One of the services of Face Consultants is to carry out surveys and provide due diligence reports for property acquisitions or lease agreements. These are usually referred to as Condition Surveys when taking on a lease and as Dilapidations and Floors Surveys when handing back the building.
Floors in warehouses are the key construction element in the building, and yet, over recent years, we have seen tenants sign up to long term full repairing leases on buildings with floors which are in appalling condition. We have also seen tenants being compelled to replace floors in 30 year old buildings where the floor has long since passed its serviceable life.
So how to avoid these pitfalls?
The first and foremost step is to ensure that the floor is surveyed by a competent engineer / surveyor before entering into a lease. The engineer will walk straight past the recently smartened up entrance offices and other facilities to get to the functional heart of the building – the warehouse and its floor.
What never ceases to surprise is the willingness of tenants to enter into leases without exercising due diligence and yet the cost of doing so in respect to the floor can be no more than one would expect to pay for a survey on a house.
What do we need from the floor?
The floor must be structurally sound, that is to say, thick enough and with sufficient reinforcement to take the loads, particularly from storage racking and fork lifts. The surface must be hard and durable and not given to dusting. Cracks may or may not be a problem and need to be checked out. The weakest parts of a floor are the joints. If these are very wide and broken down, then they need attention. Cracking and broken slab edges can be signs of problems below the floor, in which case a ground investigation may be needed. In addition, the floor should be flat enough for the intended use, particularly if racking is to be installed.
What to look for?
A newly painted floor should be treated with great caution. Floor paint is commonly used to superficially smarten up a floor in the probably correct belief that it will help in the letting of the building. At worst it may be covering up a multitude of problems, at best, the tenant will inherit a maintenance issue.
Checking out the floor before entering into the lease is vital. But so is checking out the terms of the lease. Dilapidation clauses seem in some cases to be heavily weighted against tenants, giving landlords unlimited freedom of action in determining what is required for remediation at the end of a lease. In a recent case, an entire floor in an old warehouse was replaced at the outgoing tenants cost, on the basis that it was no longer fit for purpose.
Like all structural elements, even well maintained floors have a limited useful life after which maintenance and repair becomes impractical. It seems unlikely that an outgoing tenant could be expected to provide a completely new building but could be expected to replace the entire floor, which is a fundamental part of the building. Surely this is the landlord’s problem and certainly something for the prospective tenant’s legal advisors to think about.
The message for prospective tenants is simple, both legal and engineering advice is needed if costly pitfalls related to warehouse and distribution centre floors are to be avoided.
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