Commercial Services

COMMERCIAL SERVICES

Giles Flythe Engineers, Inc. was founded in 2003 with a focus on building and site improvement evaluations.  We specialize in helping property owners/prospective buyers with pre-purchase due diligence inspections, environmental assessments, problem solving, repair/maintenance planning and cost estimating. We work with hundreds of property owners each year in evaluating office buildings, retail properties, industrial/manufacturing facilities, hotels, multi-family properties and various other types of commercial real estate. We can generally provide completed reports within 2-weeks of approval.


Commercial Real Estate Services

Services

  • Structural evaluations for increasing load requirements
    Roof mount HVAC or Solar Panels, new use of existing facility, Installation of conveyor equipment in industrial applications, etc.
  • Structural evaluation of concerns

Property Condition Assessments (PCA’s)

A Property Condition Assessment (PCA) is performed that meets or exceeds ASTM E 2018-15 standards for conducting such assessments. This will include a limited visual inspection of the site and building(s) to identify physical deficiencies, review of available documents, interview with persons familiar with the property, and development of a property condition report including opinions of probable cost to remedy physical deficiencies.

We will identify any current deficiencies that pose a threat to life and safety, as well as those items that require repair in the immediate or near term (0-5 years).  We will inquire with local fire departments and municipal officials to identify any outstanding code or zoning violations. Included in our site inspection and report will be:

  • Site improvements – topography, paving, curbing, parking, ingress/egress, stormwater drainage systems (to the extent visible), retaining walls, site fencing, signage and other site improvements. 
  • Structural components – An inspection for symptoms of structural concerns including cracking, uneven flooring/walls, evidence of moisture intrusion, evidence of framing damage, foundation settlement or other structural concerns. 
  • Roofing – visual inspection for types of roofing, condition of roofing, flashings, counterflashings, copings (if any), slopes for drainage, standing water or ponding conditions, condition of gutter and rain leader systems (if any), parapets and other roofing components.
  • Mechanical, Electrical and Plumbing Systems – materials of supply, distribution and drain systems (where visible), evidence of leakage and corrosion, as well as other concerns. Inspection of the heating, ventilation and air conditioning systems for adequacy, age of equipment and operability.  Capacity and ratings of the electrical system, function checking a sampling of outlets and light fixtures as available and inspection for evidence of concerns with electrical systems.
  • Fire and Life Safety – inspection of alarm system, sprinkler system, draft stops (if any), fire rated assemblies, means of egress and evidence of fire/life safety concerns.
  • Other – in addition to the above systems, exterior and interior finishes, signage, vertical transportation and other elements will be inspected as to condition and evidence of concerns.
  • Accessibility – A limited scope visual survey based on a representative sampling will be completed for concerns with building accessibility (ADA).  Note that this survey is limited and not to be considered a full compliance evaluation.  Non-compliant conditions may exist which may not be identified in this limited assessment.

Upon completion of the inspection, Giles Flythe Engineers will provide a written property condition report on the condition of the inspected structures, facilities and equipment.  A photo log will be provided to show examples of noted concerns. Budgetary cost estimates for repairs and correction of deficiencies will be provided in the report.

Phase I Environmental Site Assessment (ESA)

A Phase I Environmental Site Assessment (ESA) is performed on the subject property in accordance with the currently adopted ASTME-1527-13 standards for conducting such assessments.  The goal of the assessment is to identify recognized environmental conditions on the subject property.  Our process includes the following services:

  • Records Review – Review of readily available public records to identify previous, existing or potential sources of contamination.  This will include obtaining environmental database reports from Environmental Data Resources (EDR), which we will include in our report appendices.  We will review historical city directories and historical aerial photography as available for information on previous development, use and occupancy.
  • Site Reconnaissance – A limited visual inspection to determine the likelihood of any hazardous substances or petroleum products present that could indicate an existing release, a past release, or a threat of a release onto the property.
  • Interviews – Interview current owner(s) and occupants, past owners/occupants and government officials as readily available to determine historical use of subject property and to obtain information indicating recognized environmental conditions in connection with the property. Note that we will provide a User Questionnaire to be completed by the current owner or person knowledgeable about conditions on the subject property.
  • Report – A report will be prepared quantifying the documentation and information gathered during our investigation.  The report will include our findings and opinion with regard to known or suspected recognized environmental conditions.  Our report will also provide an opinion regarding the potential need for second tier investigation.

The assessment will be performed by an environmental professional or conducted under the supervision and responsible charge of the environmental professional. Our scope does not include any testing or sampling of materials, removal of any finishes or any excavation.  Portions of our findings may rely on information provided. 

Cost Segregation Study

A tax payer who purchases commercial real property will typically by default depreciate the building on the property with a straight-line depreciation method with a 39-year class life.  This is calculated by simply dividing the value of the building by 39 years to determine an annual depreciation expense.

The IRS allows a tax payer to segregate out assets of the commercial real property with shorter class lives to allow a more rapid depreciation of the property.  This will typically increase the annual depreciation expense substantially in the near term. An increased annual depreciation expense will result in a reduction in income tax burden. The purpose of the Cost Segregation Study is to provide a defensible report to classify assets into property classes, explain the rationale and substantiate the cost basis of each asset and reconcile total allocated costs to total actual costs.  As noted in the IRS Audit Technique Guide, quality Cost Segregation Studies “…greatly expedite the Service’s review, thereby minimizing the audit burden on all parties.”

There are many principal elements of a quality Cost Segregation Study.  Our studies are intended to adhere to the standards set in the IRS Audit Technique Guide for Cost Segregation and the standards set by the American Society of Cost Segregation Professionals.  As noted in the IRS Audit Technique Guide, “In general, a study by a construction Engineer is more reliable than one conducted by someone with no engineering or construction background.”  All of our Cost Segregation Studies are completed by and/or under the responsible charge of a Professional Engineer on staff.

Our process includes the following steps:

  1. Review documentation provided by the client including purchase agreement/contract, closing statements, lease agreements, appraisals and building/site drawings and plans to the extent available.
  2. As applicable for new construction or renovation projects we will review actual construction cost information including invoices, pay applications, bids, and other available actual construction cost information.
  3. We will complete a site inspection to complete measurements and take-offs to assist in developing cost estimates.  During the site inspection, we will also evaluate the condition of the components to complete an analysis of physical depreciation of the building components.
  4. We will research appropriate tax court cases, revenue procedures and other publications by the IRS to develop appropriate class lives for the various building components and site improvements.
  5. We will develop a full asset register for the property.  This will include segregated components of the building and site improvements with appropriate MACRS class life assignments.  The asset register will include cost estimate adjustments for physical depreciation and a premium/discount for market value.  The asset register will also include appropriate indirect costs associated with each component.
  6. We will provide a Cost Segregation Study report which will include the full asset register and a narrative report detailing our methods and reasoning for class life assignments of components.  The report will include also include a photo log.

For this study we will be using the cost approach in property valuation as it is the only method allowing the estimator the ability to determine the valuation of each of the underlying components.  To develop cost estimates, we utilize our internal cost estimate databases, nationally recognized sources such as RSMeans Construction Cost Estimating Data, and/or other applicable databases.

Note that our service includes responding to questions from you, your accountant and/or the IRS.   In the event our study is the focus of an IRS audit, a Professional Engineer from our staff will attend the audit to answer questions regarding the cost segregation study at no additional cost to you.

Contact us at (919) 465-3801 or info@gfengineers.com for more information, or to request an estimate complete the form below.

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