While roofs and mechanical systems get most of the attention, conscientious operators build in reserves for the replacement of all capital items including the parking lot. Usually when a capital expenditure is made, the expense is amortized over its useful life, and then collected again back over that time from the tenant(s) in the building. Be advised that replacement reserves may get transferred in sales to the buyer, similar to security deposits, for the continued replacement of capital items.
Back to Parking Lots. Did we mention property condition very much has an effect on value.
The most common asphalt issues you will experience are: alligatored parking lots, pot holes and ADA striping and grades. Typically parking lots and driveways are the least thought of part of a commercial building but the cost to replace the parking lot make owners regret deferred maintenance. Slurry seal and stripe when the weather is dry and warm instead of watching winter rains wear out that parking lot. Garbage Trucks, delivery vans, and other large vehicles will wreak havoc on your pavement and wear is most common in and around the patterns of large vehicles. Below we show the Stages of Asphalt Deterioration, which is also linked to the original article. We liked these descriptions and the recommendations.
Reminders to avoid expensive large capital expenditures:
- Routine maintenance is the key to making capital improvements last. Work with your vendors to make sure they are on board. Nip small issues as soon as they arise. The Pavement Life Cycle above is a good reminder.
- Build reserves as you are depreciating the asset. See your property accountant for budgeting. Remember the reserve can be used as a negotiating tool later. Put it in all of your reimbursable operating expenses right up front. The pennies per foot will soon add up.
- Plan the next improvement with durability. In the case of Asphalt double the base rock in high traffic and weight load areas where garbage and delivery trucks travel. Being cheap always will cost more in the long run.
