Sunday, December 2, 2012

Due Diligence on Environment is Key to Buying Profitable Commercial Real Estate

Michael Bull
 ATLANTA (Nov. 27, 2012) – When it’s time to purchase commercial real estate properties, not performing due diligence on a site’s potential environmental issues can be a costly mistake for a buyer.

That was one of the many important points outlined by a panel of environmental-liability experts in the most recent episode of Michael Bull’s “Commercial Real Estate Show.”

The episode provided an enlightening look at the many environmental issues confronting buyers and sellers of commercial real estate, including Phase 1 Environmental Site Assessments, risk mitigation and vapor intrusion.

Robert Brawner
When considering purchasing a property, a potential buyer should always perform due diligence on potential environmental issues and give itself plenty of time to do so, the experts agreed. Otherwise, a property owner could eventually find itself saddled with exorbitant cleanup costs.

“There are horror stories out there,” said Robert Brawner, an environmental engineer and owner of One Consulting Group. “There’s a small Georgia town where a large industrial manufacturer bought a plant, didn’t do enough due diligence to find a problem and wound up with a $30 million environmental remediation issue.”

Ken Burrell
Lenders often require buyers to conduct a Phase 1 test to pinpoint any environmental-liability issues associated with a real estate asset; conducting the test also can provide Superfund liability protection.

A typical Phase 1 test takes about three weeks to complete and would cost the owner of a 2,000-square-foot commercial building about $1,500, Brawner said.

The discovery of an environmental issue doesn’t mean a buyer should automatically walk away from a sale, said John Spinrad, an environmental attorney with Arnall Golden Gregory. “There are very few problems that can’t be solved if you allow enough time for due diligence because there are enough tools that we can use for dealing with risk – whether it’s insurance or a brownfields program,” Spinrad said.

John Spinrad
An emerging environmental issue is “vapor intrusion,” said Ken Burrell, a managing partner of Synapse Services, a provider of environmental insurance. “Vapor intrusion” is the migration of volatile organic compounds from subsurface groundwater into the interior of a commercial building, where people can inhale them.

The entire episode on environmental issues and strategies is available for download at

For More Information, Contact

Stephen Ursery
Wilbert News Strategies

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