Due Diligence Checklist for a Commercial Acquisition

Commercial property due diligence covers more ground than a residential purchase, and the consequences of missing something material are typically more expensive to unwind. A structured checklist, worked through methodically rather than reactively, is the most reliable way to avoid gaps.

Legal and title due diligence

• Title search confirming ownership, easements, covenants and any registered encumbrances
• Zoning and planning scheme compliance, and any pending planning changes affecting the site
• Building approvals and certification for existing structures and any modifications
• Environmental due diligence, particularly for industrial sites with a history of contaminating uses
• Heritage listings or overlays that might restrict future development or renovation

Financial due diligence

• Verified rent roll showing current passing rent, arrears history and outgoings recoveries
• Outgoings statement reconciled against actual invoices, not just the vendor's summary
• Capital expenditure history and any known upcoming works (roof, HVAC, car park resurfacing)
• Land tax, council rates and any special levies affecting ongoing holding costs

Tenancy due diligence

Every lease should be reviewed in full, not summarised secondhand. Confirm lease expiry, options, rent review mechanisms, permitted use, make-good obligations, bank guarantees or security deposits held, and any side deeds or incentive arrangements not reflected in the headline lease. Tenant covenant strength, discussed in more depth elsewhere, should be assessed independently of the vendor's characterisation.

Ask for the full lease documents and any deeds of variation, not just a lease summary schedule. Summaries can omit clauses — break rights, incentive clawbacks, exclusivity — that materially change the risk profile.

Physical due diligence

A building and services inspection covering structure, roof, essential services (fire, electrical, mechanical) and compliance certificates is standard. For older buildings, an asbestos register and any required remediation should be confirmed. For industrial and retail assets, loading access, car parking ratios and any operational constraints relevant to the tenant's use are worth verifying against the lease's permitted use.

Strategic and market due diligence

Beyond the property itself, buyers should form a view on comparable sales and rents in the precinct, the supply pipeline of competing space, and how the asset's rent compares to achievable market rent — both upside and downside risk if leases roll over at review or expiry.

Commercial due diligence is rarely completed by one person. A solicitor for legal and lease review, a building consultant for physical condition, an accountant for structure and tax, and often a buyer's agent or valuer to sense-check price against evidence, together cover the ground that a single inspection and contract read-through simply cannot.