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Protect Owner Liability With an Earthquake Retrofit

Protect Owner Liability With an Earthquake Retrofit

There are a number of reasons why a business owner decides to purchase commercial real estate property. Of course, one of the main reasons probably includes the desire to eliminate rental payments.  An even greater reason that is often considered is to capture the long-term financial return that comes with owning commercial real estate.  When a business owner purchases the commercial property where the business is located, he/she becomes known as an “owner-occupied” building owner.

Once a business owner purchases a commercial property, he/she will find that the real estate will provide both risk and reward.  Almost immediately, the property owner will find that a balance is needed between the two extremes. Pivotal to bridging the gap between risk and reward is the ability to limit liability/financial exposure while keeping expenses minimized for an overall long-term profit.

Protecting commercial buildings and commercial businesses from catastrophic loss (resulting from a natural disaster) is often a topic of discussion and concern, especially on the West Coast, where earthquakes represent a significant natural disaster threat. In response to this particular threat, an earthquake retrofit can reduce an owners’ risk of loss from such a disaster.  In addition, an earthquake retrofit protects not only the business itself, and the actual “owner-occupied” commercial property, but it also protects the employees/occupants inside the building each and every day, providing a much safer work environment.

An earthquake retrofit protects “owner-occupied” building owners by reducing or eliminating the following concerns:

  • Loss of life

  • Medical costs

  • Litigation from employees

  • Loss of assets within the building

  • Loss of business productivity, building use and overall business operations

  • Cost of temporary relocation

  • Inability to obtain earthquake insurance

In addition to the benefits listed, an “owner-occupied” building owner can realize an increased market value for their building as a result of an earthquake retrofit; adding seismic bracing and hardware to strengthen a building increases the overall value of the property.  Experienced commercial real estate investors on the West Coast are often looking specifically for retrofitted buildings.  For buildings that have not yet been earthquake retrofitted, savvy investors often choose to negotiate a discount in the purchase price to account for the cost to retrofit later. All-in-all, owning real estate that has been through an earthquake retrofit translates to better market value for the building. In addition, if an “owner-occupied” building owner decides to re-finance the property, an earthquake retrofit will increase the number of lenders ready and willing to finance. Many lenders view retrofitted commercial properties as a sound investment, since those properties are less susceptible to the catastrophic damage that can happen with a powerful earthquake.

While earthquake retrofitting may be done for many different reasons, retrofitting commercial property makes good business sense for “owner-occupied” building owners.  An earthquake retrofit helps to bridge the gap between the financial risk and the reward of owning commercial real estate. The reality is simply this: many buildings in danger zones were not initially built to withstand the force of earthquake activity.  Ensuring the safety and security of your employees, machinery and inventory, along with strengthening your building is a smart business strategy. To find out more about whether your commercial property in the Bay Area should be strengthened and reinforced to withstand the impact of an earthquake, call Saunders Commercial Earthquake Retrofit Bay Area today!

Northern California Office

(408) 267-3876


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