.

Adding roof-to-wall anchors and continuity ties, as well as steel brace frames, will definitely help buildings stay together during the rocking and rolling of an earthquake.  Un-reinforced masonry can be quite unstable, as well, during strong seismic tremors.  Seismic retrofitting measures may also include strengthening the walls with tube steel or fiber wrapping.  Multi-story buildings or “tuck under” structures are unique and have additional retrofitting requirements based on their current strength and construction.  It is also important to note that seismic retrofitting plans for a building located in California must also take into consideration the area’s terrain, state and local building codes, and the initial construction method used.

There is one more very important point to remember and it is that seismic retrofitting a building in California also helps to reduce the cost of earthquake insurance – another selling point for your commercial property.  Improve the marketability of your building by increasing the likelihood that the bank will not see it as a risky investment. To get more information on securing commercial buildings, call the professional experts at Saunders Commercial Seismic Retrofit today!

Southern California Office

(949) 646-0034

Northern California Office

(408) 267-3876

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