Demand for Phase I environmental site assessments (ESAs) on real estate projects involving 10 or more properties was up 13% in the third quarter of 2011 – the highest level in five quarters – according to a new report from Environmental Data Resources (EDR) Inc., headquartered in Milford, Conn.
California led the nation with 18% quarterly ESA growth, followed by New York (17%) and Texas (13%). Georgia and Florida rounded out the top-five list. Driven by volume in their major metro areas, these five states collectively accounted for 37% of Phase I ESAs conducted in the U.S. in the third quarter.
‘Just as areas of the country went into the market downturn at different rates, they are recovering at different rates, so it's not surprising that trends in due diligence activity vary considerably from state to state,’ says Dianne Crocker, principal analyst at EDR. ‘These five top-volume states share the perfect mix of drivers: They contain global gateway metros that are attracting investors' interest and metros with the highest levels of distressed assets in the country. Together, these forces are driving demand for property environmental due diligence today.’Â
The strongest drivers for environmental due diligence work include distressed asset purchases by REITs and other private equity groups, foreclosures and sales of distressed loan portfolios by national lenders, and borrower refinancing, according to Crocker, who says that multifamily and retail properties are attracting the most interest by buyers.