Due Diligence Checklist for Commercial Acquisitions

A well-run due diligence process is what separates a good acquisition from an expensive mistake. While every deal has its own nuances, there's a core set of items every commercial buyer should work through before removing contingencies.

Financial diligence comes first. Verify actual trailing twelve-month income and expenses against what was represented in the offering — not just the pro forma. Pull utility bills, property tax records, and existing service contracts directly rather than relying solely on seller-provided summaries, and confirm that all leases match the rent roll in term, rate, and any options or concessions.

Physical and environmental diligence is where buyers most often get surprised after closing. A property condition assessment from a qualified engineer should cover roof, HVAC, structural, and life-safety systems, with realistic capital expenditure estimates rather than optimistic ones. A Phase I environmental assessment is standard for industrial and many commercial properties, and if it flags any recognized environmental conditions, budget time and cost for a Phase II before you're comfortable removing contingencies.

Title and survey review should confirm there are no easements, encroachments, or use restrictions that would interfere with your intended use or future exit. This is also the stage to confirm zoning and entitlements match your plans, particularly for any property where you're underwriting a change of use, expansion, or redevelopment.

Tenant and lease diligence matters just as much for a stabilized asset as a value-add one. Estoppel certificates from every tenant confirm the lease terms, any side agreements, and whether the tenant has any disputes or claims against the landlord — discrepancies between an estoppel and the rent roll are a common and important red flag.

Finally, don't underestimate the value of local market diligence: talking to your broker about recent comparable sales and leases, current vacancy in the immediate submarket, and any planned developments or infrastructure changes nearby. Numbers on a page only tell part of the story — the rest comes from knowing the market the property actually sits in.

If you're underwriting an acquisition and want a second set of eyes on the deal, we're happy to walk through it with you before your contingency period runs out.