A New Tool to Evaluate Brownfield Opportunities from Environmental Consultant Arcadis

Industrial property owners who have contaminated properties they would like to take off their books, developers who are interested in acquiring and redeveloping those properties, and cities whose economies would gain from the restoration of contaminated industrial properties all might benefit from reading the article recently published by international environmental consulting firm Arcadis:   “Arcadis Urban Land Restoration Index—Ranking the Development Potential of Environmentally Impaired Land Across 27 U.S. Cities.”   Link to the article at:
https://www.arcadis.com/media/2/A/4/%7B2A4B47FE-3EE1-4B6F-B7D5-E097E6CB61A0%7DAG1004%20Restoration%20Index%20_Full%20Version_FINAL_ONLINE.pdf .
The 31 page article (NB: beware the small print!) provides a perhaps unnecessarily wordy, but nonetheless valuable overview of the economic potential for developing urban brownfield properties and presents a useful tool for owners and developers of those properties and the cities in which they are located.

In a nutshell, the article presents an Urban Land Restoration Index (ULRI) that rates the brownfield redevelopment potential of 27 American cities, based on differences in remediation cost, city dynamics, and property type (i.e., industrial, commercial, and residential).

I have taken the liberty of presenting a condensed and lightly edited version of the article below.  After reading this version or the entire article, if you have questions about the remediation and/or redevelopment a brownfield property, don’t hesitate to contact me here at Trill-EnviroLaw.

The Arcadis Urban Land Restoraton Index

The Urban Land Restoration Index (ULRI) combines insight on city dynamism and the relative
environmental clean up (remediation) costs in 27 cities across the U.S. to identify locations with the greatest opportunities for divestment, restoration, and development of impaired industrial property.

The two key elements behind the ULRI assessment are City Dynamism and the Cost of Cleanup, which when combined yield a unique parameter referred to as the restoration ‘sweet spot’. Industrial property owners and investors are well-advised to target property sale (divestment) and development in areas currently identified as having high potential – especially if remediation costs are relatively low on either a ‘one-off’ single site scenario or a portfolio basis. Typical remediation costs vary across a sample of U.S. cities by a factor of 2.5, meaning the cost of cleanup for an equivalent parcel of land with equal levels of contamination and targeted end use for development more than doubles between selected cities

Land, accessibility and resources are advantages the cities possess. Many urban environments are hosts to strategically located, underutilized properties. Much of this property is held in the legacy portfolios of industrial firms, primarily multi-national companies. Although many of these sites face environmental challenges, they nonetheless offer significant financial opportunity based on timely divestment, remediation, restoration and smart redevelopment.

In effect, the continuing renaissance of mid-sized cities may be creating unexpected pockets of
untapped value in the real estate portfolios of industrial land owners. By focusing on cities with the greatest potential and fewest barriers to restoration, it is possible to create outstanding sustainable and investment opportunities, while simultaneously creating a platform for industrial land owners to effectively divest environmentally impaired properties.

ULRI may be used as a tool to empower industrial land owners, developers, investors, and city
leaders to make informed, smart decisions by identifying cities with the greatest potential to create value:

For the industrial property owner, the ULRI serves as a barometer, comparing relative remediation costs across 27 cities, and gauges the potential and attractiveness of cities for real estate investment, enabling owners to spot opportunities in their portfolio and helping to maximize the value of their properties.
For the developer, the ULRI supports the allocation of resources within individual markets or across an investment portfolio, and provides a broad indication of the potential cost and return on redeveloping environmentally stressed properties, allowing for a weighted assessment of the attraction of properties and prioritization of opportunities for further viability analysis.
For City leaders and planners, the ULRI provides a better understanding of the competitive position of a city and highlights the key factors critical for effective transformation of under-utilized industrial sites. ULRI developed a measure of city dynamism that combines several factors; a city’s attractiveness, growth potential, real estate performance, resilience and business environment.

The urban areas ranked in the top five for brownfields redevelopment of industrial properties are New York, Denver, Charlotte, Chicago, and Los Angeles.  The top five for commercial redevelopment comprise New York, Nashville, Charlotte, Pittsburgh, and Denver.  For residential redevelopment the top five list is Denver, New York, Nashville, Charlotte, and Atlanta.  Occupying the bottom of the overall index are Baltimore (#25), Phoenix (#26), and Detroit (#27).

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