Property Evaluation Must Account for Complexity, Assessor Says

Mike McGillis, facility assessor at Tetra Tech, Inc., joined REIT.com for a video interview at REITWise 2016: NAREIT’s Law, Accounting and Finance Conference at the Marriott Marquis in Washington, D.C.

Tetra Tech is a provider of consulting, engineering, program management, construction management and technical services worldwide. McGillis specializes in developing and implementing real estate asset management programs.

McGillis stressed that during the process of acquiring a property, it’s important to consider the complexity of a building: “You need to scale the assessment to the type of property you have.”

Different property types present different issues for prospective buyers, he noted. Case in point, shopping centers will likely present issues with roofs and parking lots. Data centers, on the other hand, may have a smaller roof, “but if it leaks, you’re going to wreck a lot of equipment inside.”

McGillis also said that assessing a property prior to purchase is beneficial in the long term. For example, identifying potential repair issues before a sale may mean the current owner has to address them, not the purchaser.

In addition, McGillis said he likes to look at the lifecycle of a facility by taking data and using it for capital planning or asset management purposes.

“You can even base your lease structures off condition indexes so that tenants are held to certain standards that they need to maintain,” McGillis said.