Phase 1 and Phase 2 environmental assessments can protect you and your client during commercial real estate deals. Many firms provide these assessment services. But they are not all created equal. That is why you must carefully screen firms before choosing your partner.
We know that is often easier said than done. That is why we have created this detailed guide. Below, we recap what these assessments are and their differences. Then, we outline why they are needed. From there, we discuss how to choose the right team for the job.
What Are Phase 1 and Phase 2 Environmental Assessments?
Phase 1 and Phase 2 environmental assessments are site inspections. These inspections are typically called environmental site assessments, or ESAs. Each ESA will assess the environmental condition of a property.
Phase 1 ESAs are always performed first. They provide a broad look at a piece of commercial real estate. Inspectors may uncover recognized environmental conditions (RECs) during the Phase 1 ESA .
If RECs are found, then a Phase 2 ESA will be performed. A Phase 2 ESA focuses on the concerns found in the Phase 1 assessment. Phase 2 ESAs are more in-depth. They help buyers understand how RECs impact the value of a property.
When Are Phase 1 and Phase 2 Environmental Assessments Needed?
Phase 1 ESAs should always be performed when commercial land is involved. Many lenders require them. This is because Phase 1 ESAs can protect involved parties from liabilities.
A Phase 1 ESA should reveal the presence of hazardous materials and contaminants. It will also locate equipment like storage tanks. Phase 1 ESAs will outline what a site was previously used for. Sites that have been used to store hazardous materials and substances, such as dry cleaners or gas stations, will likely need a Phase 2 ESA.
Phase 2 ESAs are only needed if a Phase 1 ESA finds RECs. If the Phase 1 results do not list RECs, Phase 2 ESAs usually are not required.
How to Choose the Best Firm for My Phase 1 and Phase 2 Environmental Assessments
When searching for a partner to perform your Phase 1 and Phase 2 environmental assessments, look for a partner that checks the following boxes.
1. Has Relevant Experience
- How long has the firm been performing ESAs?
- What sort of experience does the team possess?
- Who will be leading the assessment?
These are all important questions to answer before choosing a partner. The best teams will be led by a professional industry expert. This individual will ensure that your ESA is performed in strict adherence to established standards.
Inexperienced firms may be less thorough. Your client could be exposed to serious liability if they miss a concern. Overlooked issues can also be dangerous to staff who will work on the site.
2. Communicates Well
The best firms will communicate well from the outset of the partnership. They will outline their process and keep you in the loop at all times.
A firm’s transparency should be evident from the first consultation. The firm’s staff should be confident in their practices and experience. If they are not, it is time to continue your search.
3. Provides a Clear Deadline
Delays in your transaction can ruin a real estate deal. When it comes to ESAs, you must be able to provide a clear completion deadline to the seller and buyer. This information will come directly from the firm performing it.
Try to avoid firms that have no guaranteed turnaround times. These firms may be overbooked or lack confidence in their ability to deliver. Either way, it spells bad news for your client.
The best firms will have a reputation for meeting or beating report deadlines. These firms will keep your deal on pace to arrive at the closing table as scheduled.
4. Offers Additional Services
If your Phase 1 and Phase 2 environmental assessments reveal hazards, the site will require remediation . These efforts will address environmental hazards so that the client can safely use the site.
Potential contamination is always a concern with developed properties. That is why you need a firm that offers additional services. This firm can perform the assessment and provide other services if needed. Choosing such a partner will eliminate the need to find another firm if there are concerns in the ESA reports .
Comparing Costs and Timeframes for Phase 1 and Phase 2 Environmental Site Assessments
When planning for Phase 1 and Phase 2 Environmental Site Assessments (ESAs), it is crucial to carefully consider both the cost and timeframe involved in completing these evaluations. Understanding the Phase 1 Environmental Site Assessment cost becomes particularly relevant in this context. Phase 1 ESAs generally have a more predictable cost structure and take less time to complete than Phase 2 ESAs, making them a cost-effective initial step in assessing environmental risks. In fact, a typical Phase 1 ESA may take two to four weeks to complete, with the duration varying depending on factors such as the size, location, and complexity of the property. It is worth noting that the cost of a Phase 1 ESA is influenced by several crucial factors, including property size, location, and complexity.
In contrast, the cost and timeframe for a Phase 2 ESA can be more variable, as they depend on the specific sampling and laboratory analysis requirements dictated by the findings of the Phase 1 ESA. A Phase 2 ESA may take several weeks to several months to complete, depending on the scope of the investigation, site access, and laboratory turnaround times. The cost of a Phase 2 ESA can range from a relatively modest sum for small, simple sites to substantially higher amounts for larger, more complex sites with extensive contamination. To effectively manage the cost and timeframe of both Phase 1 and Phase 2 ESAs, it is crucial to engage an experienced environmental consultant who can provide accurate estimates and efficiently guide the assessment proces
Frequently Asked Questions
A Phase 1 ESA is a comprehensive evaluation of a property’s environmental history and potential for contamination. It involves a review of historical records, site visits, interviews, and an evaluation of potential environmental risks associated with neighboring properties. The goal is to identify any recognized environmental conditions (RECs) that may require further investigation or remediation.
A Phase 2 ESA is conducted when a Phase 1 ESA identifies potential or known environmental concerns on a property. It involves sampling and laboratory analysis of soil, groundwater, and/or building materials to determine the presence, nature, and extent of contamination, and helps property owners, buyers, or developers understand the extent of contamination on a site.
A Phase 1 ESA is typically required during property transactions, such as a sale or transfer of ownership, or as part of the due diligence process for obtaining financing or insurance. It may also be required before redeveloping or renovating a property or as part of a regulatory compliance process.
A Phase 2 ESA is typically required when a Phase 1 ESA identifies potential or known environmental risks that warrant further investigation. It may also be required by a regulatory agency as part of a site cleanup or redevelopment project, or to obtain closure or a No Further Action (NFA) determination from the agency.
The cost of a Phase 1 Environmental Site Assessment is generally more predictable and less variable than that of a Phase 2 Environmental Site Assessment. Phase 1 ESAs usually have a fixed price range, depending on the size, location, and complexity of the property. Phase 2 ESA costs, on the other hand, can vary significantly depending on factors such as site size and location, nature and extent of contamination, site access and logistics, regulatory requirements, and laboratory analysis. The cost of a Phase 2 ESA can range from a relatively modest sum for small, simple sites to substantially higher amounts for larger, more complex sites with extensive contamination.
Let Us Be Your Partner for Environmental Assessments
Ideally, you want to find a partner like RSB Environmental. We offer a full suite of environmental compliance solutions. From Phase 1 and 2 ESAs to site remediations, we truly do it all. We can also assist with long-term compliance planning.
To obtain a quote for our services, contact RSB Environmental today . We look forward to supporting your commercial real estate deals.