Whether you're looking at developing new corporate real estate, acquiring a building or leasing space, doing an environmental assessment is becoming a more and more important part of the due diligence process. Phase I and, when necessary, Phase II environmental site assessments help you assess the risks that come along with a piece of real estate.
What ESAs Do
An environmental site assessment is a process that determines what environmental risks, if any, exist on a piece of corporate real estate. The first step in the assessment is a non-invasive Phase I test. If it finds the potential for deeper issues, the process continues to a Phase II.
In a Phase I report, a site assessor combines a site visit with research. While on the site, he looks for anything that could indicate the potential presence of environmental contamination. A Phase One survey of a retail center might note that a site has a dry cleaning plant that might have dumped solvent, while a survey of an older office building might note that the property has signs of old buried underground tanks for fuel oil storage.
In addition to the site visit, the inspector also researches the area and the history of the parcel. He could note if it is close to other sites that are known to be contaminated. The inspector could also review historical photos to see what the parcel had been in the past.
If everything comes out clean, the process stops with the Phase I. However, if the inspector identifies contamination or the potential for contamination, the site assessment will move into Phase II.
A Phase II assessment involves taking samples of the air, water and ground to determine if there is any contamination. Frequently, engineers will take soil samples both at ground level and underground as well as samples of both ground and aquifer water. If they find any issues, they will be noted in the report.
Environmental Risks
In today's increasingly aware climate, environmental risks are just about everywhere. A company considering the purchase of a piece of corporate real estate next to an apartment building could end up buying a piece of the contamination that came from a busted methamphetamine-making operation in an apartment unit. A seemingly innocuous piece of light industrial real estate could be contaminated by leaky hydraulic cylinders used by an occupant 15 years ago, and an office building could have radiation from an improperly handled dental x-ray machine.
While there are some protections for innocent purchasers, the rule remains that when you buy a property, you buy its benefits and drawbacks. Especially if your company has deep pockets, a bad corporate real estate acquisition could turn out to be a very expensive mistake.
The Innocent Landowner Defense
Under the Comprehensive Environmental Response Compensation and Liability Act that governs environmental liability, doing a Phase I and, if necessary, Phase II can shelter your company from liability for contamination that it didn't cause but that gets found on its corporate real estate. Doing an assessment proves that you tried to learn what was on the property. If it comes back clean, you can legitimately claim that you had no way of knowing what was there. As long as you didn't cause the contamination, you can escape liability for it. For that reason alone, doing an environmental site assessment can be a valuable process.
When looking at corporate real estate, an experienced tenant representative can help you determine if you need an assessment. He can also help you find the right vendor to perform the inspection and, if necessary, the testing.
Other great LEED & Green Commercial Real Estate articles:
Subscribe to our blog for more great tips!!
