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How to Tackle Properties with Environmental Issues

Updated: May 16

When a property has or is perceived to have contaminants in the soil or groundwater, many developers don’t want to touch it. But as I said in my previous blog, The Beauty of Ugly, sometimes the ugly deals are actually the shiny deals.


Let’s say you found the perfect property––the right location, visibility, access to main roads, and zoning flexibility. But you’re not sure what’s hidden underneath. Here’s my advice to tackle properties with environmental issues:


1. Get a knowledgeable partner. Just because a property has an environmental issue, doesn’t mean you should abandon the deal or the property. With the right experts, challenges can be overcome. Issues fall on a continuum, and a knowledgeable partner can lead you to an expert to handle the situation correctly.


Metal industrial building with two drive-ins and one service door.

2. Expect the unexpected and tackle the situation head on. Almost all industrial––and other types of properties––will have some kind of contaminant because of age, use, and location. Due diligence uncovers issues to mitigate or overcome, and that’s one reason we have the process. Use the time to figure out a plan as soon as possible. Sometimes waiting can lead to more costs and stretch the deal out longer.

3. Contact the MN Pollution Control Agency (MPCA) to assess the technical issues of the property investigation and cleanup. They offer guidance for developers, environmental engineers, remediation consultants, and other professionals addressing brownfields and contaminated sites.


Woman noting a water sample while doing an environmental test.

4. Know the environmental process and typical time frame. Some issues take weeks, some months. The cost and time frame are impacted by whether the property has minor environmental issues like soil contamination or more extreme like ground water contamination.

5. Ultimately, cleaning up a contaminated property is worth it. Completed environmental work has long-term benefits for property owners and tenants. It keeps the property more saleable in the future and maintains or adds to its monetary value. Also, thriving properties increase jobs and resources for the area.


Conclusion

Environmental issues in CRE are always a concern when looking at a site or building. It’s common for them to come up in deals. There are fantastic experts out there who provide solid advice and strategies to buyers and sellers. Having the right contacts––people with experience in strategically approaching environmental concerns––can help make or break the deal. Reach out, we can help.


Smiling Jeff Salzbrun

Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.




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