Brownfield properties are sites on which environmentally hazardous materials were used or made, typically in industrial applications. Before that land can be used again, those hazards need to be remediated. Now might be a good time for those struggling to find industrial property to consider buying a brownfield land.
“These properties are great for industrial, manufacturing, warehousing, or use as a parking lot,” says Eliot Kijewski, Senior Vice President at Cushman & Wakefield | CRESCO Real Estate. “Otherwise-dormant properties get put to use, generating revenue and creating jobs in the process, and that’s something governments incentivize with public funds.”
There’s no loosening of Greater Cleveland’s tight industrial real estate market expected anytime soon, making brownfields a great option for the right buyer. And with public funds available to possibly offset remediation, these properties can be a way to get a great site at a low cost.
Smart Business spoke with Kijewski about brownfields and what prospective buyers should know about the remediation process.
What are brownfields and how can they be used?
Property gets a brownfield designation once contaminants such as heavy metals, solvents, oils and other hazardous materials are discovered, usually after historical industrial use. This condition limits what can be built on it. For example, residential properties such as housing developments, assisted living facilities and multifamily properties, anything where somebody’s living there 24 hours a day, can’t be built on brownfield properties. But industrial, manufacturing, warehouse and parking lots can, be once remediation has been done to bring the property up to a useable state. For example, the former Midland Steel site at West 110th Street and Madison Avenue was remediated and is now an Amazon site that employs hundreds of people.
Remediation can be done in a variety of ways. Typically, an environmental company works with the city and the state to determine what needs to be done to get the land usable again. If there is a building on site, it will need to be evaluated by environmental engineers for contaminants, as well as the presence of asbestos and lead. Any contaminants found will need to be remediated, according to government standards, by a certified contractor equipped to remove those contaminants.
Additionally, the demolition crew contracted to raze the building will need to be experienced in demolishing contaminated properties. It requires special equipment, techniques and certifications to be done in accordance with legal guidelines. This will naturally make demolition more expensive compared with non-contaminated properties.
How might public programs make brownfield sites a better option for buyers?
Public subsidies can be helpful for those looking to remediate a brownfield site, as these funds can offset the costs of cleanup. By taking advantage of these funds, the acreage purchased comes at a fraction of the cost of shovel-ready land. This can be very beneficial to those seeking land for industrial use, especially given the incredibly tight industrial real estate market in the Greater Cleveland area.
In addition to getting inexpensive land, buyers can be confident they’re not building in a wetland or land that’s home to protected animal species. It’s typically developed and already timbered, so it’s not going to need to be cleared. And as an added benefit, the buyer is putting land to work that might otherwise lay dormant, which is why governments offer funds to help with remediation.
What should buyers understand about securing public funds?
Securing public funds is time consuming — months, sometimes upward of a year. Consult with experts who are familiar with the process. It’s a good idea to work with an attorney, preferably one who has real estate and/or environmental experience. Talk with an environmental company about what’s needed to remediate the land and find a real estate broker who has worked with brownfield properties. It’s also a good idea to work with a lender that has experience with these properties, because most lenders don’t. The local municipal leaders should also be able to assist, offering valuable information and help moving the project forward. ●
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