Due Diligence Done Right: The Role Of An Experienced Brownfield Redevelopment Consultant

Zoning laws, land use regulations, rising land costs — these are just some of the reasons why developers struggle to pencil deals where they can bring their projects to life. As a result, they are increasingly turning to brownfields, previously developed industrial and commercial properties contaminated by pollutants, hoping to transform these underutilized sites into thriving developments. 

“Many of our commercial real estate clients have become more comfortable with former industrial or other blighted/potentially impacted properties,” said Principal Scientist Christopher Battista at environmental consulting and management company Roux, based in its greater Boston office. “They’re looking for dealmaking opportunities, tax incentive programs or other incentives.”

Roux helps developers navigate the complexities of these sites, starting with environmental due diligence by evaluating site conditions, regulatory framework, potential environmental exposures and any other factors that may increase development costs and schedules. Roux can also design engineered remediation solutions to mitigate risks, a unique skillset to call upon during due diligence.

Based out of Roux’s Los Angeles region office, Vice President Mauricio Escobar stated that today’s developers are more sophisticated and eager to take the technical information Roux provides during due diligence and transform it into successful business strategies. Roux understands the complexities of the market and helps clients find qualifying incentives that can offset remediation costs. 

“We are not there to kill deals or point to impossibilities, we are there to provide realistic advice and solutions,” he said. “We offer reasonable case scenarios for dealing with environmental challenges for existing and future development.”

Roux’s developer clients often consider sites with significant contamination, according to Principal Scientist Joshua Graber, who is based in the San Francisco Bay region. The firm has been looking for predominant risks related to vapor intrusion and impacted soil that will require environmental management during construction.  

“There are always regulatory risks, but our experience with the process and the players involved has allowed us to assist our clients in estimating what will impact cost and schedules most,” Graber said. “In this highly competitive market, effectively navigating the regulatory process can be the difference between a profitable project and one that doesn't pencil.”

Graber said the firm takes an “informed” risk management approach to due diligence, which means Roux anticipates pain points throughout the development process and identifies potential cost increases or schedule delays. Roux Principal Scientist and Vice President Peter Downham, working out of the Philadelphia region, added that it is critical to provide real-time feedback to clients and to remain solutions-oriented and aware of tight developer deadlines. 

“This not only means providing bad news when identified, but also providing solutions to mitigate the bad news,” he said. “Additionally, with the pace that many of these deals are moving, it is paramount to run certain tasks in parallel to keep progressing.” 

One emerging risk is the rapidly evolving regulatory landscape surrounding PFAS, or per- and polyfluoroalkyl substances, also known as “forever chemicals.” Downham is no stranger to emerging contaminants on sites within New Jersey and Pennsylvania. He said that Roux recommends having upfront discussions with clients to ensure they would like to proceed with an evaluation. For emerging contaminants, following a thorough investigation, he said, “To help mitigate risk, we recommend the potential client to evaluate whether environmental insurance is appropriate to make the client comfortable and protect them in the future.”

Graber added that some Roux clients incorporate “holdbacks” in the purchase and sale agreement, based on environmental unknowns. This strategy allows for more rigorous due diligence to be completed in advance of closing. 

The most common discoveries are unidentified underground storage tanks and hazardous soils. Developers can work with owners to estimate the cleanup cost and seek reimbursement from prior owners, or state and federal incentive programs such as the New York State Brownfield Cleanup Program. As mentioned, a common route is for the buyer to secure environmental insurance, which is why a properly conducted and timed Phase I Environmental Site Assessment is always recommended before closing on an acquisition. ​Sometimes, the due diligence process may reveal that less intervention is needed than a client may have anticipated. 

One of Roux’s Western New York Vice Presidents, Michael Lesakowski, explained that many sites are former gas/service stations, dry cleaners, printers, or even clothiers that used certain chemicals, leading to contamination. In the past, these sites have been left largely untouched, but now developers and lending institutions have become more comfortable working in these areas, particularly if an experienced consultant like Roux is involved. 

Lesakowski said that having seen thousands of properties involving just about every historic use and potential contamination scenario, Roux has an informed perspective when analyzing potential concerns. 

“Sometimes a practical approach can be taken, accounting for the client's risk tolerance, type of impacts, and concentration and location of contamination,” he said. “Alternative strategies to manage environmental risk often include the use of proper soil/water management plans and engineering and/or institutional controls such as deed restrictions.”

He added that while contaminated properties should be properly remediated when necessary, not every recognized environmental condition requires further investigation, and not every contamination scenario requires remediation.

A common phrase at Roux is, “We start with the end in mind,” Battista said. He explained that this approach involves being more than just a Phase I shop.

“It’s about knowing clients well and approaching each project with insight and pragmatism, providing them with more than just technical information or regulatory jargon,” he said. “We are a valued member of the development team, one that understands financing, design and construction. Roux has a deep technical bench with extensive real estate development experience.” 

With this in mind, Roux’s team guides their clients from as early in the process as possible, seeing their projects through until the very end.

This article was produced in collaboration between Roux and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.