Commercial and Industrial Technical Due Diligence - Things to Watch Out For

Over the last few years as a building consultant and advisor, I have done a lot of technical investigations and due diligence on behalf of major REITs, as well as mum and dad investors.

Below are a number of reasonably common matters that have popped up over the years I thought I would share here for the benefit of this community.

Note that the below generally only refers to what the National Construction Code refers to as Class 2-9 (everything that isn't Class 1a or Class 10), and does not include standalone or semi-detached dwellings which are typically Class 1 buildings.

1. Combustible Cladding to Facades

We have all seen in the news of stories of high-rise buildings going up in flames from top to bottom, including a couple in Melbourne. The suspect cladding in most instances has been aluminium composite panels, although expanded polysytrene (EPS) has also been identified.

Victoria is the state most pro-active in having this cladding removed from high-risk buildings, although New South Wales and Queensland are starting to move in this direction as well.

Not all aluminium panels are combustible, there are some panels out there that comply with the relevant standards (AS1530), as they tend to be hollow or solid aluminium panels which often appear similar to the combustible cladding types on first appearance. Getting the architectural specifications and manufacturer's warranties is key here to identifying the cladding used. An investigation by a qualified fire engineer to determine the risk of suspect cladding is also warranted, as a building is not necessarily high risk just because the combustible cladding exists.

2. Asbestos

Not really a new one, or a surprise to most people. Would pretty much recommend to my clients asking the vendor for an asbestos register or obtaining one from a Hazmat specialist for anything built before the early 1990s.

3. Fire Protection Installations

Pretty much anything over 25 metres in height requires sprinkler protection, or industrial buildings where the warehouse area is over 5000m2 require sprinkler protection.

Under the current code which was implemented in 2019, in addition to the above, any multi-residential buildings over 3 levels but still under 25m in height ALSO require fire sprinklers.

In industrial warehouses where high-bay racking is going to be used, ESFR (early suppression fast response) sprinklers are generally preferable over the ordinary hazard type.

Annual fire safety statements (called by differing names all over Australia - in NSW it's the Annual Fire Safety Statement, Queensland it's called the Occupiers' Statement and in SA it's known as the Schedule 16 Form 3 or Part 59 log book for anything that had one prior to 1992) are required on an annual basis for authorities to determine that fire safety installations are being maintained as per code requirements.

4. Travel distances and safe paths of egress

The majority of instances require at least 2 safe exits from a building, and no more than 20 metres to a fire protected exit in most multi storey residential and office buildings. In warehouses and car parks, this requirement is 40 metres. The fire protected exits in most cases require protected egress directly to the outside of the building with some exceptions - some older buildings have fire exits which discharge those from the upper floors directly into the ground floor instead of directly outside.

I have seen numerous instances where rearranging office floor tenancies by inserting new partitions has turned what was previously compliant into an arrangement which does not comply with the building code.

Buildings that don't comply to this will generally require a performance solution reviewed by a fire engineer to assess the risk.

Feel free to fire away (pun intended) any other technical questions you might have to me.

 

The combustible cladding is an issue. A lot of new builds have pretty incredible fire resistant stuff and this is worth its weight in gold when the insurance brokers are doing a risk review.

 

Switchboards - unlike residential, wired fuses & asbestos boards are still common enough in older installations. There's no retrospective requirement to replace or update the board with ELCB.

 

Yes, this is a great point. And a lot of these installations are generally approaching the end of their usable life, so they will eventually need to be replaced anyway even though there's no restrospective requirements to replace installations which don't comply with AS3000 for wiring and the new AS61439 for switchboards.